As an NRI, the residential financial products, rules and regulations will not apply to you. That is because, you will need to opt for a specialised account, designed for the needs and formulated under government regulations known as the NRI accounts. Under this account, you can either opt for the NRO or the NRE account. Each of these accounts has their features and benefits which can be utilised for different purposes.
However, between both the accounts, there the NRE account is an ideal choice. But what is the NRE account? This type of NRI account can be held in the savings or current account, allowing the account holder to repatriate funds that come from outside earnings. The earnings can be easily transferred to India in a convenient and secure manner. The funds that are normally transferred to this accountis done in INR.
Now that you are aware of what is the NRE account, here are the different benefits you will be getting through this NRI account:
Tax benefits: This is one of the most important benefits to opening the NRI account. The interest that is earnedin this account, whether in the savings account or the fixed deposit, is tax-free in India. They are not included in your taxable income. This makes for an ideal benefit, especially if you have any income in India. Due to this factor, investing in an NRE fixed deposit will offer you one of the safest and secure investments that will offer you a high return.
Repatriation benefits: After the tax benefits, the second key advantage to this account is the repatriation benefits. You can easily move funds from the saving account because you can repatriate both the interest as well as the principal amount abroad. In other words, the funds in the account for NRE is fully and freely repatriable.
Low balance requirement: Due to the increase in competition amongst the banking institutes, both public and private sectors, the minimum balance for the NRE account has dropped significantly. Several bank and financial institutions are now opting for Rs. 10,000 as the minimum balance.
High-interest rate: Both the savings and the fixed deposits of the NRE account offer high-interest rates. However, this can vary between the different financial institutions. One of the most beneficial factors of this account is that the interest rate is calculated on a daily closing balance and the interest is paid half-yearly in June and December. With the right calculation and investment strategy, you can easily invest and get high returns.
Convenient benefits: Adding to the list of benefits of the account is convenience. While it can be easy to open an NRE account, you can now open this account online. You only need to fill a form online, take a printout and attach the self – attested copy of the required documents. Once all the required documentation and attestation is done, you can courier it back to India.