Savings Account
Importance of Opening NRE or NRO Accounts
3 min read
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Dec 28, 2022
Table of contents
Planning to settle abroad? The first thing you need to do is open an NRI Savings Account. As per the Reserve Bank of India (RBI), an NRI cannot continue to operate a regular Savings Account for money management abroad. NRIs are required to open an NRE or NRO Account or you can maintain both accounts considering your financial requirements. So, what is the difference between the two accounts and what are the benefits you can avail? Let us get to know in detail.
What is an NRE Account?
An NRE or Non-Resident External Account can be opened by NRIs staying abroad and who want to park foreign earnings in a bank in India. It can be in the form of a Savings Account, Current Account, Recurring Deposit Account or Fixed Deposit Account.
What is an NRO Account?
An NRO or Non-Resident Ordinary Account allows you to maintain income that is generated within India. The income can be generated from sources from current income such as property rent, pension, etc. Even NRO Account can be opened in the form Savings Account, Current Account, Recurring Deposit Account or Fixed Deposit Account.
Difference between NRE and NRO Account
| Parameters | NRE Account | NRO Account |
| Currency | The NRE Account lets you park foreign funds in Indian Rupees denomination | The NRO Account lets you park foreign as well as India originated income in Indian Rupee denomination |
| Taxation | Deposits in NRE Accounts are tax-exempt, including both principal and interest component | The interest in NRO Account is subject to Tax Deducted at Source (TDS) |
| Flexibility of repatriability, i.e., Transfer of Funds | Both principal and interest are fully repatriable. This means you can freely transfer the funds | Funds in NRO account is partially repatriatable, same can be repatriated post payment of applicable taxes |
| Suitability | You can open and maintain an NRE Account if you are staying overseas and want to park your earnings in an Indian denomination | You can open an NRO Account if you are also earning income in India. For instance, rental income, dividends from investments, pension etc. |
| Joint Account | You can open an NRE Account jointly with an NRI or Resident Indian with former or survivor mode | You can open an NRO Account jointly with an NRI or a Resident Indian. |
| Deposits & Withdrawal | You can deposit in foreign currency & withdraw in Indian Currency | You can deposit in foreign & Indian Currency but withdraw only in Indian Currency |
Benefits of NRE account:
- Having an NRE account helps you to remit money to India from overseas.
- Balance in NRE account, including both principal and interest, can be transferred back to a foreign country without any restriction
- The interest income is not subject to Income Tax & hence it remains tax-free in the hands of the account holder
Benefits of NRO Account
- Ideal place to park your foreign earnings & Indian income sources
- Joint account allows your dependents to manage your account on your behalf
- Ability to remit balance up to USD 1 million per financial year
About AU NRI Savings Account
If you are planning to settle abroad, you can open an AU NRI Savings Account with AU Small Finance Bank. The bank lets you open both NRE and NRO Accounts. Let’s get to know some of the features & benefits of an AU NRI Savings Account:
- Enjoy high interest rates on your deposited amount as well as the benefit of Monthly Interest Payout
- Zero mark fees on our flagship family banking programme AU Royale World NRE/NRO account
- Enjoy complimentary International & domestic lounge access
- Avail a complimentary Hospicash facility to insure your family members in India
- Manage your taxes better with our FREE Tax Advisory Service in India (available for both NRO & NRE Accounts)
- Apply for post account opening service in an instant with the AU Video Banking facility. You also have the flexibility to manage your banking needs using AU 0101 App/NetBanking
- Ability to appoint a Mandate holder to manage your NRI Account back in India
- Free digital payments via RTGS/NEFT/IMPS
- Free documents pick up services and also PO Box services
Read More: Types and Benefits of NRI Savings Account Every NRI Should Know About
You can visit our nearest AU Small Finance Bank branch or call on our customer care number at 0141 7141000 to open an NRI account.
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