GIFT City Funds
For Non Resident Indians (NRIs), the foremost step that they must take after moving abroad is to choose between an NRE (Non-Resident External) and an NRO (Non-Resident Ordinary) accounts. Although both of these accounts are specifically designed for NRIs, their purpose and flexibility will differ.
For Income In India: NRO Account
If you are an NRI that has income that still originates from India, through the form of rent, dividends and/or pension and want to manage it, then an NRO account is ideal.
- It is non-repatriable as it is a rupee account, albeit exceptions exist.
- Capable of receiving funds from both India and overseas.
- Interest is taxable in India and is subjected to TDS.
For Income earned Abroad: NRE Account
It is ideal for NRIs who want to manage their income that is earned in their resident country at present (outside India). This is also perfect if they wish to bring their overseas income directly into India, with full repatriation available. Which means the principal interest amounts can be freely transferred abroad.
The Funds that originate from thai account should only come from abroad or other NRE accounts, not from Indian Savings or NRO.
The interest earned is completely tax free, deeming this an ideal choice for looking to maintain liquidity in India as well as avoiding double taxation.
How to Decide between the Two?
It is based on your goals, if your objective is to manage the income that is earned in India such as rent, dividends, pensions, etc then an NRO account is the right choice for you.
If you also earn an income from abroad, and you wish for greater flexibility, you can opt for an NRE account.
In most cases, NRIs maintain both the accounts, using NRE accounts for Remittances for Savings and the NRO for managing Indian income. It maintains compliance as well as sound fund management on both sides.
