6 Facts Of An NRI Account To Know About!

An Indian individual residing outside India can open an NRI account with any authorized bank in the country. This account is mainly used to process transactions in rupees. It can be opened in the form of savings, current, fixed deposit or recurring. However, most NRIs prefer to open a savings account for the credit of dues like interest and dividend. But it is also important that you must be aware of the facts related to such accounts. Read more to know what they are.

1. Types of NRI accounts: There are basically three types of accounts for an NRI. One is the Non-Resident Ordinary (NRO) Savings Account, second is Non-Resident External (NRE) Account and the third is Foreign Currency Non-Resident (FCNR) Fixed Deposit Account. NRE and NRO accounts are maintained in Indian currency while an FCNR account is maintained in foreign currency. In case of interest income earned in the NRE and FCNR account, it remains tax free, while the interest income earned in the NRO account will be liable to TDS.

1. Mode of operation: An NRI bank account cannot be opened or operated by a Power of Attorney holder in India on behalf of the NRI. The Power of Attorney holder can operate the account to make local payments on behalf of the NRI, but he is not permitted to make any remittances outside the country.

1. Investments: An NRI can invest in securities and shares of Indian companies and in government securities. Further, they can also invest in deposits with Indian companies, mutual funds, immovable properties in the country and partnership or proprietorship concerns in the country. This investment can be done using an NRO or NRE account.

1. Repatriation benefit: There are repatriation benefits of an NRI account. You can easily move the funds abroad as and when the need arises. The fund in your account will be freely and fully repatriable.

1. Minimum balance: There is a minimum balance requirement of Rs. 10,000 in your account.

1. FCNR deposit: With an FCNR account, you have the option of booking foreign currency deposits. If you plan to save your earnings in a foreign currency, you can book the deposit and earn an interest in the foreign currency. This interest will remain tax-free in India.

Opening an account is easy. All you need to do is fill up the account opening form and attach a self-attested copy of the documents and submit it to the bank. You can manage your account from anywhere in the world. The biggest advantage of an NRI bank account is the tax benefit on interest earned. This means you do not have to pay double taxation for the income earned in India and in the country of your residence. You can use such an account to earn income from interest or dividend and the same income will remain tax free. Further, it adds convenience in terms of repatriation of the funds. You can easily transfer funds from your country to your account in India and vice versa.

Arjit Chalmela is a finance student who loves to write in his free time. He has spent considerable time researching the foreign exchange rate.