If you are an NRI and you want to get the most out of your savings you need to choose the right type of account and investment option. The way taxes are handled how easily you can take your money out of the country. The interest rates you get can be very different depending on whether you have an NRE savings account an NRE fixed deposit, an NRO fixed deposit or an FCNR deposit. So it is very important to understand which one of these is the fit for the money you have coming in and what you want to achieve.
NRE Savings Account: You Can Get Your Money When You Need It. You Do Not Have to Pay Tax
An NRE savings account gives you interest rates that are usually between 3.50% and 7.00% per year depending on the bank. Some private and small finance banks give you interest rates. The good thing about this account is that the interest you get is not taxed in India and you can take all your money out of the country if you need to.. The problem is that the interest rate is not very high. This account is a starting point for NRIs who send money to India regularly and need to have some money that they can use easily.
NRE Fixed Deposits: You Get Returns You Do Not Have to Pay Tax and You Can Take Your Money Out of the Country
NRE Fixed Deposits are a very popular option for NRIs who want to get high returns on their money. The interest rates are usually between 6.25% and 7.50% per year depending on the bank. How long you keep your money in the deposit. The interest you get is not taxed in India. You can take all your money out of the country if you need to. You can keep your money in the deposit for from one year to ten years. If you take your money out before one year you will not get any interest. This makes NRE Fixed Deposits a good option for NRIs who want to get high returns on their money without having to pay tax in India.
NRO Fixed Deposits: You Get a Higher Interest Rate. You Have to Pay Tax
NRO Fixed Deposits are a good option for NRIs who have money in India that they want to save. The interest rates are similar to those for NRE Fixed Deposits.. The problem is that the interest you get is taxed in India. If you are an NRI who lives in a country that has an agreement with India you can reduce the amount of tax you have to pay by submitting some forms. NRO Fixed Deposits are an option for NRIs who want to save money that they already have in India, such as rent or dividends.
FCNR Deposits: You Do Not Have to Worry About the Value of the Rupee Going Down
FCNR Deposits are a good option for NRIs who want to save money in a foreign currency, such as US dollars. This way you do not have to worry about the value of the rupee going down. You can deposit your money in US dollars. You will get your interest and principal back in US dollars. The interest rates are usually lower than those for NRE Fixed Deposits. You do not have to worry about the exchange rate. This is an option for NRIs who want to save money in a stable currency.
Which Option is Best for You?
If you want to get the returns on your money and you do not have to pay tax NRE Fixed Deposits are a good option. If you need to have some money that you can use easily an NRE Savings Account is an option. If you have money in India that you want to save an NRO Fixed Deposit is an option. If you want to save money in a currency an FCNR Deposit is a good option.
For NRIs NRE Fixed Deposits are the best option because you get high returns and you do not have to pay tax.. If you are worried, about the value of the Indian rupee going down you should consider FCNR Deposits. If you have a lot of money in India you should consider NRO Fixed Deposits. The best thing to do is to use a combination of these options depending on where your money’s coming from how long you can keep it in the deposit and what currency you want to use.