An NRE, or non-resident external account, is a savings bank or current account that is opened by a person who is not from India. It offers several benefits but also has certain limitations. A major benefit of this account is the money received from these accounts is not subject to Indian taxes. I have shared several advantages and disadvantages of NRE account below.
Pros and Cons of NRE Account
Non-resident Indians must open NRE Accounts and utilise them to import money from abroad under the rules established by FEMA. NRIs who intend to invest their money in India will benefit from this kind of account. Let’s check out the limitations and benefits of this account.
Advantages of NRE Account | Limitation of NRE Account |
Both the principal and interest in an NRE account can be freely repatriated to the NRI’s foreign country without restrictions. | NRE accounts do not allow deposits in Indian Rupees (INR) from within India, restricting local income deposits. |
Interest earned on NRE savings and fixed deposits is completely tax free in India (no Income Tax, Wealth Tax, or Gift Tax). | Since deposits are converted into INR, fluctuations in exchange rates can affect the value of funds. |
NRIs can deposit foreign currency (USD, GBP, EUR, etc.), which is converted to Indian Rupees (INR) at prevailing exchange rates. | Cannot be opened with an Indian resident (except as a nominee or mandate holder), limiting family access. |
Allows easy transfer of foreign earnings to India and provides access to ATM withdrawals and online banking. | Once withdrawn in cash (INR), funds cannot be redeposited back into the NRE account. |
Can be held jointly with another NRI, offering flexible financial management options. | - |
I hope you found this helpful.
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What are the Advantages and Disadvantages of NRE Account?
ruchi
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10 months
2025-03-21T08:41:26+00:00 2025-03-21T08:41:27+00:00Comment
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