As a Non-Resident Indian (NRI), you can open three types of accounts in India, as authorised by the Reserve Bank of India (RBI). These are Non-Resident External (NRE) accounts, Non-Resident Ordinary (NRO) accounts, and Foreign Currency Non-Resident (FCNR) accounts. Each account type serves unique financial needs and offers different benefits, from tax exemptions to ease of fund repatriation.
But simply having an NRI account isn’t enough. To unlock its full potential, effective account maintenance is crucial. Discussed below are practical tips that can help you maintain your NRI account effectively. Get useful insights to keep your financial health robust, no matter where you are in the world.
Segregate Funds Appropriately
If possible, use NRE accounts for repatriable foreign earnings and NRO accounts for income earned in India. This segregation helps in better financial planning and ensures compliance with regulatory norms.
Also, note that while NRE account balances are fully repatriable, NRO account balances are subject to repatriation limits. Typically, up to $1 million can be repatriated per financial year (April-March) from NRO accounts, along with other eligible assets. This follows the guidelines specified in the Foreign Exchange Management (Remittance of Assets) Regulations.
Plan your repatriations accordingly to stay within these limits and avoid regulatory issues.
Use Digital Tools to Manage your NRI Account Online 24/7
With the IndusInd Bank NRI Account, you become eligible to enjoy premium banking services. For example, you can open a Non-Resident Indian account from anywhere with an easy online process. No hassles of bank visits, lengthy documentation, or a waiting period. Simply apply digitally, and the bank will instantly process and activate your account.
The most appealing aspect is access to superior digital banking services, such as:
- Net banking
- Mobile banking
- Video branch
These features help you conduct transactions, monitor balances, and reach customer support as needed. Simply put, you can handle your NRI banking needs anytime without any geographical restrictions.
So, open an NRI account and get started with IndusInd Bank today! Get access to premium NRI services and features at your fingertips!
Leverage Tax Exemptions
The interest you earn from NRE and FCNR accounts is tax-exempt in India. However, the interest accrued on NRO deposits is subject to a Tax Deducted at Source (TDS) rate of 30% plus any applicable surcharge and cess. You are eligible to claim a deduction on this interest up to ₹10,000, as per Section 80TTA of the Income Tax Act, 1961.
Utilise the Double Taxation Avoidance Agreement (DTAA)
If your income is subject to taxation in both India and your country of residence, you can obtain tax relief through the DTAA. India has DTAAs with more than 90 countries to help NRIs avoid dual taxation on their income. There are two possible ways to claim this tax relief:
| Exemption method | With the exemption approach, you, as an NRI, face taxation in just one country and enjoy exemption in another. |
| Tax credit method | Through the tax credit approach, where income is taxed in both countries, you can seek tax relief in your current country of residence. |
Stay Informed about Regulatory Changes
The regulations affecting NRI accounts, governed primarily by RBI and the Foreign Exchange Management Act (FEMA), can evolve. Staying updated on these changes will help you adhere to all legal requirements and avoid potential penalties. Subscribing to updates from your bank or a trusted financial advisory service can keep you informed.
Add a Nominee to your Bank Account
Adding a nominee to your NRI account is a critical step in making sure that your assets are securely transferred to your chosen beneficiary without legal complications. This can help you protect your financial assets and get peace of mind, knowing that your investments will be handled as per your wishes.
It’s a simple yet effective way to safeguard the assets held in your NRI accounts and should be considered an essential part of your account maintenance routine.
Key takeaways
The benefits of NRI accounts are many. They provide convenient access to Indian banking, facilitate easy repatriation of funds, offer tax advantages, support investment opportunities in India, and simplify currency conversion. However, the key to leveraging these benefits lies in maintaining your NRI account effectively.
Therefore, make sure to understand the complexities of NRI taxation, choose the right investment options, and stay compliant with regulatory requirements. Proper tax planning, staying updated with financial regulations, and seeking professional advice when needed are also crucial to maintaining your NRI account as a valuable asset.
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