NRE stands for Non Resident External Account
- NRE accounts may be opened/ maintained in the form of savings, current, recurring or fixed deposit accounts.
- These accounts are opened for the purpose of depositing income earned overseas.
- The funds held in these accounts can be remitted back overseas freely subject to terms and conditions of the resident country
Income from interest on balances held in NRE accounts is exempt from Income Tax in India. Likewise balances held in such accounts are exempt from wealth tax.
- These accounts are opened in Indian Rupees and all foreign exchange deposits received for credit of these accounts are first converted to Indian rupees at the bank’s buying rates.
- Permissible credits to NRE account are inward remittance to India in any permitted currency, proceeds of account payee cheques, demand drafts / bankers’ cheques, issued against encashment of foreign currency, where the instruments issued to the NRE account holder are supported by encashment certificate issued by AD Category-I / Category-II, transfers from other NRE/ FCNR accounts, sale proceeds of FDI investments, interest accruing on the funds held in such accounts, interest on Government securities/dividends on units of mutual funds purchased by debit to the NRE/FCNR(B) account of the holder, certain types of refunds, etc.
Eligible debits are local disbursements, transfer to other NRE/ FCNR accounts of person eligible to open such accounts, remittance outside India, investments in shares/ securities/commercial paper of an Indian company, etc.These accounts can be opened jointly with other NRIs.
- Opening of NRE accounts in the name of individuals/ entities of Bangladesh/ Pakistan nationality/ ownership requires prior approval of Reserve Bank of India.
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