If you are a Non-Resident Indian (NRI) and looking to manage your finances in India, then opening an NRE (Non-Resident External) account could be an excellent option for you. An NRE account is a type of bank account that can be opened by NRIs to manage their income earned outside India. In this blog, we will discuss what an NRE account is, its features, and benefits.
What is an NRE Account?
An NRE account is a type of savings or current account opened by an NRI with a bank in India. The account can be opened in Indian Rupees and is freely repatriable, meaning that the account holder can transfer funds to a foreign account as and when required.
Features of an NRE Account
Joint Account Holding: NRIs can open NRE accounts jointly with another NRI or a resident Indian. However, the resident Indian is required to be a close relative of the account holder, as defined by the bank.
Tax Benefits: Interest earned on the balance in an NRE account is tax-free in India. Additionally, the account holder is exempted from paying tax on the interest earned in the NRE account for the first two years of their return to India.
Nomination Facility: The account holder can nominate a person to receive the balance in the event of their death.
Repatriation: The funds in an NRE account are freely repatriable, which means that the account holder can transfer the funds to any foreign account without any restrictions.
Withdrawal Facility: NRIs can withdraw money from their NRE account through ATM or by visiting the bank branch in India. The account holder can also issue cheques from their NRE account.
Benefits of an NRE Account
Tax Exemption: As mentioned earlier, interest earned on the balance in an NRE account is tax-free in India. This makes an NRE account an excellent option for NRIs looking to park their funds in a tax-efficient manner.
Foreign Currency Deposits: NRIs can deposit foreign currency in their NRE account, which is then converted into Indian Rupees at the prevailing exchange rate.
Easy Repatriation: The funds in an NRE account are freely repatriable, meaning that NRIs can transfer funds to their foreign account as and when required. This makes it easier for NRIs to manage their finances in India.
Nomination Facility: The account holder can nominate a person to receive the balance in the event of their death. This ensures that the account holder’s funds are transferred to the intended beneficiary.
Joint Account Holding: NRIs can open NRE accounts jointly with another NRI or a resident Indian. This makes it easier for NRIs to manage their finances in India with their family members.
Conclusion
In conclusion, an NRE account is an excellent option for NRIs looking to manage their finances in India. The account offers a range of features and benefits, including tax exemption, easy repatriation, and nomination facility. If you are an NRI, it is recommended that you consider opening an NRE account with a bank in India to manage your finances efficiently.
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Frequently asked questions about NRE accounts:
Q: What is an NRE account?
A: An NRE (Non-Resident External) account is a type of bank account that can be opened by NRIs to manage their income earned outside India.
Q: Who can open an NRE account?
A: NRIs, Persons of Indian Origin (PIOs), and Overseas Citizens of India (OCIs) are eligible to open NRE accounts.
Q: What are the documents required to open an NRE account?
A: The documents required to open an NRE account may vary from bank to bank, but typically include proof of identity, proof of address, and proof of NRI status.
Q: Can an NRI hold a joint NRE account with a resident Indian?
A: Yes, an NRI can hold a joint NRE account with a resident Indian, but the resident Indian should be a close relative of the NRI.
Q: What is the minimum balance requirement for an NRE account?
A: The minimum balance requirement for an NRE account may vary from bank to bank, but it is usually around Rs. 10,000.
Q: Can funds in an NRE account be repatriated to a foreign account?
A: Yes, funds in an NRE account are freely repatriable, which means that the account holder can transfer funds to a foreign account as and when required.
Q: Is the interest earned on an NRE account taxable in India?
A: No, the interest earned on the balance in an NRE account is tax-free in India.
Q: Can an NRE account holder nominate someone to receive the balance in the event of their death?
A: Yes, an NRE account holder can nominate a person to receive the balance in the event of their death.
Q: Can an NRE account be used for making investments in India?
A: Yes, an NRE account can be used for making investments in India, subject to the rules and regulations of the Reserve Bank of India (RBI).
Q: Can an NRE account holder withdraw money from their account in India?
A: Yes, an NRE account holder can withdraw money from their account in India through ATM or by visiting the bank branch.
