1. NRE account:
- Interest Earned is exempt from income tax
- Freely repatriable
- Investments done from NRE account are taxable
- Funds from India cannot be directly transferred to NRE. Bank may ask to submit Form 15ca and 15cb certificate to transfer funds from NRO or Resident account to an NRE account.
2. NRO account:
- Interest Earned is taxable
- Non repatriable
- Investments done from NRO account are taxable
- Funds from India can be directly transferred to NRO account.
3. FCNR account:
- Interest Earned is exempt from Income Tax
- Freely repatriable
- Only FDs are possible (not saving account)
- Funds can be transferred from NRE or an Overseas bank account and can be invested in foreign currency
Points to remember by an NRI:
- NRIs cannot hold resident accounts in India. In Income Tax Portal, tax payer has to add his bank accounts in India mentioning whether account is an an NRO, an NRE or Resident. Holding resident account may invite huge penalties.
- NRIs cannot invest in Government schemes like PPF, Post OfficeSchemes, Sukanya Samriddhi Yojana etc. If they are holding any PPF account they can continue to hold but they cannot do further investments or open a new PPF account in India.
- NRI’s cannot buy an agricultural land. They even cannot receive agricultural land as a gift. However, they can inherit agricultural land. An NRI can sell only that agricultural land that is acquired by way of inheritance.
- Before taking any decision in India NRIs should check the provisions of Income Tax law and FEMA Law.
Disclaimer: This article is just to make you understand about basic concepts. Please take Professional advice in case you have any doubts.
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