What is an NRE Account
An account which is opened under the Non-Resident (External) Rupee Account Scheme in India is called as NRE Account.
It can be opened by Non Resident Indians (NRIs) or Persons of Indian Origin (PIO). A NRI is an Indian citizen who is resident outside India. A PIO is a person who is a citizen of a foreign country (except Bangladesh or Pakistan) but was a former citizen of India or a child / grandchild / spouse of an Indian citizen.
NRE account can be opened jointly by two or more NRIs/ PIOs. It can be opened in Indian currency only. It can be in the nature of a savings account, current account, recurring account or a fixed deposit account.
Can an Indian resident open a NRE account
An Indian resident can hold a NRE account jointly with an NRI/ PIO relative only on ‘former or survivor’ basis. The Indian resident can operate the account as a Power of Attorney Holder only. The transactions which can be undertaken by the Indian resident are local payments in India.
What are the transactions which can be undertaken through NRE account
An indicative list of the transactions which can be undertaken through NRE account are as under:
- Income which is earned outside India
- Investments made in India
- Income earned in India through rent, dividend, interest
- Payments made in India for local expenses
- Transfer of funds outside India
Income which is earned in the NRE accounts is exempt from tax in India. The balances are exempt from wealth tax.
The above article provides a general overview on the topic. For further information with respect to NRE accounts, kindly contact services@jneela.com.
