Moving abroad invites a host of changes. Besides the obvious lifestyle ones, it also mandates changes in your banking ways. This implies swapping your old bank account to conduct everyday transactions. You must either opt for a new one with a foreign banking partner. You could also convert your old account into a Non-Indian Resident Account. An NRI Account is meant explicitly for NRIs.
It allows them to park their foreign earnings safely. It facilitates their banking and investment needs once they move away from India. Such an account comes in three distinctive types. They are as follows:
- Non-Resident External Account
- Non-Resident Ordinary Account
- Foreign Currency Non-Resident Account
Out of these, we will cover the essential aspects of an NRE Account. The following points explain it:
- Rupee denominated
An NRE Account is Rupee denominated. This means that it maintains your deposits in Indian Rupees. The function stays consistent across all types of such an account. For example, whether you have an NRE Current or NRE Savings Account, your funds will be retained in Indian Rupees.
- Repatriability
This type of account offers you full repatriability. You can freely transfer the funds in your account to another country. Thus, many NRIs with financially dependent families open an NRE Account. It allows them to send money to India without any hassles.
- Fund maintenance
You can contain funds received from another country in your NRE Account. The same goes for transfers obtained from another NRE/FCNR Account maintained in India. Also, it is possible to transfer money from your NRE Account to an NRO Account. The process involves no restrictions.
- Joint facility
At times, you might want to open an account with a family member living overseas. Considering this, an NRE Bank Account offers you a joint facility. You are allowed to hold the account jointly with another individual. However, the co-holder must be an NRI. Else, you cannot avail of this facility.
- Conversion
Many Indians move overseas for a brief period. When they come back, they get the option of converting this account into a regular resident account. The procedure for this conversion, however, varies from bank to bank.
- Taxation
The most appealing aspect of an NRE Account is its taxation policy. Interest earned on deposits in this account is exempt from taxes. This way, the NRI can optimise their interest earnings without any worries.
- Transfer rules
A resident power of attorney cannot open an NRE Account on the NRI’s behalf. However, they can make local rupee payments and transfers on the NRI’s behalf. There is no imposition on such transactions.
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