If you have recently gained the NRI status, you might be worried about managing your finances while living abroad. But you’ll be happy to know that there are two convenient options for managing your income in India. You can either opt for an NRE (Non-resident External) or an NRO (Non-resident Ordinary) savings account.
NRE and NRO savings accounts are designed for the financial needs of NRIs so they can manage the income they earn overseas as well as in India. Read further to learn more about these NRI accounts and how they can help make your life easier.
Difference Between NRE and NRO Savings Accounts
NRE Savings Accounts: You can transfer your overseas earnings to India by depositing them directly in an NRE savings account. All the funds you transfer into an NRE account are converted into INR regardless of the currency you deposit in them. Thus, they are sometimes referred to as Non-Residential External Rupee accounts.
NRO Savings Accounts: If you have income sources in India, you can manage them with an NRO Savings Account. These income sources include rent payments on properties in India, pensions, and dividends. You can also transfer foreign currency into an NRO account, but it will be converted to INR.
Benefits of NRO Accounts
- Easy Conversion: If you have lived in India and are now moving abroad, you can inform your bank about the same and apply for conversion. Your bank will convert your existing savings account to an NRO account. The process requires minimal documentation and helps keep all your savings in one place even after moving overseas.
- Flexibility: When it comes to making deposits, NRO accounts are flexible. You can deposit the money you earned in India or overseas. Additionally, if you have an NRE account, you can also transfer funds to your NRO account.
- Jointly Owned Accounts: If you have a family member who is a resident Indian, you can open a joint NRO account with them. You can also give them the mandate to manage and operate your account within India.
Benefits of NRE Accounts
- Tax Benefits: The funds you deposit in your NRE account and the interest you earn on them are exempt from tax. Thus, when you withdraw funds from your NRE account, you will not have to pay any tax on them in India. Conversely, your earnings from NRO savings accounts are taxable in India as per your tax bracket. They are also subject to TDS.
- Fully Repatriable: Repatriation means transferring funds between India and a foreign country. With an NRO account, you can repatriate up to USD 1 million in one financial year. But with an NRE account, you can conveniently repatriate all your funds, including the interest earned.
- Investments: You can link your NRE account with an investment instrument, such as a fixed deposit, mutual fund, or a DEMAT trading account. Thus, NRE accounts allow you to invest your overseas income in Indian investment instruments.
- Easy Access: You can withdraw your funds from your NRE account using international debit cards provided by your bank. You can withdraw funds outside of India, through ATMs and India, and use these debit cards to pay at any Point-of-Sale and make online payments.
- Jointly Owned Accounts: Similar to NRO accounts, you can open an NRE account jointly with an Indian resident and allow them to manage and operate it from India.
Depending upon your needs, you can open an NRE account, an NRO account or both. With online banking, you can open an NRI account in India from anywhere in the world. IndusInd Bank offers a host of features with their NRI savings accounts to make it easier for you to park your overseas earnings and manage your finances effortlessly.