A large number of NRIs and OCIs apply for HDFC NRI account to maintain their foreign earnings and income sourced in India. HDFC Bank allows NRIs to open two types of NRI savings accounts – NRO and NRE savings accounts. These NRIs accounts have some similarities as well as differences in terms of account opening process, taxability, permissible credits, etc. Here is a deep analysis of HDFC NRO vs NRE account.
SBNRI is a business partner of leading Indian banks. An NRI can apply for an NRO/ NRE account with one of these Banks by clicking the button below.
HDFC NRO vs NRE Account
Many NRIs are often confused and hassled as to decide what account they should opt for. Understanding differences between NRE and NRO savings accounts can help you to decide which account is best for you for inward and outward remittance, financial transactions and investment in India.
Here are clear differences between HDFC NRO and NRE accounts:
| Basics | NRE Account | NRO Accounts |
|---|---|---|
| About | NRE account allows NRIs to deposit and maintain their overseas income in HDFC Bank in INR. | NRIs can deposit their Indian income as well as foreign earnings in an NRO account with HDFC Bank. |
| Currency Denomination | Foreign currency funds are denominated in Indian Rupee (INR). | Indian denomination. |
| Taxability | The principal and interest earned thereon is not taxed in India. | Interest earned in an NRO account is subject to tax deducted at source (TDS). |
| Repatriation | Funds available in an NRE account are fully and freely repatriable i.e. you can transfer the principal and interest earned to an overseas account without any restriction. | Funds available in an NRO account can be repatriated outside India after the payment of applicable taxes with a limit of USD 1 million in a financial year. |
| Joint Account | You can open an HDFC NRE account with another NRI/ OCI and close relative resident Indian. | NRO accounts can be held jointly with another NRI/ OCI and resident Indian. |
Which Account Should NRIs Open?
NRIs can choose between HDFC NRO and NRE savings accounts or open both accounts depending on their requirements.
Open NRO Account If:
- You want to deposit your income sourced in India, such as rental income, pension, dividends from investments in mutual funds, stocks, etc.
- You have an immovable property in India that you want to sell. The sale proceeds are deposited into an NRO account.
- You want to invest in India in a hassle free manner. With funds in an NRO account, you can invest in many asset classes that don’t allow investment from NRE accounts like futures and options (F&Os).
- You want to open a joint account that allows your dependents in India to manage your expenses on your behalf.
- Need to convert your regular account to an NRI account post change in your residential status.
Open NRE Account If:
- You want to deposit your foreign earnings in an HDFC NRE account in Indian denomination.
- You want to earn tax-free interest income on your foreign earnings.
- You want to repatriate funds in your NRE FDs or other investments made on repatriable basis abroad without any restrictions.
- You want to invest in India using your foreign income to earn attractive returns.
- You wish to open a joint account on a former or survivor basis.
NRIs should open both NRO and NRE savings accounts for hassle-free financial transactions in India, including saving their foreign and Indian income, repatriation, investments, etc.
Due to lots of information and documentation required to apply for NRO and NRE accounts, the account opening process is lengthy and cumbersome elsewhere but you can download SBNRI App to apply for an NRE account with nominal documentation in just 10 minutes.
You can also click on the button below to open an NRI account. Also visit our blog and YouTube Channel for more details.
