NRE account is also known as Non Resident External (NRE) account is referred as INR denominated account. Foreign currency earnings can be deposited in Non Resident External accounts which are maintained in Indian Rupees.
Foreign currency earnings deposited in Non-Resident External account is completely repatriable. There is no limit on the principal amount and interest amount earned which can be repatriated.
Interest earned on foreign currency earnings deposited in NRE account is completely free of tax under the Income Tax Act, 1961- section 10(4)(ii).
We will discuss all the relevant point related to Non Resident External (NRE) Account.
Who can open NRE savings account?
- NRI a.k.a. Non Resident Indian
- OCI a.k.a. Overseas Citizen of India
- PIO a.k.a. Person of Indian Origin
- Indian Nationals who are seafarers or mariners
- Citizen of India residing outside India for employment, studies or business purpose.
What is the type of Non Resident External (NRE) Account?
NRE Account can be of these types:
- Savings account
- Current account
- Recurring account
- Fixed Deposit (FD)account
What is the Permissible Debits (Payment or expenses) from NRE account?
These are the Permissible Debits (Payment or expenses) from NRE account.
- Local disbursements
- Remittances outside India
- Transfer to Non Resident External/ FCNR (B) account of the account holder or to any person eligible to maintain such NRE account
- Investment in shares, mutual funds or any other security of Indian company subject to general/ special permission granted by Reserve Bank of India.
- Investment in immovable property in India subject to general/ special permission granted by Reserve Bank of India.
What is the Permissible Credit (Receipts or Incomes) in NRE account?
These are the Permissible Credit (Payment or expenses) from NRE account
- Proceeds of remittances to India
- Transfers from other FCNR (B) / Non Resident External accounts
- Interest made on the funds held in the account
- Current income such as rent, dividends in India etc. subject to payment of applicable taxes
- Sale proceeds of any permissible investment or on the maturity of any permissible investment in India which was originally made by NRE/ FCNR (B) account or out of remittances received from outside India via banking channels.
- Shares refund or debentures subscriptions to new issues of Indian companies if the same was paid from FCNR (B) /Non Resident External accounts or by remittance from outside Indian via banking channels.
NRE Joint can be opened by:-
- Two or more NRI’s
- Two or more PIO’s
- NRI with a resident relative*
- PIO with a resident relative*
*However, the resident relative can operate the account only as PoA (Power of Attorney) holder.