What are the features of an NRE Account?

 Once you become a Non-Residential Indian, managing funds in India becomes difficult. Sending or receiving money becomes a hectic task. You need to complete numerous transactional formalities. This could be time-consuming. To avoid this hassle, consider NRI Accounts. One such service is the Non-Resident External Account. It is a rupee-denominated account. This means your funds are maintained in Indian rupees.

An NRE Account specifically caters to NRI requirements. It satisfies your unique banking needs. But before you seek one, go through its features. Here are some:

Fund repatriation

NRE Accounts facilitate fund repatriation. They let you move funds freely. Through them, you get to transfer money to any other country. This ensures a smooth flow of funds.

Rupee denominated

An NRE Bank Account is rupee denominated. All your funds get sustained in INR. For example, you can deposit money in US Dollars and withdraw it in INR. This account is a Savings Account, Current Account, or Term Deposit Account. You can choose what type you want your funds in.

Remitted funds

NRE Accounts collect funds remitted from another country. They also obtain funds from another NRE or Foreign Currency Non-Resident Account. The funds may be in foreign currency drafts, cheques, remittances, etc. The accounts, however, are maintained in India. Once you ensure this, you receive funds freely.

Transactions

Sometimes, you may want to send funds to a Non-Resident Ordinary Account. You could also be expecting payment from the same. To help with this, NRE Accounts facilitate your transactions. They enable you to send and receive funds from NRO Accounts.

Tax exemption

The interest you earn on deposits is usually taxable. It eventually decreases your interest earnings. However, under NRE Accounts, interest earnings are exempted from taxes. As a result, your taxable income gets reduced.

Terms

To open an NRE Account, you need to obey some terms and conditions. For starters, you must be an NRI. Also, the Power of Attorney cannot open NRE Accounts on your behalf. This is impossible according to the account terms. However, they can make rupee transactions locally on the NRI’s behalf.

Account conversion

Say you are an NRI holding an NRE Savings Account. You have returned to India. You have also become an Indian resident. In this case, your account gets converted into a regular resident account.

Debits

NRE Accounts facilitate debit transactions. These include local disbursements, payments made outside India, etc. They allow transfers to other NRE/FCNR Accounts as well.