What Are The Advantages Of Opening An NRI Account?

Money is a valuable resource for people worldwide. They have lots of priorities and expenses to meet, which is impossible to achieve without adequate funds. They need to start saving from the present day to meet emergencies in the future. A bank account is the best option to store funds, earn interest and spend wisely.

An NRI bank account is available for only those individuals residing out of India’s geographical territories for at least 120 days throughout a year and spends less than 365 days in the country in four previous years. Under the Income Tax Act, 1961, an individual’s residential status would change to NRI only if they follow this rule. However, if the person leaves India for employment to a different nation, they will immediately get declared NRI.

NRIs need to understand the features of the three types of NRI savings account opening available for them in India. It helps them fulfil their investment objectives, financial obligations, and plans of residency adequately. They can open them with earnings originating either within India or their resident country, depending on the account type (NRE account, NRO account, or FCNR (B) account). Here are four advantages of opening this account:

1. It facilitates investment in financial instruments: One of the primary benefits of the NRI savings account is that individuals can participate in the stock market and invest in different schemes. These investments, supported by the Portfolio Investment Scheme (PIS), are offered by financial institutions. It is an RBI scheme allowing NRIs to trade in market-linked financial instruments like equity shares and debt instruments like company debentures. 

2. It offers many tax benefits: Individuals with NRE accounts and FCNR (B) accounts are eligible to enjoy tax-free interest earnings on their income, according to the Income Tax Act, 1961. Such global profits will be taxable in India under their domicile or residence if an NRI does not bear a tax liability to any other country, as per the Union Budget 2020 proposal. 

3. It offers high returns: An NRI account can help individuals earn substantial returns on the total deposits in NRE FDs and FCNR accounts at negligible risks without worrying about stock market fluctuations.
   
   
4. They can avoid exchange rate fluctuations: Individuals can choose to deposit their earnings from a foreign country in an FCNR account without conversion into INR. This facility allows NRIs to avoid exchange rate fluctuations and consequent reduction in the deposit value. However, they must remember to check the NRI account interest rates for getting additional benefits.