Difference between NRE and NRO account

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Anil

Anil (Querist)
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12 June 2009 Can anyone please explain the difference between NRE account and NRO account?

Thanks

Guest

Guest (Expert)

12 June 2009 NRO and NRE accounts can be maintained in current / savings/ fixed deposits. Power of Attorney holder cannot open a NRE account on behalf of a non-resident. Power of Attorney holders can operate on the NRE accounts but only for local payments to be made on behalf of the account holder. POA holder is permitted to make investments in India if a permission is granted by RBl. POA holders cannot make gifts from NRE accounts.

Proceeds of foreign currency notes and travellers cheques upto U,S.$5,000/ - can be credited during their visit to India from abroad provided they are tendered in person. In case of travellers cheques they should be presented by the account holder himself and discharged in the presence of the official of the concerned bank. If the amount exceeds U.S. $5,000/- or its equivalent, it should have been declared to the Customs on the Currency Declaration From (CDF) at the time of account holder's arrival into India. Power of Attorney holder cannot credit proceeds of foreign currency notes/ bank notes and travellers cheques to the NRE accounts.

Balances held in NRE accounts can be repatriated abroad freely. Funds in NRO account cannot be remitted abroad but have to be used only for local payments in rupees.

NRO accounts can be held jointly with residents. However, NRE accounts cannot be held jointly with residents.

Debits for local payments are allowed freely in NRE / NRO accounts Debits to the NRO account for the purpose of investment in India and credits representing sale proceeds of investments are allowed subject to the accountholder giving an undertaking that such investments/disinvestments are covered either by general or special permission of Reserve Bank Of India. Credits to NRE account, of funds emanating from a local source would be permissible only if the funds are of a repatriable nature. Funds held in NRE accounts can be repatriated abroad freely. Funds held in NRO accounts which would generally be from local source cannot be repatriated outside India. Funds in NRE/ NRO accounts can be utilized for payment of airfare and other travel related expenses in India.

NRO / NRE account holders are eligible for loans/overdrafts against their fixed deposits except for the purpose of relending, carrying on agricultural/plantation business. Loan against NRE fixed deposits can be utilized for investments in India on non- repatriation basis for acquisition of flat / house for their own use.

Nomination is allowed in all the NRE accounts. No repatriation is permitted for funds held in NRO accounts and the amount can be credited to the nominee's NRO account only. Remittance of funds to the non- resident nominee from the deceased person's NRE account will be permitted.

Transfer of funds from one NRE account into another is permitted. Transfer of funds by way of gifts can be permitted after obtaining an undertaking from the transferee/transferee's bank that gift tax rules have been complied with.

Anil

Anil (Querist)
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14 June 2009 Thank you very much sir.

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