Non-residents can open bank accounts in India. The Reserve Bank of India (RBI) designates accounts that can be opened and maintained in India by non-residents.
Including:
a) Non-resident rupee (external) account plan (NRE account);
b) Foreign currency account plan (non-resident) (bank) (FCNR account (B));
c) Non-resident ordinary rupee account plan (NRO account);
d) Non-resident rupee special account (SNRR account).
The most prominent features of these accounts are as follows:
This is one of NRI's most popular bank accounts. NRI is an Indian citizen and a person who lives outside India. NRIs living abroad and foreign nationals of Indian descent, known as Indian descent (PIO), can open this account at an Indian bank. They can be savings.
Currently, the credits allowed in NRE accounts include:
- Remittances from outside India;
- Bank interest;
- Income from investments in India (i.e interest and maturity);
- Current income, such as rent, dividends, pensions, interest, etc.
The debits allowed in NRE accounts include:
- Local payments in India,
- Investments allowed,
- Remittances outside India, subject to specific conditions.
They also allow transfers within the NRE account of oneself or others. The account can be opened alone or with other NRIs and PIOs (usually family members).
To facilitate account operations, NRI may also maintain NRE accounts together with resident relatives who have valid power of attorney for NRI. The funds in the NRE account can be remitted freely.
NRI and PIO can open and maintain FCNR (B) accounts in Indian banks. This account can only be used as a time deposit that can be freely exchanged for foreign currency. Other conditions that apply to NRE accounts, such as credit/debit, joint accounts, etc., also apply to FCNR (B) accounts.
It may be a savings, current, fixed or recurring deposit account. Non-residents may jointly hold a NRO Account with residents as Power of Attorney holder. Additionally, NRIs and PIOs may also hold a NRO Account jointly with other NRIs and PIOs.
The permitted credits into NRO Account include:
- Inward remittances from outside India;
- Legitimate dues in India;
- Rupee gift/loan made by a resident to a NRI/PIO relative subject to the limit prescribed under the Liberalized Remittance Scheme.
The permitted debits into NRO Account include:
- The account may be debited for local payments;
- Remittances of current income abroad;
- Balance in the NRO Account may be repatriated abroad or to an NRE Account up to $1 million in a financial year (April to March).
Transfers within NRO accounts of self or others are also permitted.
A foreign national may also designate his rupee account as an NRO Account at the time of departure from India, on completion of employment in India.
It may only be used for collection of bona fide dues in India, such as withdrawal from provident fund and pending dues from employer. Such receipts can be repatriated within the limit of $1 million per financial year.
A non-resident having a business interest in India may open a SNRR Account for making bona fide transactions in rupees. An SNRR account is non-interest bearing and may be operated for a maximum period of 7 years. Funds in SNRR Account are fully repairable.
While interest earned in NRE Account and FCNR (B) Account is tax-free, interest earned in NRO Account is taxable in India. All remittances made outside India from the NRE, FCNR (B) or NRO Account are required to be made net of applicable taxes.
While remitting funds overseas, Form A2 and a Chartered Accountant’s certificate in Form 15CB and a self-declaration in Form 15CA are required to be furnished to the bankers confirming that applicable taxes are deducted and/or deposited into the government treasury.
Written by: Renu Gorkhnath Chauhan
Edited by: Gourav Chowdhury
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