Many Indians live overseas and conduct ongoing financial activities in India. They may want to send money to their family in India or make any form of investment. In India, a non-resident Indian (NRI) can open either an NRE or an NRO account. Although there may be some similarities between the two tales, there are also some differences. So, let’s check out the NRI vs NRE below.
NRE vs NRI Account
The terms NRI (Non-Resident Indian) and NRE (Non-Resident External) are often confused, but they have distinct meanings in Indian residency and banking.
NRI (Non-Resident Indian) Account
An NRI is an Indian citizen who lives outside India for over 182 days in a financial year for work, education, business, or other reasons.
NRIs do not pay tax on their foreign income in India, but must pay tax on income earned in India.
NRIs can invest in Indian stock markets, mutual funds, and real estate under FEMA (Foreign Exchange Management Act) guidelines.
They are eligible for NRE (Non-Resident External) and NRO (Non-Resident Ordinary) bank accounts in India.
NRIs must follow specific rules while purchasing property, transferring funds, and filing taxes in India.
NRE (Non-Resident External) Account
An NRE account is a bank account for NRIs that allows them to deposit foreign earnings in India.
This account is fully repatriable, meaning both principal and interest can be transferred abroad without restrictions.
Currency: Maintained in Indian Rupees (INR) but funded from foreign currency deposits.
Interest earned is exempt from Indian income tax.
Best for saving foreign income in India and making investments.
This is all about NRE account vs NRI account.
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Hi,
If I understand it correctly, you want to know the difference between NRI and NRE Accounts. If that’s the case, I can help you out. I have a cousin in Dubai and we were having this discussion about which account is better NRI or NRE. I will let you in on what we discussed and I hope that it will help you arrive at a decision yourself.
NRI and NRE DifferenceBefore telling you about both the accounts, let me tell you the NRI and NRE full forms. NRI is Non-Resident Indian account and NRE is Non-Resident External account. Here is a table to explain difference between NRI and NRE quickly:
| NRI Account | NRE Account |
To open NRI account the person should at least be outside of India for 120 days in a particular year |
NRE Account is a part of NRI accounts. This account accepts income from the current country of residence |
Such account opener should have resided in India for less than 365 days for the past 4 years combined |
Only income denominated in Indian rupees is accepted in NRE Account |
There are three accounts that come under NRI account - NRE Account, NRO account and FCNR account (NRE: Non Resident External, NRO: Non Resident Ordinary, FCNR: Foreign Currency Non-Residential Account) |
NRE Account allows foreign currency transfer but the balance is held in Indian Rupees |
Documents to be submitted:
|
The amount deposited is tax free and the account holder is eligible to earn 4.35% interest on deposit amount annually |
I hope this clarifies all your doubts about the difference between NRI and NRE accounts.
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What is the difference between NRI and NRE?
Nilesh
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2022-04-25T13:46:51+00:00 2022-04-25T13:46:52+00:00Comment
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