What is (NRE) Non-Resident External Rupee Account ? A NRE (Non-resident External Accounts) account is a Rupee denominated account.

Funds in NRE account is maintained in Indian rupees only. Any interest earned on this account are exempt from tax

Key Features of NRE (Non Resident External) accounts

Funds in a NRE account will be maintained in Indian Rupees Source of funds into NRE accounts must be from your earnings abroad or from another NRE Funds can be transferred from an NRE account to an NRO , NRE or Resident account You can have joint account with other NRIs Funds in NRE account is repatriable (That is, funds can be converted to any foreign Interest income earned on the money in a NRE account is non-taxable in India NRI can have joint account with other NRIs ( Resident Indians cannot be joint account Power of attorney holder can operate the account ( that is, Power of attorney can make local, NRE account is converted into a regular resident account if NRI returns to India permanently

/ FCNR-B account maintained in India

currency)

holders in NRE accounts) rupee payments on behalf of the NRI )

What is Foreign Currency Non-resident Bank Deposits : FCNR-B Accounts ? NRIs can avoid Risk of Foreign Exchange fluctuations by keeping their overseas money in Foreign Currency Non Resident Bank Deposits (FCNR-B) and you can convert back money to the foreign currency. The account should be opened by the non-resident account holder. FCNR-B enable NRIs to earn good returns on their foreign currency earnings.

Key Features of FCNR-B (Foreign Currency Non Resident Bank Deposits) accounts
FCNR(B) accounts are maintained in Foreign currency only No need to worry forex rate fluctuation risk as the accounts are always maintained in the

foreign currency
Source of funds to FCNR-B accounts should be from abroad(can be from NRE or FCNR

accounts)
USD, GBP, EUR, JPY, CAD and AUD are allowed to maintained in this account Remittances in other Currencies will be converted into any of the currencies named above

at the option of the depositor

 Interest will be made in the same foreign currency Interest income earned on the money in a FCNR account is non-taxable in India No gift tax on Gifts made out of balances No wealth tax on balances held FCNR-B is maintained only in term deposit Period of deposits range from 1 year to maximum 5 years.

FCNR-B deposits can be closed before the due date(penalty apply) NRIs can appoint Power of Attorney Holder to residents in India for operating their FCNR(B) accounts in India
You can have joint account with other NRIs ( Resident Indians cannot be joint account

holders in NRE accounts) NOTE: Acceptance of deposits under 2 earlier schemes namely Foreign currency Non resident Accounts (FCNR) and Foreign currency (Ordinary Non repatriable) (FCONR) deposit scheme were discontinued in w.e.f. 15/08/94. Deposits already accepted are however, allowed to continue till their maturity and thereafter no renewals would be permitted.

There are two options an NRI interested in opening a bank account in India can choose from an NRE or an NRO account. Are you an NRI keen on getting a bank account opened in India? Then it would be advantageous to know how these two types of accounts differ and which one is right for you. The Government of India has permitted NRIs to open rupee accounts in India in order to repatriate funds from their home countries. The two most common accounts are the NRE and NRO accounts. Lets take a closer look at them. Whats an NRE account? A Non-Resident External (NRE) account is a bank account thats opened by depositing foreign currency at the time of opening a bank account. This currency can be tendered in the form of travelers checks or notes. Whats an NRO account? A Non-Resident Ordinary (NRO) account is the normal bank account opened by an Indian going abroad with the intention of becoming an NRI. An NRI can also open this account by sending remittances from his home country or by transferring funds from his other NRO account. It offers the same facilities as an NRE account, except that any repatriation done through this account should be reported to RBI by filling up prescribed forms. How do NRE and NRO accounts differ? Funds remitted from overseas sources or local funds that would otherwise have been sent to the accountholder abroad can instead be transferred to NRE Accounts. On the other hand, local funds that arent eligible to be remitted abroad must be credited to an NRO account. Can you transfer funds fromanNREto anNROaccount and vice versa? Its easy to transfer funds fromanNREto an NRO account. But its not possible to transfer funds from an NRO account to an NRE account. Once you transfer funds fromanNREtoanNRO account, the amount is non-repatriable. Consequently, you cannot transfer it back.

Whats the difference in the tax treatment for interest earned on an NRE and an NRO account? The interest earned on any type of NRO bank as well as the credit balances in this kind of account are taxed under the account holders tax bracket. On the other hand, interest earned on the NRE account is totally exempted from income tax, and the credit balances in the account dont attract any wealth tax. Any gift given to a close relative doesnt attract gift tax. NRE and NRO accounts are two different types of rupee accounts permitted by the Government of India for NRIs.
Have you tried opening either of these accounts? With which bank did you open your account? How did you decide which one to go for?