In this article, we will throw light on can you deposit Indian rupees in NRE account? If you are an NRI residing abroad, then this information will immensely benefit you. As an NRI, it is your responsibility to ensure that you save hard earned for future investments in India, if required.
We will also read about NRE (Non Resident External Account) accounts and find out more about them. This would be useful to those of you, who have never heard about it or yet to open an NRE account. You never know when the rainy might come.
Can an NRI deposit INR in NRE Account in India?
The answer is a yes. Depending on the source of the money, the answer can be a no. As an NRI, you can deposit your money in INR. There are several private banks in India like SBI, Bank of India, ICICI, HDFC, Kotak, and others.
However, your money should be part of an NRE or FCNR account. This is when; you can take the help of your friends or relatives who are staying abroad for transferring funds. It is legal and will cause no issues for you, later on.
The same goes, when you already have an NRE account in HDFC and SBI. You can transfer from one account to the other. However, if somebody else other than you, transfer funds using these accounts, the owner will have to pay income tax.
Please keep that in mind. However, your partner or parents can transfer money using the accounts. They are your family members. It is advisable to have two or three NRE accounts in India. Yes, there are restrictions on the number of accounts an NRI can open in India.
Like mentioned above, the source of the funds should be abroad. Otherwise, you do not become eligible for depositing money in your NRE account. That allows you to free repatriation, where transfer of money can be done online to countries like America, UK, Canada, and other countries.
Though you may have a saving account, amounts cannot be transferred from the resident saving account to an NRE account. You have to request the bank to convert the resident saving account to an NRO account before you open an NRE account.
However, INR can be transferred from an NRO account or FD to an NRE account. However, there is a limit on that. An amount of 1 million USD per year can be transferred. A written approval is also needed and you must pay the taxes in advance.
You will want to remember one thing. When the status of your income tax changes to NRI, the resident saving account or resident fixed deposit cannot be kept. They have to be converted to an NRO saving account and FD as quickly as possible for your usage.
Otherwise, you will have to pay huge penalties. Apart from that, you stand to lose your existing account and only can use your NRO account.
Things to know about the NRE account
If you have not yet opened an NRE account, then there are some important pointers, which you ought to know.
They are given below.
What is difference between NRE and NRO?
An NRO (Non Resident Ordinary) and NRE (Non Resident External Account) are savings accounts where you can deposit in INR. The NRE account requires you to invest you earnings in India which the help of funds which is Principal + Interest.
These are freely repatriable.
Can NRI deposit in India with NRE account?
NRIs can deposit in their account. A Non-Resident Ordinary account can also be used to deposit money. However, you will want to take note of the fact that you can deposit only $1 million. Not to mention, the interest rates can be increased or decreased depending on the market conditions in India.
This usually happens when you have sold a property abroad and want to deposit the money in INR to your NRE account. Well, you can do that with the help of an NRO account. The income got from selling a property, rent income, royalty income and others can be transferred through these accounts.
Can NRI deposit INR in his/her NRE account?
A foreign draft can be used to deposit money in your NRE account. An NRI can also use the foreign telegraphic transfer. All the money, which you plan to deposit, has to be converted into INR.
You can deposit Rs2L in an NRO account. Local remittances can be done using NRO account. Large amounts can also be deposited in the NRE account.
Can money be withdrawn from an NRE account in India?
Money can be withdrawn from an NRE account in India. Not to mention, money can be taken out even abroad from your NRE account. However, during deposits only foreign currency will be accepted.
An NRO account can be used for deposits involving INR.
Can money be transferred through an NRE account from India?
Yes, you can transfer money through an NRE account from India. The Reserve Bank of India (RBI), allows NRIs to transfer money from NRE accounts to NRO accounts and vice versa. An NRO or FCNR account you can be opened through which transfers can be made. You will also want to know that an NRE savings account can be jointly held with another Indian citizen or NRI.
Can money be transferred from an NRE account to NRE account?
The money held in your NRE account is in INR. Yes, money can be transferred. The amount can be transferred from not only NRE accounts, but also FCNR, NRO, and resident saving account. Money can also be transferred from NRE accounts for paying bills or even opening fixed deposit accounts.
How much can be transferred from an NRE account?
