A Guide To NRI Fixed Deposit

[Shashank Bhaskar]

People all over the world want to progress and achieve their goals while they are alive. They have lots of aspirations and desires that they wish to fulfil to live peacefully after retirement. They want to excel in every field, whether academics, sports, or even employment so that they can be proud of their achievements. Many Indians travel abroad for better opportunities and a broader scope to achieve them.

An NRI fixed deposit is one of the safest ways to earn tax-free interest in India. There are different options under it which can help NRIs start earning returns on the funds parked in these accounts. They can use them when they visit India without worrying about financial stability and dependability.

The NRE Fixed Deposit helps park the funds that individuals earn outside India. They can gain an interest up to 7.81 per cent, which is tax-free in India. Both the principal amount and the interest are fully repatriable. The NRE FD interest rates differ between banks, and the range they offer starts from 3.90 per cent.

The NRE FD is a rupee fixed deposit for foreign earnings. Individuals can enjoy the full repatriation of the investment along with interest. The interest earned exempts taxes in India. NRIs can also apply for loans of up to 90 per cent of the deposit amount at attractive interest rates. The account offers the flexibility of conversion, low deposit amounts, hassle-free renewal, attractive loan options, and quick processing of the loan at competitive exchange rates.

An NRI usually opens an NRO account to manage the income earned in India. This income can get generated in the form of rent, pension, or other types of dividends. The interest earned is taxable. An NRO FD attracts taxes as per Indian laws. According to the Income Tax Act, the interests earned from it involve taxes according to the Income Tax Act, 1961 at around 30 per cent, which is relatively high compared to domestic FD rates.

These FDs do not offer repatriation option on the principal investment. Only the interest earned from the FD gets transferred to a foreign account. Only funds originating in India can help open an NRO account, and consequently, an NRO fixed deposit.

Individuals cannot transfer funds from abroad to start a fixed deposit from NRO. However, they can transfer funds from an NRE account into an NRO account to open a fixed deposit. The NRO FD interest rates may vary according to the bank. They must check the available rates to find the option with the highest returns. An NRE or NRO fixed deposit comes with a maturity period of up to 20 years.