With so many investments offering potentially great return rates, one might wonder why it is important to have a savings account. Saving money gives you peace of mind, it gives you options to choose from later in your life, and the more you save the easier it becomes to accumulate additional savings. People save money for different reasons and purposes- for emergency funds, for retirement, for down payment, for luxury and travel etc.
Although Non-Residential Indians (NRIs) are allowed to open and hold savings account in India, these accounts are not the same that is offered to a residential Indian. Before you put your money in a saving account, you need to understand and decide on which type of NRI account you want to go with. There are two types of NRI accounts that one can take advantage of if they want to maintain a bank account in the country- NRE account and NRO account.
• NRE or Non-Resident External Rupee account allows NRIs the ability to open a simple savings account. However, the balance is maintained in the Indian currency only. Even if a deposit is made in another currency, it would first be converted to Indian rupee before getting deposited. Money deposited in this account is free of taxes, and if you are maintaining any NRI fixed deposit in this account then both the interest and the principal is tax free.
• Any normal bank account held by a Non-Residential Indian is known as Ordinary Non-resident Account or NRO. Deposits can be made to an NRO account from overseas. However, the account holder cannot transfer their savings from this account to a foreign account without prior permission of the RBI. The interests earned from these accounts are not exempted from the Income tax in India. NRO savings accounts allow you to keep your Indian earnings from rent, fixed deposit interest, dividends and other sources.
If you are an NRI looking to open an NRI savings account in the country, ensure that you understand the features of these two accounts and choose the one that you find most suitable according to your needs.
Although Non-Residential Indians (NRIs) are allowed to open and hold savings account in India, these accounts are not the same that is offered to a residential Indian. Before you put your money in a saving account, you need to understand and decide on which type of NRI account you want to go with. There are two types of NRI accounts that one can take advantage of if they want to maintain a bank account in the country- NRE account and NRO account.
• NRE or Non-Resident External Rupee account allows NRIs the ability to open a simple savings account. However, the balance is maintained in the Indian currency only. Even if a deposit is made in another currency, it would first be converted to Indian rupee before getting deposited. Money deposited in this account is free of taxes, and if you are maintaining any NRI fixed deposit in this account then both the interest and the principal is tax free.
• Any normal bank account held by a Non-Residential Indian is known as Ordinary Non-resident Account or NRO. Deposits can be made to an NRO account from overseas. However, the account holder cannot transfer their savings from this account to a foreign account without prior permission of the RBI. The interests earned from these accounts are not exempted from the Income tax in India. NRO savings accounts allow you to keep your Indian earnings from rent, fixed deposit interest, dividends and other sources.
If you are an NRI looking to open an NRI savings account in the country, ensure that you understand the features of these two accounts and choose the one that you find most suitable according to your needs.
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