NRE & NRO Account

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Anjan S. Mehta (Querist)
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29 February 2008 Sir,
I would like to know the concept of NRE & NRO A/c. Who can open this both a/c & after opening the a/c what are the statutory compliances to be fulfil.Pls explain in detail.

Regards,
Anjan S Mehta

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R.V.RAO (Expert)
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29 February 2008
NRE ACCOUNT
Designated Currency Rupees
Nature of Bank A/c Current Account Saving Bank Account, Recurring, Fixed Deposit Account
Operating the Account -
Who is eligible to open the Account? Non-Resident Indian
Joint Account Opening of these with a resident is not permissible. However, joint account in the name of two or more non-resident individual may be open.
Who can operate the Account? Non Resident Indian Account holder. Also the Power of Attorney holder only for local payments. The Power of Attorney holder cannot give gift, repatriate or transfer to another FCNR/NRE account.
Whether Nominations permitted? YES In favour of any Non Resident Indian or Resident Indian. On death of Account holder, NRI nomiee is allowed repatriation. However, resident nominee has to take RBI approval for remittance of funds outside India for meeting the liabilities of the deceased person or for similar purpose.
Transfer of Funds between one Non Resident Indian to another Non Resident Indian YES
Source of Depositing Money Inward Foreign Exchange remittance Funds from Local source of a repatriable nature.Income from specified Assets, which is repatriable.Can also deposit personally unlimited Foreign Currency notes or Travellers Cheques brought to India as Traveller.Refund of application/ earnest money together with interest if any on the deposits paid by Housing Board or Private Agencies may also be allowed to be credited provided the original payments was made out of NRE/FCNR account of holder or from Direct remittance from outside India through normal banking channels and authorised dealer is satisfied about the genuineness of the transaction
Rate of Interest The interest rates are revised frequently.
Taxation of Interest Income- Tax free
TDS-NO
REPATRIATION OF PRINCIPAL AND INTEREST ALLOWED.

NRO ACCOUNT
Designated Currency Rupees
Nature of Bank A/c Current Account, Saving Bank Account, Recurring, Fixed Deposit Account
Operating the Account -
Who is eligible to open the Account? Non-Resident Indian
Joint Account Account may be held jointly with resident.
Who can operate the Account? Non Resident Indian and Resident Indian Account holder jointly or severally Also Power of Attorney holder
Whether Nominations permitted? YES In favour any Non Resident Indian or any Resident Indian. On death, amount is transferred to NRO Account of NRI nominee.
Transfer of Funds between one Non Resident Indian to another Non Resident Indian YES
Source of Depositing Money Balance in India, Sale proceeds of Indian Assets, Inward Forex remittance, transfer from NRE /FCNR account, Non repatriable income in India. Can also deposit personally unlimited Foreign Currency notes or Travellers Cheques brought to India as Traveller.
Rate of Interest The interest rates are revised frequently.
Taxation of Interest Income Taxable
Loans / Overdraft in RupeesAgainst security of funds to Account holder in India. Permitted for personal purposes or for business activity (subject to certain conditions and its end utilisation).
Repayment From inward remittance or from local Account i.e. NRE/FCNR/ NRO/RFC account.
Loans / Overdraft in ForexAgainst security of funds to Account holder in India. Not permitted
Liquidity Premature withdrawal is allowed in all the Accounts
Third Party Loans against Security of funds. Loans/overdraft can be granted to resident third parties.
Loan outside India Not permitted
Tax Deducted at Source on Interest 30% + Surcharge (as applicable)
Repatriation Principal NOT ALLOWED
Repatriation of Interest ALLOWEDThe entire income earned during the financial year 1996-97 and onwards is eligible for repatriation.
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