Investing is all about trade-offs. In most cases, investors are trading off risk for returns or vice versa.
But for NRIs, trade-offs are not just limited to risk and returns. Factors like repatriation, taxation, currency risk, easy of investing etc. need to be traded off.
However, there's one investment option that gets you the best of most, if not all, worlds: NRE FDs.
Low risk. Check!
Moderate returns. Check!
100% repatriable. Check!
Straightforward investing, withdrawal and taxation. Check!
A Non-Resident External (NRE) account helps you manage your foreign income in India. Since the income is not earned in India, it is tax-free. NRE Fixed Deposits (NRE FDs) help you earn as high as 8% tax-free interest!
NRE fixed deposits help you deposit your foreign income in India and earn high interest on it. It is a rupee-denominated deposit account.
NRIs, PIOs, and OCIs can invest in NRE deposits using their NRO and NRE accounts. You can open an NRE FD account with funds remitted to India through banking channels.
You can pick a suitable tenure for NRE fixed deposits based on your investment preference. The interest you earn from the NRE FDs is tax-free in India. The interest and principal amount are fully repatriable to your country of residence.
The following are the key features of NRE FDs:
The following are the benefits of investing in NRE FDs:
The interest you earn from NRE FD investments is completely tax-free in India.
You can fully repatriate the principal and interest back to your country of residence without any restrictions.
You can enjoy higher interest rates on NRE FDs compared to the regular savings account and other foreign FDs.
You can pick a tenure that best suits your needs based on your investment goals. NRE FDs have a flexible tenure that ranges from 1 to 10 years.
You can invest in NRE FDs from the comfort of your home. You can use the digital banking facilitates to open, renew, or close accounts online.
Following are the tax implications and benefits offered by NRE FDs:
Here are some pro tips to maximise your returns on NRE FDs:
NRE FDs offer a secure and lucrative investment option for NRIs, combining attractive interest rates, tax savings, and repatriation flexibility.
NRE FDs are rupee-denominated, so the deposits are immune to foreign exchange rate fluctuations. Thus, this account helps hold money in Indian rupees for future expenses like purchasing property or retirement.
At iNRI, you can explore our theme, 'Alternative to Bank FDs'. This theme focuses on shortlisting mutual funds that can offer higher returns than FD by keeping the risk to a minimum. Talk to our experts, who can help you pick the right funds for your investment goals and generate higher returns than FDs.
Upon your return to India, you can hold on to your NRE fixed deposits until maturity.
Yes, you can take a loan up to 90% of the deposit amount against your NRE FD.
You have the flexibility to deposit funds in any currency. However, they will be converted to INR.
No, you cannot have 2 NRE accounts. Each individual can have only one NRE account in their name.
Yes, NRE FD deposits are tax-free in India. However, global income can be taxable in your country of residence.
Both NRE FD and regular FD are term deposits. However, NRE FDs are exclusively for NRIs.
Yes, you can prematurely withdraw your NRE FDs. However, this may attract penalties (reduced interest rates).
You cannot transfer funds from the NRO account to the NRE FD.
Interest payment frequency for NRE FDs is monthly and quarterly. However, for the cumulative option, the interest payment is at the time of maturity.
Yes, a PAN card is mandatory for opening an NRE fixed deposit.