When it comes to holding an account in India, NRIs can select from several options depending on the nature and source of deposits. An NRI who wants to handle an income generated in foreign denominations can opt for an NRE account. On the other hand, an NRI with a source of income in India, such as a pension, rent, dividends, etc., can open an NRO account to manage the funds. The third type, i.e. an FCNR account, is used only for term (fixed) deposits with maturity ranging from 1-3 years.
An Indian living overseas can easily apply online for opening NRI accounts as there are no fees or extra charges associated with it. One must hold a valid Indian passport, NRI status proof, and proof of address to open an NRI account in India. Whether it is NRE, NRO, or FCNR account, there are numerous advantages of holding an NRI account in India, apart from earning attractive interest rates and using an exhaustive range of services provided by the bank.
Read on to know about the six significant benefits of an NRI account.
- Repatriation: A vital advantage of an NRI account is repatriation benefits, i.e. smooth inflow and outflow of funds. In the case of an NRE account, one can repatriate the principal and the interest amount freely within India and the present residing country. Conversely, a person holding an NRO account can repatriate the interest amount freely, but the principal amount can be repatriated only up to USD 1 million in a financial year.
- Tax liability: Another key factor associated with the NRI account is tax exemption benefits. The deposits of an NRE account, both the principal amount and interest earned, are tax-free in India. On the other hand, savings and fixed deposits related to an NRO account are subject to TDS. However, NRO account holders are free to apply for availing reduced tax benefits under the DTAA guidelines.
- Easy to open: An NRI account can be easily opened online while staying abroad without visiting an Indian branch. A person living overseas could open an NRI account without visiting the branch by filling the form and sharing the required documents online. With proper documentation and online KYC verification, an NRI account can be opened hassle-free within a few days.
- Easy to manage: An NRI account is convenient to operate from anywhere in the world. Bank provides various facilities such as international debit cards, payable-at-par cheque book, and free internet banking to NRIs for letting them keep track of their funds from across the globe.
- Interest on Savings: The banks offer an attractive rate of interest, completely tax-free, on the NRE savings accounts and fixed deposits to maximise funds. However, the interest generated on NRO account deposits is subject to TDS.
- Joint Account Facility: An NRI or PIO can also opt for opening an account jointly with another NRI. Additionally, the account holder could also nominate a resident mandate to operate the account while they are abroad.
Therefore, with the benefits mentioned above, it is highly preferable for Indians residing abroad to open an NRI bank account online to facilitate the swift and hassle-free transfer of funds.