There are a few types of non-resident Indian (NRI) deposit accounts.
Each of these NRI deposits would be suitable for different NRI investment requirements.
Besides convenience, an NRI deposit account:
In India, there's no tax applicable to funds in your NRE accounts. However, interest earned on NRO accounts is taxable. Please check the tax regulations in your country or region of residence to understand how tax is applied.
It's important to know the differences between the NRI accounts. What you choose will depend on how you're planning to manage your income and investments.
Non-resident rupee fixed deposits are denominated in Indian rupees and can be funded from overseas remittances or transferred from another NRE account. Such deposits should have a minimum investment period of one year and a maximum of up to 5 years. If the deposit is withdrawn early before completion of the minimum tenor, the bank pays no interest.
Non-resident ordinary (NRO) fixed deposits are also denominated in Indian rupees. These deposits, which range from 7 days to 5 years tenure, are flexible regarding the source of funding for the account – whether offshore or domestic. However, the amount invested is subject to repatriation restrictions. Interest earned is subject to income tax deduction at the source.
Such deposits are denominated in foreign currency. Benefits include allowing the NRI depositor to invest in India and still preserve its relative purchasing power against the Indian rupee when the funds are transferred back to their country of residence. Like NRE deposits, FCNR deposits are also freely repatriable, and the interest income is tax exempt.
RFC deposits are denominated in foreign currency and can be converted into Indian rupees at a later date. This allows you to choose the most favourable exchange rates. Funds held in NRE and FCNR accounts can be transferred into RFC deposits when you return to India. The money can then be used to make overseas remittances without prior approval. HSBC RFC accounts support US dollars, pound sterling, Japanese yen and euro deposits.
Like NRE deposits and FCNR deposits, both the principal and interest of RFC deposits are fully repatriable, and interest income is not taxable.
If you're banking with HSBC and have decided on a deposit account, you'll need to:
If you're planning to settle abroad, having an NRI account is important. Based on your needs, you can easily open an NRO or NRE bank account with HSBC. Both HSBC Premier and HSBC Personal Banking accounts can now be opened online.
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Note: The information provided in this article is for informational purposes only. You may consult professionals for specific guidance for the applicable Income Tax rules and FEMA Regulations, as these are subject to changes.
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