Shashank Kapoor asked on 22/07/2023

What are the benefits of opening an NRI Account?

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SBNRI Team
answered on 17/08/2023

Benefits of opening an NRI Account: Tax free Interest up to 7.95%

The benefits of opening an NRI Account are as follows:

 

An NRI (Non-Resident Indian) account is a bank account designed specifically for Indians living abroad. There are several benefits of an NRI account, including:

 

1. Easy repatriation of funds:

 

NRI accounts allow easy transfer of funds to and from India. This makes it easier for NRIs to repatriate their earnings and savings to their country of residence. NRE/ NRO accounts allow NRIs to transfer money from India to other countries. While NRE accounts are fully and freely repatriable, funds in an NRO account are repatriable only after the payment of applicable taxes, with a limit of USD 1 million in a financial year.

2. Tax Benefits

 

NRI accounts offer tax benefits to NRIs. For example, interest earned on NRE accounts and FCNR (Foreign Currency Non-Resident) accounts are tax-free in India. However, savings in an NRO account are subject to TDS (Tax Deducted at Source) as per the income tax act. You can transfer funds from an NRO account to an NRE account post payment of applicable taxes.

 

3. Easy Fund Management

 

NRIs usually earn income abroad as well as in India. NRE account allows NRIs to deposit their foreign earnings in a bank account in India and an NRO account can be opened to save funds sourced in India, such as pension, dividends, rental income, etc.

NRIs can also convert their resident account into an NRO account. NRI accounts can be easily operated online, making it convenient for NRIs to manage their finances from anywhere in the world.

 

4. Currency Flexibility

 

NRIs living around the world can transfer their foreign earnings to an NRI account. In case of NRE and NRO accounts, the foreign currency deposit is instantly converted in INR. If you open a FCNR fixed deposit, the funds remains in the same foreign currency and there is no risk of exchange rate fluctuation.

 

Access to Indian financial services

 

NRI accounts also provide access to a range of Indian financial services, such as loans, insurance, and investment opportunities.

Overall, an NRI account offers several benefits to NRIs and can be a great tool for managing their finances while living abroad.

 

Can OCIs have an NRI Account?

 

Yes, OCIs can open NRE/NRO/FCNR accounts in India as they are entitled to similar benefits as NRIs. OCIs can also enjoy the benefits of opening an NRI Account.

You can open both NRI savings accounts and fixed deposit accounts. Here is an overview of the NRI FD accounts for you to choose the best account as per your needs:

Factors to consider

Non Resident External (NRE) Account

Non Resident Ordinary (NRO) Account

Foreign Currency Non Resident (FCNR) Account

Purpose

For income earned outside India

For income earned from India (pension, rent etc.) 

Foreign Currency Investment in India

Currency

INR

INR

USD, GBP, EUR, JPY, CAD, AUD, SGD, HKD and CHF

Tenure of Deposits

1 year to 10 years

7 days to 10 years

1 year to 5 years

Interest

Up to 7.25%*

Up to 7.30%*

Up to 3.05%*

Repatriation

(transfer of money from Indian bank account to foreign bank account) 

Both Principal (money invested initially) and Interest completely repatriable

Up to a maximum of 1 million USD per financial year

Both Principal and Interest completely repatriable

Tax Deductions

No tax

Tax on Interest earned (not on principal amount): 30% tax + surcharge + education cess will be deducted at the source of interest earned in India

No tax

Open NRI Bank Account Now

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