The world is seeing a declining interest rate scenario, with citizens in a few countries even facing negative interest rates. In such a terrible scenario for savers, one is frequently on the lookout for better investment options for their extra funds. Non-resident Indians or NRIs can open NRE savings accounts and NRE fixed deposits to park their foreign income, which will undoubtedly come in handy. This is because NRIs can benefit from higher returns, advantageous tax treatment, and the ability to repatriate cash back through such accounts.
The post mentions the 3 main benefits of NRE fixed deposits. 1. There is No Income Tax on Interest Income According to Section 10(4) of the Income Tax Act of 1961, interest income from NRE accounts, including NRE fixed deposits, is free from taxation (as amended). As a result of this exemption, the bank is not required to deduct any tax on such interest income on NRE savings accounts or NRE fixed deposits. As a result, while repatriating funds to their NRE account or investing in NRE FD, NRIs do not need to worry about any taxation-related compliance, such as tax payment and return filing. 2. Better Interest Rates Interest rates on NRI fixed deposit in India are unregulated and are not subject to approval by the Reserve Bank of India, the country's central bank. As a result, various banks may offer varying interest rates on NRE fixed deposits. To attract more customers, banks are offering attractive interest rates which eventually benefit NRIs by helping them to generate better and assured returns. 3. Funds Repatriation Flexibility According to current regulations, the balance in NRE accounts, both savings and fixed deposit accounts, is easily repatriable outside of India. In other words, non-residents are free to transfer their balances back to the country where they are working. This is true not only for the real funds deposited into the NRE account in foreign currency but also for the interest received on such funds. As a result, non-residents have the freedom to move monies to India in NRE accounts, invest in NRE fixed deposits, and even transfer the funds back without restriction. Take advantage of these benefits by investing in NRE FDs from the best bank for NRI account right away.
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