A savings bank account, where the user can keep his foreign earned income in India and in Indian currency is known as NRE Account (NON-Resident-External Account). The Deposit in the NRE account is completely tax-free. In this article we will talk more about NRE accounts, so read this article till the end for complete information
What is NRE Account or Non-Resident External Account?
An NRE account is an account that is opened in India by NRI residents for complete security. It is also called an Indian rupee-denominated account. In this account, the foreign currency is converted into Indian rupee which means if the individual has deposited money in a foreign denomination, then it can be withdrawn in form of Indian Rupees.
The Foreign Exchange Management Act (FEMA) has issued the guidelines that an NRI is not allowed to have a savings account in his/her name in India. The individual who has left India and stays in another country has to convert all his savings to a Non-Resident External Account (NRE) or Non-Resident Ordinary (NRO) account. Here, savings means the money that the individual has earned while living in abroad. According to the guidelines, if the Individual does not close his account in India and continues to use it then he has to pay a good amount in form of penalties. It is a very good option for the NRI to open these accounts.
There can be savings, current accounts, recurring deposits, and fixed deposit accounts. These accounts give the facility to open accounts individually and jointly. For the joint account, both the account holders should be NRI. The individual can only deposit the amount that he has earned in a foreign country. With the help of International Debit cards, the individual can do transactions anytime.
Why There is a Requirement for NRE Account?
The Foreign Exchange Management Act (FEMA) has set the rules that the NRI cannot maintain a saving account in India. The NRE accounts are opened in order to help the NRI to do transactions in India. It will also give the facility to NRI to do investments in India. The NRI can give permission to any family member in India to access the amount in the account according to the need. This is a good option for the NRI to help their family members in India financially. This is considered one of the best ways to use your foreign earnings in India.
Who can open an NRE Account?
The individuals, who are staying outside India for the purpose of education, work etc. Government Employees who were sent to another country for official work. An employee of the Indian Navy and airlines registered with a foreign country can open this account. An employee of an oil rig company who is allowed to go outside India for some necessary work is also eligible to open an account. But the employee has to go out of India for at least 6 months or more.
Features and Benefits of NRE Account
The Deposits in NRE Accounts are exempted from tax, which means the deposit amount is completely tax-free. Here we are sharing various Perks and Features of a Non-Resident External Account.
- It is considered the perfect way to save your income that is earned in foreign.
- The banks that are providing the facility to open this account offer exclusive relationship and lifestyle benefits.
- Funds can be transferred easily between the countries.
- The interest rates in these accounts are very high.
- With an International debit card, the individual can shop everywhere in the world.
- Internet banking helps the individual to do secure transactions online anytime.
- The interest earned in this account is not taxable in India.
- These accounts can be opened jointly also.
- The NRE account is helpful for both personal and business purposes.
- It also helps to do investments in India. Like linking the NRE account with an investment and trading account.
- It also provides the facility to withdraw cash anytime by using International debit cards.
- Fixing deposits in these accounts give you a higher return.
List of Important Documents Needed for Opening NRE Account
- Application form
- Photocopy of all pages of valid passport including name, address, date of birth, photograph, signature, and date of issuance and expiration
- A document that shows the Indian or overseas address.
- Valid Employment proof
- Work Permit / Residence Visa/ Student Visa.
- Copy of PAN card or Form 60
- Latest passport-size colored photograph.
Online Opening Process of NRE Account
- First, visit the official website of your desired bank.
- On the homepage of the official website, type NRE Account in the Search Bar
- The new page of the NRE Account will appear on your screen
- Now fill out the online NRE Account Opening form.
- Don’t forget to note the Tracking ID to track the status of your account opening.
- Keep note of all the documents asked.
- Print all the documents and sign them at the required places.
- Paste the photograph as asked.
- After this process, submit the application to the collection boxes that the bank has mentioned. Or you can also post to the address given by the bank. Some of the banks are also providing the facility of doorstep pick-up service for the customers. In this service bank, the employee will come to your residence and collect the documents from you.
Many Indian banks are providing NRE account facilities. NRE account helps Non-Resident Indians to keep their hard-earned safe in Indian Banks. This facility helps to open accounts in India for depositing the foreign earned amount in Indian currency. If your want to Open an NRE Account, you can check the official website of your respected bank.