What is the difference between FCNR, NRO, and NRE accounts? An NRO and NRE accounts are both rupee-denominated account whereas an FCNR account is a foreign currency account. ... While NRE is a Tax-free and freely repatriable account like an FCNR. NRO is taxable and only the interest after taxes is repatriable.
Mashruwala adds, “If you are certain that you will repatriate the maturity proceeds, then it is best to invest in the FCNR as you protect yourself against currency risk. Conversely, if you are certain that your investment will remain in India, NRE would be a better choice.”
FCNR (A) was introduced in 1975 to encourage NRI deposits. The Reserve Bank of India (RBI) guaranteed the exchange rate prevalent at the time of a deposit to eliminate risk to depositors. In 1993, the apex bank introduced FCNR (B), without exchange rate guarantee, to replace FCNR (A).
An NRE account is a bank account opened in India in the name of an NRI, to park his foreign earnings; whereas, an NRO account is a bank account opened in India in the name of an NRI, to manage the income earned by him in India. ... An NRI can open a joint NRO account with one or more NRIs or Indian citizens.
Final Note: You can open an FCNR account in India to save money on taxes and get competitive interest rates. The funds are freely repatriable and you need not worry about currency conversion rates. In case of premature withdrawal, the RBI allows it; you will have to check with your bank on the procedure and charges.
An NRE Account or Non-Resident External Account offers you this facility. Here, your money is converted into Indian Rupee or INR at the time of deposit. This means that you can deposit money in any foreign denomination, e.g. US Dollar and withdraw it in Indian Rupees.
Income which is earned outside India is not taxable in India. Interest earned on an NRE account and FCNR account is tax-free. Interest on NRO account is taxable for an NRI.
FCNR accounts are protected against forex rate risks. The deposit is maintained in a foreign currency. The interest earned from a FCNR account is exempt from Income Tax.
FCNR(B) stands for Foreign Currency Non-Resident (Bank) deposits. Essentially, banks were encouraged to woo their NRI clients to deposit surplus dollars at a fixed interest rate, with the RBI promising to shield banks from the exchange rate risk.
The interest earned on these FCNR deposits are paid on a half-yearly basis and deposits are renewed automatically. They offer a high yielding rate on US dollar deposits, which is 2.65%. Tenure.
The Foreign Exchange Management Act (FEMA) has laid down clear rules to determine if a citizen of Indian origin is a Resident Indian or a Non-Resident Indian. He/she has lived in India for at least 60 days of a year, in the previous year, and at least 365 days in the preceding four years.
PAN for NRI:
PAN Card is required by an NRI if that NRI has got a taxable income in India. According to the new, rule of SEBI, any NRI not having PAN card cannot do the share trading by depository or broker. PAN Card is also mandatory for an NRI if the NRI would like to invest in Mutual Funds.
List of Top 10 NRE Saving accounts for NRI's, Interest Rates, Min. Balance
|Bank Name||Interest rate (%) Per Annum|
|Bank of Baroda||2.75%|
|HDFC Bank||3% to 3.50%|
|Yes Bank||4% to 6%|
|Citibank||2.75% to 3.75%|