Earning abroad offers you the benefit of foreign funds, which often have a high conversion rate as compared to the local currency. But while you might wait for the right time to take advantage of the market conditions, you can look for alternative options to invest your foreign funds. One of the best options available in the market is the FCNR. Here are a few facts you must know about this account before you invest in it:
Easily used to repatriate funds:
As a part of the feature of the account, the funds that need to be invested must come from abroad. These funds are also allowed to be repatriated back home. Although the balance in the FCNR account is allowed to be held in a termed deposit, the funds from the account can be used to make payments locally. This can be done namely through a joint account holder, who can be a relative or someone who is abroad.
As compared to the other NRI accounts, the FCNR is tax-free in India. Therefore, if you invest in this account, you need not pay income taxes or wealth taxes. This makes for an excellent investment option especially if you will be working or staying abroad for long term purposes. Through this factor, the account holder can remit the primary amount or the interest, back to the home country without any tax charges. Additionally, you can have a compounding interest at the date of maturity
Ideal long term foreign currency investment:
As a part of the features of the account, the account holder can invest over six different currencies in the account. These currencies include the US dollar, the British pound, the Euro, the Japanese yen, the Australian dollar and the Canadian dollar. Since it also functions as a termed deposit, you can enjoy the benefits of foreign currency rates, especially when you invest it in a termed deposit. Since the invested funds in the account are not affected the volatile conditions of the market, you can easily invest the funds at a fixed rate, when the market conditions are in your favour. You can make multiple deposit accounts, with different tenures to receive a different return of interests at the period of maturity.
From the above facts, you can see that the FCNR makes for an excellent opportunity, to invest your foreign funds. With over multiple currencies to opt for, each promising high returns, you have plenty to opt for when it comes to investing. Additionally, if there is any change in the status of the non-residing Indian, the account will be converted to RFC account, thus allowing you to access the funds, by your changed requirements.