I ) Non-Resident External Account (NRE) –
NRE Accounts are maintained in INR. When you deposit the money in the NRE Account, the foreign currency is converted to Indian rupees at the prevailing foreign exchange rates.
You can save here your income earned abroad. The principal and the interest amount accrued on it, are fully repatriable, ie you can take out the amount out of India any time.The Interest income earned in this account is tax free.
NRE account may be maintained in any form, e.g. savings, current, recurring or fixed deposit account etc.
Joint accounts can be opened by two or more NRIs and/or PIOs or by an NRI/PIO with a resident relative(s) on ‘former or survivor’ basis. However, during the life time of the NRI/PIO account holder, the resident relative can operate the account only as a Power of Attorney holder.
Permissible credits– Credits permitted to this account as inward remittance are interest accruing on the account, interest on investment, transfer from other NRE/ FCNR(B) accounts, maturity proceeds if such investments were made from this account or through inward remittance. Current income like rent, dividend, pension, interest etc. will be construed as a permissible credit.
Permissible debits– The debits allowed from this account are local disbursements, transfer to other NRE/ FCNR (B) and investments in India.
II) Non-Resident Ordinary Account (NRO) – This account type is generally used by NRI’s to save their Indian income. Rent income, dividends from investments, or pension funds can be paid into these accounts. It is used to deposit your income earned from India or abroad. The accounts may be maintained in any form, e.g. savings, current, recurring or fixed deposit account. The interest earned on an NRO fixed deposit is taxed at a rate of 30%.
The accounts may be held jointly with residents on ‘former of survivor’ basis. NRIs and PIOs may hold an NRO account jointly with other NRIs and PIOs.
Permissible credit- Inward remittances from outside India, legitimate dues in India and transfers from other NRO accounts are permitted. Rupee gift/ loan made by a resident to a NRI/PIO relative within the limits prescribed under the Liberalised Remittance Scheme may be credited to the latter’s NRO account.
Permissible debits- Local payments, transfers to other NRO accounts or remittance of current income abroad. Apart from these, balances in the NRO account cannot be repatriated abroad except by NRIs and PIOs up to USD 1 million. Funds can be transferred to NRE account within this USD 1 Million facility.
III) Foreign Currency Non-Resident (FCNR) –
NRIs and PIOs are permitted to open and maintain these accounts. Deposits may be accepted in any permissible foreign currency. Foreign currencies are stored in these accounts. It helps to avoid the currency fluctuations that take place in financial markets.
FCNR Accounts can be maintained only in the form of fixed deposit.
You can take money from this account at any time and it is not taxed by the Indian government. The principal and the interest from this account are fully repatriable.