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NRE Account: A Hassle-Free Way to Deposit Your Foreign Earnings in India
As per the rules, NRIs can’t open a savings account in India. An NRE account can help them save their foreign earnings in Indian currency. What is the full form of an NRE account? What are the benefits, taxes applicable, etc.? Read on to know more.
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These Amazing NRI Bank account benefits can help you save more and grow your money /
When 35-year-old Kabir, a non-resident Indian (NRI) in the United Kingdom, wanted to transfer a portion of his earnings to his parents in India, in Indian currency, he wanted a hassle-free way to do so. For this, he used his NRE account.
For Kabir and several other NRIs, an NRE account is handy when transferring or saving their foreign earnings in Indian currency. If you are an NRI looking forward to easy access to your earnings made abroad in India, you need to have this account.
What is an NRE account?
A Non-Resident External account is the full form of an NRE account. It’s an Indian-rupee-denominated account from which you can deposit your foreign earnings in Indian currency hassle-free. This account can be in the form of a -
- Savings account
- Fixed deposit
Recurring account
Offering high liquidity, you can open an NRE account individually or jointly with someone who is also an NRI. It's important to note that you can deposit or transfer only the amount earned outside India into this account, i.e. the source of earned funds shouldn't be on Indian soil.
Benefits and features of an NRE account
- Full repatriation
Repatriation means the transferability of foreign currency into local currency. NRE accounts offer full repatriation, including principal and interest. This feature allows you to remit foreign currency into Indian rupees and take care of the requirements of your family members in India.
At the same time, you can freely transfer funds from your NRE account to your foreign bank account. This flexibility allows you to efficiently manage your finances across borders and access funds whenever needed.
- Tax-exempt income
The income you earn on this account, including interest, is tax-exempt in India. The principal amount doesn’t attract any tax treatment due to the Double Taxation Avoidance Agreement (DTAA) that the government has with other countries.
- Competitive interest rates
You get competitive interest rates on funds in this account. Though interest rates differ across banks, competitive rates allow you to earn substantial returns on your deposits. With the income being tax-exempt in India, it further augments returns from this account.
You can check the official websites of the respective banks where you want to open the account to know the interest rate offered.
- Easy transfer of funds
You can easily transfer funds from one NRE account to another account. You can also transfer funds from this account to a Non-Resident Ordinary (NRO) account that NRIs use to manage their income in India through dividends, pensions, rent, etc.
- Use of funds for a wide range of purposes
You can use the funds in your NRE account for personal and business purposes. Whether paying utility bills, funding education expenses for a family member, managing healthcare costs, or starting a new venture, you can use this account to address these needs.
NRE account - some essential considerations
While this account brings multiple benefits to the table, there are certain crucial things to take care of. Note that -
- You can’t use this account to deposit earnings made in India
- The account is subject to conversion loss and fluctuation in the rupee’s value against a foreign currency. Hence, if the value of the rupee falls against a particular currency, you may suffer losses
Manage your funds better with an NRE account
If you are looking for an account that helps you conveniently manage your overseas finances, visit IDFC FIRST Bank to help you find the right selection. With the option to transfer funds 24X7, this account comes with a free Visa Signature Debit Card. To apply, click here.
(Disclaimer: The above is a sponsored post, the views expressed are those of the sponsor/author and do not represent the stand and views of New India Abroad or Indian Star LLC.)
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