What is NRE full form?
NRE or NRE account full form is Non-Resident External account. It is a kind of NRI bank account opened by Non-Resident Indians (NRIs) to park their foreign earnings or send money to their loved ones in India. An NRE account offers several benefits for NRIs and OCI cardholders.
NRE Account Meaning
An NRE (Non-Resident External) account is a Rupee-denominated account that enables NRIs to deposit their foreign currency earnings. NRE accounts can be opened in the form of savings and current bank accounts as well as recurring or fixed deposits. Foreign currency deposited in this account is converted into INR. The account is highly liquid and allows for full repatriation of funds within Indian and abroad when required. It is important to note that only money earned outside India can be deposited in an NRE account.
NRE account benefits
Here are the key benefits of an NRE account:
- An NRE account allows NRIs to transfer their foreign earnings to India. They can hold or maintain their overseas earnings in Indian currency.
- Interest earned in an NRE account is exempt from any type of tax in India.
- NRE accounts are suitable for individuals who wish to keep their savings liquid.
- NRIs can transfer their funds including principal and interest to a foreign account from an NRE account without any restrictions.
NRE vs NRO
As per the Foreign Exchange Management Act (FEMA) guidelines, you can’t operate your Indian savings account once your residential status changes to NRI. You must open an NRI account. There are basically two types of NRI savings accounts – NRE account and NRO account. NRE and NRO accounts have various different features and applications. Here is analysis of NRE vs NRo accounts
|NRE Account||NRO Account|
|NRE account is suitable for holding overseas earnings.||NRIs can keep their India-based earnings such as dividends, rent, pension, etc. in an NRO account in India.|
|Both principal and interest in an NRE account are fully and freely repatriable.||Allows limited repatriation. You can repatriate up to USD 1 million inclusive of all taxes during an assessment year.|
|An NRE account is tax-free in India.||Interest earned in NRO accounts and credit balances is taxed as per the respective income tax bracket.|
|You can open a joint NRE account with an eligible NRI.||You can open an NRO account with both NRI and resident Indian.|
|NRE accounts are subject to currency exchange rate fluctuations.||If an NRI deposits his Indian earnings in an NRO account, there is no risk of conversion loss.|
NRIs who want to open an NRE or NRO account can download SBNRI App to apply for an NRI account with nominal documentation in just 10 minutes.
NRE Full Form – FAQs
The full form of NRO and NRE accounts is Non-Resident Ordinary and Non-Resident External respectively. Both of them are NRI accounts opened in India by non-residents to maintain their overseas income and Indian income (only in an NRO account).
The full form of an NRE account is Non-Resident External account. It is a bank account that allows non-residents to remit their foreign currency earnings to India and the money is converted in INR.