What Are The Types Of NRI Account In Indian Banks?

With the interest rates in India being significantly on the higher side compared to other countries, many Indians staying abroad prefer parking their excess funds in India to earn a handsome interest on their surplus money. It is wise to store cash in Bank Accounts rather than homes to earn some returns on the investment.

The government has allowed three types of NRI Account to encourage Non-Resident Indians to invest in India. You need to provide relevant proof of citizenship and resident status to the bank to get the benefits. Ideally, an Indian citizen who resides in India for less than 182 days during the preceding financial year, has gone out of India, stays outside India for employment, or carries on business or vocation gets NRI citizenship.

Foreign Currency Non-Resident Account

You can open the FCNR Account only in foreign currencies. It is a Fixed Deposit on which you pay regular interest. You do not bear risk fluctuations in the foreign currency. You can open this account for a minimum of one year to five years. The interest earned does not attract taxes in India. You can store money in US Dollar, British Pound, Euro, Japanese Yen, Australian Dollar, and Canadian Dollar.

Non-Resident External Account

The NRE Account is a rupee-denominated account with freely repatriable funds. Open this type of account either in Savings, Recurring, Current, or Fixed Deposit. You convert foreign currency in rupees and vice-versa while taking the money to your resident and home country.

This NRI Savings Bank Account is suitable for overseas savings remitted to India by converting foreign currency into INR. You operate it through power of attorney favouring residents for the limited withdrawal of local payments or remittances through banking channels to the account holder.

Non-Resident Ordinary Account

Under the NRO Account, the income deemed to arise in India is permissible for deposit. Examples include rent, dividend, commission, etc. The interest earned is also taxable in India with TDS. You withdraw money in Indian Rupees, and the interest income is subject to tax deduction at source at 30.90%. Suppose the depositor is a resident of any country India has a DTAA.

In that case, the tax deduction applies as per Double Taxation Avoidance Agreement agreed between India and the respective country.

Holding structure

Opt for an NRI Savings Account if you wish to invest and save money in India. The funds are liquid and save you from arranging money in other denominations on your arrival. There are joint holder options as well, where you can assign another NRI or resident Indian to open the account with you.

Alternatively, you can open an account online by visiting the bank website, filling the form, uploading the relevant documents or submitting them to the branch and operating it after receiving the bank kit.

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