Nri fd account

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

15 July 2013 I have recently attained NRI status. I have an S/B account and FD account linked to it in India.
Excess TDS is deducted on my resident FD account (as I have no other income in India)
- Can I hold a normal FD account?
- Can I claim refund of the excess TDS deducted?

Anil Sankar V

Anil Sankar V (Expert)
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15 July 2013 You can claim refund of excess deducted.You can hold a FD a/c.

Querist : Anonymous

Querist : Anonymous (Querist)

15 July 2013 I know I can hold an FD. I am an NRI holding a resident FD account.

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Anil Sankar V

Anil Sankar V (Expert)
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16 July 2013 You can hold sir,not a problem.

Querist : Anonymous

Querist : Anonymous (Querist)

17 July 2013 I should be holding a NRE/NRO account. However I have not converted my account to on of these. I still hold a resident account.
How do I disclose the interest on these FD accounts?
TDS deducted on interest is 10% in my case.
However TDS on interest in an NRO account is 30%.

Querist : Anonymous

Querist : Anonymous (Querist)

17 July 2013 Help required

Anil Sankar V

Anil Sankar V (Expert)
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18 July 2013 Difference between NRO NREÂ Accounts

1. Interest on NRE account is tax free where NRO is taxable in India: It used to be that NRE accounts paid a lower interest than NRO accounts, but recently RBI allowed banks to set up their own NRE rates, and as a result now NRE fixed deposits pay as much as a NRO fixed deposit.

The big difference is that there is no tax in India on the interest on this NRE account, so it makes much more sense to open a fixed deposit using a NRE account instead of a NRO account.

2. NRE accounts are tax free whereas NRO accounts are not: You don’t have to pay any taxes on your NRE account, but interest income on the NRO deposit is taxed in India. There was a comment the other day from a reader stating that NRO tax rates have gone down, but I can’t find confirmation of that anywhere, so if you have any information on that then please leave a comment.

3. Up to a Million Dollars is Repatriable in NRO Account: Repatriable in this context means money transferred from India to another country, and it used to be that money from a NRO account wasn’t repatriable at all.

However, RBI has made some changes and now up to a million dollars can be repatriated from a NRO account in a year. However, a friend who was trying to do this told me that it’s a bit of a hassle transferring money from NRO account when compared with a NRE account.

If you foresee the need to repatriate more than a million dollars then you should opt for a NRE account.
Conclusion on NRO NRE Comparison

A lot of NRIs need a bank account back in India because they plan to return some day in the future or they have to maintain their family still in India. So you need something back in India – either a NRO or a NRE account.

I’ve seen the rules change in such a way for these accounts that for a long time it made sense to have a NRO account but not a NRE account, and now the situation has been reversed.

When you open an account – the bank gives you an option to choose if you want to open one or both, and you should choose both at the time so that you don’t have to go through the lengthy process of submitting documents and opening a new account in case the rules change again.