What is NRE and NRO Account for NRIs ?

NRIs (Non Resident Indians) are always bothered about the type of accounts they
should open for depositing their funds or incomes. NRIs can avail the facility of opening
bank accounts in India. An NRI who is interested in opening a Bank Account in India has
been provided with 2 different options by the Government of India. The NRIs can
repatriate their funds from their home countries to India by depositing in any of the 2
accounts. The different options in respect of rupees accounts being given to an NRI are
NRE and NRO Accounts. These two accounts differ from each other and have
respective benefits.
Taxmantra.com has tried to remove this doubt of an NRI in respect of rupee accounts by
giving a brief view about the type of accounts and the benefits and differences between
them:
a)
NRE (Non- Resident External) Account It is a type of account in which at the
time of opening of the bank account foreign currency is being deposited. This foreign
currency can be tendered in the form of travelers cheque or notes. It can be in the form
of savings, current or term deposit accounts. It can be opened only by an NRI.
b) NRO (Non- Resident Ordinary) Account Its a normal bank account that can be
opened by an Indian going abroad for becoming an NRI. An NRO account can only
contain funds received from within India. It can also be in the form of savings, current or
term deposit accounts. Funds in this account can be transferred to another NRO
Account. These funds have to be used only for local (within India) payments in Indian
Rupees.
Some differences between these two accounts will make you more clear and specific on
the type of accounts to be used:

Income to be deposited: In an NRE account income earned from abroad can be deposited
whereas in NRO account takes into account generally the Indian incomes.

Who can deposit: In an NRE account only NRIs can deposit but in NRO account both
Resident and Non Resident can deposit their incomes and become joint holders.

Tax treatment on Interest earned: The interest earned on any type of NRO bank as well as
the credit balances in this account are taxable whereas interest earned on the NRE account is
totally exempted from tax, and the credit balances in the account dont attract any wealth tax.

Transfer of Funds: Funds can be transferred from NRE to NRO account but Funds cannot
be transferred from NRO to NRE account.

Repatriation benefit: The principal amount can be freely repatriated from the NRE account
but this benefit of repatriation is not available in case of NRO account.

Process to open an NRE and NRO Account

Similar process can be followed in case of opening any of the two accounts i.e. NRE and
NRO account. You just need to make a request with the authorized bank. After making
the request submit the following documents for further processing

Utility bill

Resident Permit

Driving License

Amount of rent received

Passport

Overseas or Indian Bank Statements

Also, the minimum fund has to be remitted to India either as forex remittance and
transfer from existing NRE account.
Further, NRIs (Non-Resident Indians) are also required to file their income tax returns for
income accruing or arising in India.

If any income accruing in India is through capital gains, rent, interest or dividend, one needs
to file return without considering the threshold limit. In this one can claim deductions too.

If income earned is less than the exemption limit and TDS has been deducted for the same,
then in order to claim refund of the same one need to file return. Filing of income tax return is
also compulsory when TDS deducted is more than the tax payable. Thus to claim that excess of
TDS deducted over tax liability NRIs required to file their income tax refund.

For FY 2011-12, an NRI (male, who is below 60 years) whose income exceeds 1.8 lakhs
and a person above 60 years who earns more than 2.5 lakhs should file returns in India.
In order to avoid penalty and interest NRI should file their return till 31 st July 2012

How to deposit money in NRE and NRO account -Savings Fixed deposit

How to deposit money in NRE account -ICICI, HDFC, SBI

You can deposit money in NRE account held with ICICI Bank, HDFC
Bank, SBI Banks, Kotak, Axis by using following methods :
1) Best way to deposit money in NRE Fixed deposit or savings
account is by remitting foreign currency to your NRE account by
using any remittance services like money2India from ICICI,
remit2India from HDFC, click2remit from Kotak and SBI Express from
SBI. There is no restriction on which service you use to remit money
to India, its up to you. you can even deposit money in HDFC NRE
account by remitting money using ICICI money2India services or
depositing money on Kotak NRE account by using remit2India
service. Same method can be used to transfer money to your NRO
savings account and FCNR fixed deposit account as well.

2) Second way is by wire transfer, if your foreign bank allows you to

transfer money directly to your NRE account hold with Major Indian
bank like ICICI, SBI or HDFC.
3) Another way to deposit money in NRE savings account by deposit
foreign currency by any NRI who is traveling India or by yourself.
This requires to visit bank and deposit foreign currency.
4) you can also deposit amount in your NRE or NRO saving account
by using foreign currency cheque drawn on your foreign currency
account. This is a slow process and it can take long time to credit in
your NRE saving account.
5) You can also tender traveler's cheque on your visit to India in
order to deposit amount in your NRE or NRO savings account or
fixed deposits.
6) You can deposit money on NRE recurring deposit or savings
account by transferring fund from any other NRE (Non Resident
external) or Foreign Currency Non Resident (FCNR) deposit account
with any other bank in India e.g. you can deposit money in your SBI
NRE account from your ICICI NRE account or your HDFC NRE
account.
These were some ways you can deposit money on your NRE, NRO or

FCNR savings account or fixed deposit account. One important thing

to note is that you can only deposit foreign currency in your NRE
savings account, you can not deposit Indian rupees in your NRE
account, neither you can transfer Indian Rupee (INR) from your NRO
Savings account or any other Resident savings account in India.