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Everything you need to know about NRE/NRO Bank accounts

NRE (Non- Resident Rupee) and NRO (Non-Resident Ordinary Rupee) are the two NRI account options for those who want to maintain an Indian bank account. So, if NRIs want to repatriate overseas money to India or keep their Indian earnings within the country, they can opt for either NRE or NRO account.

The accounts can be opened as savings and current account and the currency is in Indian rupee. It is mandatory to maintain a minimum of INR 75000 in both NRE and NRO account. Here are few differences between both.

Repatriation

One can easily repatriate NRE bank account, while NRO account has some restriction. Up to $1 million net of applicable taxes in a financial year is permitted in NRO. It can be undertaken after a certificate from a chartered accountant.

 

Tax Treatment

NRE account is tax-free in India whereas, NRO account is subjected to income tax which includes wealth tax and gift tax.

Deposit of Rupee

The NRI who has income from Indian origin sources like rent and dividends, has to deposit money in NRO account only. Deposit of such money is not allowed in NRE account.

Joint Holding

NRIs can open NRE accounts as a joint account with another NRI, but not with an Indian resident. On the other hand, NRO account can be held with both NRI and Indian residents who are close relatives.

Which one should you choose?

The question here is, which NRI banking account is better: NRE or NRO? The answer depends on the primary reason for opening an account.

Go for NRE account if:

If the reason for opening it, is to park the overseas earning to India or maintain savings in rupees but keep them liquid for NRI investments. Also, if you want the savings to be freely repatriable, you should opt for NRE account.

Go for NRO account if:

If the primary reason for opening an account is to park India based earnings within the country. Also, if you want to open a joint account with an Indian resident or deposit income earned in India, choose NRO account.

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