Features of Non-Resident (External) Rupee Account Scheme [NRE Account]

A Non-resident (External) Rupee Account or NRE account is a bank account that can be opened by an NRI or a PIO to house his earnings from abroad. This account can also be maintained as a joint account in the names of two or more NRIs/ PIOs. NRIs/ PIOs can hold jointly with a resident relative on ‘former or survivor’ basis. The resident relative can also operate the account as a Power of Attorney holder during the life time of the NRI/ PIO account holder. The basic NRE account features are as follows: 

 The maintenance of funds in Indian currency 

  •  Non-taxability of income earned in the accounts
  •  Repatriability 

What are the different types of NRE account? 

The various NRE Account types are categorized as below: 

  •  Savings 
  •  Current 
  •  Recurring 
  •  Fixed Deposit 

What is the term period for fixed deposits? 

The term period for fixed deposits are one to three years. However, banks are allowed to accept NRE deposits above three years from their Asset-Liability point of view.

What are the NRE account rules regarding transactions?  

NRE account rules are many, which are mainly classified as Permissible Credits and Permissible Debits. 

Credits permitted to this account are inward remittance from outside India, interest accruing on the account, interest on investment, transfer from other NRE/ FCNR(B) accounts, maturity proceeds of investments (if such investments were made from this account or through inward remittance). Current income like rent, dividend, pension, interest etc. will be construed as a permissible credit to the NRE account. Care: Only those credits which have not lost repatriable character and subject to TDS, if applicable. 

 Permissible debits are local disbursements, remittance outside India, transfer to other NRE/ FCNR(B) accounts and investments in India. 

What are the major NRE account benefits? 

Interest income earned is exempt 

  • Fully repatriable funds 
  • Maintained in INR 
  • Funds can be freely transferred overseas 
  • No limitation on withdrawals 

Disclaimer: The views / the analysis contained therein do not constitute a legal opinion and is not intended to be an advice. Readers of this document are advised to seek their own professional advice before taking any course of action or decision, based on this document.

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