What Is An NRE Account? Why Do NRIs Need It?

Are you living abroad and struggling to send money home? You need to open a Non-Residential External (NRE) account to resolve the problem. It will facilitate you park your foreign earnings in Indian denominations with nary hassles. 

Most Indian banks offer Non-Resident Indians (NRIs) an option to open an NRE account with them and enjoy smooth intercountry transactions. This account comes with other financial benefits that holders can enjoy. 

What Is An NRE Account

An NRE account is just like any other account you open in a bank, but the financial laws related to it are a little different. They come with different kinds of tax benefits. Our expert Chandrakant Bhat, founder of NRI Money Clinic, said that if NRIs use any other savings account in India, they come with hefty penalties on the holder. 

Therefore, if you have decided to move abroad for an unknown period, you need to speak with the bank (How To Make The Most Of Your Bank Acccount) authorities and inform them about your decision. Your current savings account can easily be converted into an NRE account, and you will be able to enjoy its benefits without any issues. 

Once you start earning abroad and open a savings or salary account there, you can transfer into the NRE account with just a click of a button. It helps you avoid paying hefty fees on currency exchange, and whenever you visit India, you can withdraw the rupee currency, travel around the country, and enjoy hassle-free transactions. 

What Is The Reason To Transfer Money To The NRE Account?

We spoke to CA Swaraj Jain to understand the benefits of transferring money to the NRE account. He said that this account is the legal path for NRIs to send money to their home country. It also facilitates them to enjoy investing in India without much effort and problems.

The best aspect of the NRE account is it allows the holders to withdraw the entire savings at once. No questions will be asked when you decide to withdraw a huge amount during an emergency or for investments. NRIs can also skip documentation if they are sending money to your family for their personal expenses. You can also deposit foreign currency into this account while you are travelling in your home country.

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Benefits Of Opening The NRE Account

Not only does the NRE account make the transaction a quick process, but it also has many benefits for the holder. Here are a couple of things you must know before opening this account,

• Whatever amount you deposit in the NRE account, it remains tax-free which means the amount that you save or the interest you earn on it is exempted from tax. Thus, the NRE account helps you avail of rebates while filing your Income Tax Return (ITR).
• The account holder can freely transfer the principal and interest amount to any other account they wish to. 
• The NRE account keeps your savings liquid, thus, allowing you to withdraw them in times of need without going through any complications. 
• You can open this account with another NRI or a relative living in India. 

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If it is about your savings and hard-earned money, it is crucial to make the right decision. Stay tuned to HerZindagi for more financial advice.