If you are an Indian staying abroad, surely you will be looking for different options wherein you can send money to your homeland. But with so many options that are available, which is the best and the safest one? The NRI account is one option. There are several benefits to this account which shall mention in the article. Out of all the benefits that are offered with this account, these three factors are the most important one that any NRI must know.
Types of NRI account
When opening an account for an NRI, you will have to different types of options available. Namely, the Non Residing External account also known as the NRE account and the Non Residing Ordinary account, also known as the NRO account are the two options available. There are few similarities between these two accounts. They can both be opened either as savings or current account wherein the denomination will be held as Indian Rupee accounts. Additionally, you will need to maintain at least a minimum average of 75,000 INR per month in both the accounts.
Difference between the two accounts
Although both these accounts come under the NRI account they both have different features. With the NRE account, you can open the account individually or jointly with another NRI. With the NRO account, you can open the account individually with anybody, however, if you are opening it with another joinee, it has to be a local Indian resident only. When it comes to reparability, the NRE account makes a better option. That is because you can remit any amount of funds from this account as compared to the NRO account which only allows you a limit of 1 million USD per financial year. With taxation, the NRE account is tax free in India. However, the NRO account is taxable, in terms of premium earned and credit equalization.
Transactions of the accounts
When it comes with depositing funds, only foreign currencies can be deposited in the NRE account. With the NRO account, you can deposit both Indian as well as foreign currencies. However, one advantage of these accounts include withdrawals. Withdrawals from the NRE account are permitted as Indian local currency, whereas the withdrawals would be permitted Indian rupees in the NRO account. When transferring funds between these two accounts, it can be a bit complicated. You can easily transfer funds from an NRE account to an NRO account. However, you cannot do the same from the NRO account to the NRE account.
Before opening an NRE or and NRO account, it is important to do a thorough study to understand the features and benefits. This will help you understand and plan your finances accordingly. Additionally, it will help you create an appropriate financial plan for the future.
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