|Non Resident External(NRE) Accounts
|Ordinary Non-Resident(NRO) Accounts
NRE accounts can be opened by NRIs.
Joint account is permitted with another NRI.
Opening of NRE accounts jointly with residents is prohibited.
|NRO accounts can be opened by all non residents. Not only NRIs but any foreign national or entities (except of Pakistani/Bangladesh nationality/ownership) can open such accounts. Joint accounts with other non residents or residents permitted.
|Types of Accounts
All type of accounts like current, savings, fixed deposits and recurring deposits are permitted under the scheme.
|NRO accounts can be opened as Savings, Current, Recurring or Term deposit
Withdrawals from NRE accounts are permitted for the following purpose.
Amount held in NRO account can be withdrawn for:
|Operation by Power of Attorney
NRE accounts can be operated by resident attorneys for withdrawal for local payments and investment in shares and securities covered by the general or specific permission of Reserve Bank of India.
Power of Attorney holders are not permitted to open NRI accounts or repatriate outside India funds held in the accounts. They are also not authenticated to makes gifts from NRE accounts.
|Deposit made and interest accrued thereon can be repatriated outside India at any time.
Balance under NRO accounts can be repatriated outside India for any bonafide purpose, subject to production of declaration by the account holder under section 195 of Indian Income tax Act, duly verified and certified by a Chartered Accountant in the prescribed format subject to a maximum of USD 1.00 million per calendar year. Interest accrued on NRO account net of tax deducted at source can be credited to NRE account or repatriated outside India as and when required.
|Interest accrued on NRE accounts are exempt from Indian Income Tax Act as far as the NRI is resident outside India. No wealth tax is payable for the amount outstanding in NRE accounts.
Normally, Income Tax @ 30.00% +3 % Education Cess ( total 30.90%) will be deducted at source by the Bank, on interest earned/paid in NRO accounts irrespective of the amount of Interest. The rates will be as per DTAA (Double Taxation Avoidance Agreement) agreed between India and various countries, in the case of depositors who are resident in those countries. Click here to see the list of countries and rates. This tax deducted at source can be claimed as refund by filing the return of Income as per Income Tax Act, provided the tax deducted is in excess of the tax due for the particular assessment year.
The TDS on interest earned on NRO deposit accounts shall be at 20% (for the current year the rate will be 20.60% including cess) only instead of 30% in the case of ONR accounts complying with the following conditions:
|Advance against Deposits
Advance will be granted up to 90% of the deposit, with a maximum of Rs. 100L. Loan can be repaid by remittance from abroad, transfer from NRE/FCNR/NRO account of the borrower or liquidation of the deposit.
Advance to the extent of 90% of the deposit can be availed at a rate of interest of over 2% above the deposit rate plus interest tax.
Difference between NRE Accounts and NRO Accounts in India