Types Of Nri Savings Accounts And Their Interest Rates

A Non-Resident Indian Account operates differently from regular accounts. It allows Indians globally to manage funds easily. Through it, they can deposit/withdraw income from anywhere. They also can deposit income earned in any currency. This way, you manage funds in India while working overseas.

Before applying for an NRI Savings Account, consider some factors. An essential one is the NRI Account interest rates. These rates vary based on the type of NRI Savings Account. They may or may not be taxable, based on the account you hold. Inadequate knowledge about these may land you a penalty. Here are the types of interest rates criteria of each account:

Non-Resident External Account

An NRE Account is a rupee-denominated one. It lets you transfer foreign earnings to India. Since your funds are maintained in INR, you can open them as Current, Fixed Deposit, or Savings Account. Open them jointly, i.e., with another NRI. NRE interest rates get exempted from Indian income tax. This means your interest earnings are non-taxable. They are also easily transferable. So, move your funds conveniently.

Some banks offer high NRE Savings Account interest rates. This enables you to increase your interest earnings.

Non-Resident Ordinary Account

An NRO Account lets you deposit rupees earned in India. Foreign earnings deposits are also allowed here. You need to open an NRO Account at some points, such as an Indian citizen who has moved abroad. The purpose could be a job or permanent residence. In this case, convert your resident accounts into an NRO Account. This conversion process gets carried out by your bank. Hence, inform them about your departure beforehand.

NRO Savings Account interest rates are taxable. Unlike NRE rates, they are not exempted from taxes. As per Income Tax guidelines, they are subject to TDS deduction. To help with this, some banks also provide high-interest rates for NRO Accounts.

Foreign Currency Non-Resident Account

An FCNR Account enables one to hold different currencies. Open them in US Dollars, Canadian Dollars, Australian Dollars, Euro, etc. You can open them as Term Deposits too. This gets done for specific maturity periods, for instance, a year and above, but less than two years, three years and above, but less than four years, and so on.

The principal and interest rates on FCNR Accounts are tax-free. They are also easily repatriable. This means you can move them freely. For this, however, hold the NRI status.

Comments are closed