While considering a move abroad, one of the considerations is what is to be done with assets in India. There are strict rules on sale and repatriation abroad in normal course. And if an NRI wants to invest in India, he can’t open a regular savings account to manage spends. For such transactions, an NRI will have to open an NRE account online.
NRE stands for Non Resident External account. An NRE account can be of two types:
• NRE Savings account
• NRE Current Account
An NRE account helps to conveniently repatriate funds abroad. It is also an account to pool in foreign earnings to invest in India.
Features of an NRE account:
1. An NRE account has no restrictions on repatriation of funds. The funds in the account and the interest earned on it can be repatriated at any point of time without any certificates from accountants.
2. This account is maintained in Indian Rupees. The bank where an NRE account is opened will convert foreign exchange into Indian Rupees at the applicable foreign rates.
3. Interest on NRE savings account is paid quarterly on the balance in the account
4. Funds from an NRE account can be transferred to another NRE account for bonafide purposes. It is possible to open an NRO account with the funds in an NRE account.
5. Foreign earnings deposited in an NRE account can be used to invest in Indian assets such as shares, mutual funds, provided the NRI fulfills other requirements.
6. An NRE account can be opened jointly with another NRI. It is not possible to open this account with a resident
7. However, a resident with a proper mandate/letter of authority can manage the NRE account.
8. Funds from sale of assets can be pooled in the NRE account and repatriated after payment of applicable taxes on them.
Benefits of an NRE account:
1. Tax free interest:
The interest earned on an NRE account is tax-free. However, interest may be chargeable to tax in the country the NRI is residing.
2. Easy operability:
Operating an NRE account is very convenient. Most NRE accounts come with NetBanking and PhoneBanking operations. It is even possible to open NRE accounts online.
3. Convenient repatriation:
There are no limits on funds that can be repatriated from an NRE account. The funds that have been brought from abroad and invested can also be repatriated after paying applicable taxes on earnings. The repatriation is done at market exchange rates.
4. Low minimum balance:
The minimum amount to maintain an NRE account is Rs. 10,000. This makes it very convenient to open an NRE account online since the funds required to maintain the account are not huge.