When you go abroad, you start earning your income in the currency you reside in. However, you have your loved ones living in India who depend on your finances. For ensuring their financial needs meet with yours, open one of the popular Non-Resident Indian Account (NRI Account) called Non-Resident External Account. Here you deposit the foreign earnings.
Irrespective of the currency deposited, the funds get instantly converted to INR, thereby allowing your dependents to withdraw the sum and use it for themselves. Here are things you should be aware of NRE Account:
Account opening eligibility
As evident, only Indians living abroad have access to NRI Accounts. Besides them, Persons of Indian Origin and those assuming Overseas Citizenship of India can open NRE Account. OCIs are generally Indians serving in the merchant navy for foreign companies. You also can be an Indian Government employee based abroad on a diplomat passport.
Account opening process
You have two modes to open the account – online or offline. If you decide to open the account online, do it through the chosen bank’s websites and correspond through chatbots or emails. You need to upload self-attested copies of your original documents. Online applicants may also need to get their documents attested from the Embassy in their residence country or the Indian Embassy in that country.
Offline applicants can walk into the bank branch along with original and document photocopies. Some Indian banks also have their branches in foreign countries to physically open the account.
Repatriation clauses
Freely repatriate all the savings parked in the NRE Savings Account. This means that you can repatriate the entire principal amount deposited along with interest earned at any given time.
Tax benefits
The other prominent aspect of this account is the tax exemptions. Since the savings parked in the account are sourced from your income overseas, you are eligible for tax benefits. All NRE Accounts are considered tax-free in India. Your principal sum and NRE Account interest rates have tax deductions, i.e., you need not pay any income tax, wealth tax, or gift tax in India, irrespective of the amount transferred in the account.
Account types
Open the NRE Account either individually or jointly. However, the joint account holder must be an NRI. You can open a Non-Resident Ordinary or NRO Account to transfer foreign currency earnings, especially if you have loved ones living in India. Here, the joint holder can be an Indian resident who serves as your Power of Attorney in India.
Facilities offered
Opening an NRE Account enables you to claim a range of services that include online banking, depository benefits, remote account maintenance, and more. Moreover, you can apply for loan and overdraft facilities and invest in the Indian Share Market using the savings in the account.