What are the Features of FCNR Account?

If you are a non-resident Indian living and working overseas, it is a good idea to opt for NRI services. It helps you to look after the financial requirements of your family living in India. The same thing is applicable if you have earnings in India. There are three kinds of accounts – NRE account, NRO Account, and FCNR.
 
Non-residential external savings account (NRE) – This account facilitates in transferring foreign currency earned by you to your loved ones staying in India. These accounts are exempt from any wealth tax and interest earned through these accounts is also exempted from tax.
 
Non-resident ordinary account (NRO) – If you have a steady flow of income through of pensions, dividends, rents, etc. and have other local expenditures to be made regularly, then NRO account is beneficial for you while you stay abroad. The funds that get credited in this account need to be from within India. This account can be maintained only in Indian currency. All incomes received in this account are taxable.
 
Foreign currency non-resident fixed deposit account (FCNR) – Foreign currency account is practical when you want to keep the funds earned by you in foreign currency denomination to prevent yourself from being hit by exchange rate instabilities. As this account should be credit with foreign currency, the source of funds should be from abroad. Income earned is not taxable in India.
Features of FCNR account
The account is kept in foreign currency. Pound sterling, Australian dollar, Canadian dollar, Japanese Yen, Euro, US dollar are only a few forms of currency in which an FCNR account can get opened.
 
A non-resident Indian or Indian citizen may open the account, and only an NRI or PIO may be a joint holder of this account.
 
This form of account has only term deposit schemes, and the duration can be more than one year and a limit of five years.
 
At the end of the first year, the interest rate on the term deposit is payable, and the interest from there gets compounded half-yearly.
 
Loans can be taken against foreign currency accounts, and banks will have the right to alter interest rate on term deposit schemes when a loan gets taken against this account.
 
An NRE account is for your foreign income earned outside India and gets exempted from tax. An NRO account is for income earned in India such as dividends, pension, and rent. An FCNR account can be opened by NRIs, who have moved back permanently after being residents outside India for an uninterrupted period of more than one year. Once you provide the documents required for NRI account, any of these accounts can get opened.