An NRE account would contain a certain amount of money. However, in the United States of America, that amount can be charge on interest. When the money is being transferred from somebody else’s account, the amount is taken as a gift.
The limit for that is $14, 000 per year. You would want to make use of the lifetime gift tax quota, which can help in reduction of the taxes on your money. You would have understood by now that there is no limit on the amount, which can be transferred.
Are there any taxes for NRE account?
An NRE account is free of tax. There is no wealth tax, no gift tax, and no income tax in India. The amount of money transferred can vary and depend on the individual. You will be also glad to learn that there is no tax levied on NRE accounts.
The condition is that, you should be paying your taxes on the amount earned abroad.
Difference between NRE and NRO account for NRI Indians
Since we now know the answer to the question, can you deposit Indian rupees in NRE account we need to also know the answer to the difference between an NRE and NRO account. The NRE and NRO account are two different kinds of accounts.
Indians there are many differences between them can hold both the NRO and NRE account. All private and public banks allow you to open both NRE and NRO accounts. Depending on your usage, you can consult with them and open the account.
- The first main difference between the two accounts would be how you plans to deposit the money. In an NRE account, only foreign currency can be deposited. While in an NRO account, INR can be deposited.
- The interest rates on the NRO and NRE account can differ. Several banks offer similar interest rates on NRO and NRE accounts.
- The money in the NRE account is not accountable for tax. However, in an NRO account, it is taxable. When you have NRI FD in the NRE account, then the principle and interest are free of tax. Nevertheless, the interest is taxable in an NRO account.
- When getting money from India through rent or a business, then you will need to open an NRO account so that money can deposited in INR. In an NRE account, INR cannot be deposited. Hence, you will need to have an NRO account for deposits.
- When you have received money in your NRE account, the amount can be transferred in INR to other accounts. When opening an NRO account or NRE account, then you must open them in banks like ICICI, HDFC, and Kotak Mahindra, as they provide you with excellent customer service and facilities.
- When you want to send money from India to other countries, then having an NRE account would serve your purpose. In an NRO account, there are limits on the amounts you can transfer.
The main features of an NRE account
The main idea of having an NRE account is that you can invest your money in India whenever you want to. Perhaps, you are planning to return to India for good, then this is a very good option.
The amount saved in the account can be used for buying a property, starting a business, or just about any kind of investment. You will be glad to know that the money is fully repatriable. The interest, which you get on the amount, is free from tax.
A joint NRE account can be opened in names of only two NRIs.
The main features of NRO account
The main idea of an NRO account is to manage your money in India. Like said, an NRO account allows you to deposit money in INR. Some of the money received can be rent, dividends, or even pension in some cases.
These can be easily managed when you have an NRO account. However, you will want to know that it comes with limited repatriability. A deposit of $1 million per year is allowed. The interest rate earned will be taxed. An NRO joint account can be opened with an Indian too.
In conclusion, an NRE account allows you to invest foreign investments and reap the benefits. An NRO account helps you to deposit the INR earnings and invest it later on once you decide to return.
Importance of opening and an NRE account and investments
It always makes sense to save and invest your hard-earned money in the country, which you were born. There are numerous advantages of doing that. Firstly, you are a citizen of that country, which means you can easily get the paper work.
Whether, you are working abroad or are even born abroad is not a problem as long as your parents are citizens of the country. Citizenship is a powerful tool, which should be used to your full benefit.
Many NRIs after a certain period have that longing to come back to their own country and settle down. Without adequate resources, it is not possible. Even if you own a property, coming back after a few decades and starting over immediately, can be a hassle.
Hence having sufficient funds or savings in an NRE account is advisable. Not to mention, the competition abroad thanks to volatile market conditions is not encouraging, especially for Indians.
You should also consider options like mutual funds, stock market, and other investments, which comes with very little risk or no risk at all. After all, it is your money. Like you read above, having an NRE account make a big difference.
The answer to the question, can you deposit Indian rupees in NRE account, is a yes. There are plenty of benefits of doing so. If you are an NRI who has been residing for more than 10 years, then please do so immediately.
You can contact a reliable bank customer care support for guidance and help. They can help through the process. Since you are an NRI, the paper work will be given importance and completed without unnecessary delays and hassle.
So, what are you waiting for? Sign up immediately and enjoy the benefits of having an NRE account.