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 – the NRE Savings Account, NRO Savings Account, and Foreign Currency Non-Resident Account.
Non-residential external savings account (NRE) – This account facilitates in transferring foreign currency earned by you to your loved ones staying in India.
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.
Foreign currency non-resident fixed deposit account (FCNR) – FCNR 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 money in which an FCNR account can be opened today.
- 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 is compounded half-yearly.
- Loans can be taken against an FCNR account, and banks will have the right to alter interest rates on term deposit schemes when a loan is taken against this account.
An NRE account is for your foreign income earned outside India and is 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 following documents required for NRI account, any of these accounts can be easily opened.