Most of them cannot use their regular Fixed Deposit when they move overseas. They must convert it into a Non-Indian Resident Fixed Deposit compulsorily. It is meant explicitly for global Indians. It provides all the perks of a Fixed Deposit but has features that facilitate international financial activities. Having such an Account helps NRIs in many ways. For starters, it enables them to continue their investment journey from abroad.
Secondly, it offers easy access to the deposited funds so that they can manage them per their needs. An NRI Fixed Deposit Account also comes in different types. Of them, the most opted common ones are:
- Non-Resident Ordinary (NRO) Fixed Deposit Account
- Non-Resident External (NRE) Fixed Deposit Account
Although these two have similar-sounding names, their functions differ slightly. Hence, each is suitable for a specific investment need. Below is a brief comparison between the two for your understanding:
NRO Fixed Deposit Account
An NRO Fixed Deposit maintains deposited funds in the currency of origin. Thus, it suits NRIs who keep moving to different countries for work. Here are some other features of this type of Account:
- Repatriation
An NRO FD does not grant the repatriation of the principal investment. But it does permit you to transfer the interest earned into another foreign Account.
- Tenure
The tenure of an NRO Fixed Deposit online is seven days to 10 years. However, you can extend the duration if need be.
- Taxation
The interest earned in an NRO FD is subject to taxes under the Income Tax Act of 1961.
- Minimum deposit amount
The minimum deposit amount lies anywhere from INR 25,000 to INR 1,00,000. It depends on the bank you choose to open an NRO FD Account with.
NRE Fixed Deposit Account
NRE Fixed Deposits convert your deposits into Indian Rupees instantly. They also maintain the deposited funds in the same manner throughout the tenure. Here are some of their most notable features:
- Repatriation
NRE FDs are fully repatriable. They allow you to withdraw the principal amount and the interest earned after the tenure.
- Tenure
The tenure of NRE FDs is a year to 10 years. However, you get the option of extending them upon maturation.
- Taxation
The interest earned in an NRE FD is exempt from taxation. Hence, your deposited funds stand a better chance of reaching their peak.
- Minimum deposit amount
The minimum deposit amount in such FDs ranges from INR 5,000 to INR 25,000. However, it differs from bank to bank.
Which one is more promising?
NRE and NRO FDs have their respective benefits. But in specific cases, one can outclass the other. For example, an NRE FD will be better if you want tax-free benefits. Similarly, an NRO will suffice your needs if you wish to deposit your income earnings from India.
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