Lets talk about What is the NRO account and an NRE account? There are different types of products and accounts available in the market which would make you a little confused while choosing any one of them for sure. Knowing better about the different available choices can help you make a better decision. Also, it would be easy to generate better returns on your hard-earned money based on your overall requirements and preferences.
Non-Residential External (NRE) and Non-Resident Ordinary (NRO) accounts are the two major categories of account to choose from as an NRI. Both accounts can be opened as Savings account, current accounts and are Indian Rupee accounts. It would be better for you to understand that you need to maintain a balance of Rs 75000 in both NRO and NRE accounts. There are many NRIs who regularly faced the situation of maintaining a rupee account in India.
What is an NRE account?
NRE account stands for Non-Resident External account which is an account in the name of NRI opened in India to transfer foreign income to India. You would be able to deposit only foreign currency in the NRE account which gets converted to the Indian rupee currency at the time of deposit. Also, NRE accounts are free from tax in India that is better news for everyone.
What is an NRO Account?
A non-Resident Ordinary account is an account that is opened in the name of NRI in an Indian bank. It is used to manage the income earned in India through different income sources. You would be able to deposit Indian currency as well as foreign currency in this account. It is easy to withdraw money from this account in Indian Rupees
Do you want to know the major difference exists between the NRO and NRO account? If yes is your answer, then here you would come to know about everything in detail.
Tax Structure
You should note that the NRE account is Tax-free and there is no need to pay any kind of tax in India. If you are interested in your NRO account, then you need to pay tax for sure
Repatriation
NRE account allows money repatriation to the foreign account easily without creating any issues. But in the NRO account, there is a limit on the transfer of amount in a financial year.
Joint Holding
NRE account can be held with another NRI but not with an Indian resident. NRO account can be held with NRI as well as an Indian Resident.
Deposit of Rupee Funds generated in India
If an NRI is earning income through rent, salary, and dividends, then he/she is allowed to deposit it in an NRO account easily without any hassle. But in the case of the NRE account, it is not possible to deposit such earnings.
Conclusion
Finally, you are aware of the major differences between the NRO account and the NRE account you should be aware of. Make sure you are considering every important factor before choosing either an NRO account or an NRE account.