USD INR ₹ 83.33
GBP INR ₹ 106.12
CAD INR ₹ 60.88
Articles

Guide to NRE and NRO Accounts

Updated on April 09, 2020 12:29 pm
NRI Bank Account

NRIs (Non-Resident Indians) managing income earned in India and abroad may benefit from having two different types of bank accounts in India, an NRE (Non-Resident External) account and an NRO (Non-Resident Ordinary) account. Both NRE and NRO accounts may be opened in the form of savings, current, recurring, or fixed deposit accounts, and depending on your banking needs, one or both may help you more easily manage foreign and Indian-earned incomes.

What is an NRE Account?

The NRE account is an Indian Rupee denominated account, which is freely repairable. This form of NRI account can be in the form of savings, current, recurring or fixed deposits. The income is deemed to be earned outside India. Indian Rupees cannot be deposited into this account, only foreign currency can be deposited which will be converted into Indian Rupee at the time of deposit. The interest earned on the balances at the end of quarter is free from any income tax. However, the NRI can send his remittances from abroad into this type of account. The bank pays interest on the balance at their own determined rates.

To find the best NRE Account for you, compare the best NRE Accounts in our NRE Account Comparison Section.

What is an NRO Account?

An NRO account is a savings or current account held in India that helps NRIs manage income earned in India such as rent, dividends, or pension from abroad. The account holder can deposit and manage accumulated rupee funds conveniently through an NRO account. Foreign currency deposited into the NRO account is converted into Indian Rupees. Any NRI can open an NRO account.

For a comparison of the best NRO Accounts, check our NRO Account Comparison Section and find the best NRO Account for you.

NRIs may also convert their existing resident savings account into an NRO account when their status changes from resident to non-resident. A minimum amount of Rs.10,000 must be maintained in an NRO account on a daily basis. Any repatriation done through this account should be reported to RBI.



 

Difference between NRE and NRO Accounts

The differences between NRE and NRO accounts are outlined below in the following account features.

  • Repatriation: Repatriation is defined as sending or bringing money back to the foreign country. You can easily repatriate funds from an NRE account including the interest earned in that account. However, RBI has made some restrictions on NRO accounts. You can remit only up to USD 1 million in a financial year (April to March). In addition, you will need a chartered accountant to complete the paperwork for you.
  • Taxation Laws: NRE accounts are tax exempted. Therefore, income taxes, wealth taxes, and gift taxes do not apply in India. Interest earned from these accounts is also exempt from taxes. But as per Indian Income tax laws, NRO accounts are taxable; income taxes, wealth taxes, and gift taxes do apply. Interest earned on an NRO account as also subject to taxation. However, the reduced tax benefit is availed under the Double Taxation Avoidance Agreement (DTAA).
  • Deposit and Withdrawal of Funds: You can deposit funds from a foreign country (in foreign currency) in both NRE and NRO accounts, but funds originating from India (in Indian rupees) can only be deposited in an NRO account and cannot be deposited in an NRE account. Withdrawals from both NRE and NRO accounts can only be made in INR.
  • Flow of Funds: In an NRE account, repatriation is allowed outside India in any currency.
  • Transfer: An NRE account allows you to transfer funds to another NRE account as well as to an NRO account. You can transfer funds from an NRO to another NRO account, but you cannot transfer funds from an NRO account to an NRE account.
  • Joint Accounts: Two NRIs can open both an NRE joint account or an NRO joint account. However, you cannot open an NRE joint account with a resident Indian. This facility is available only with an NRO joint account.
  • Motive or Purpose: An NRE account helps you transfer funds to India earned abroad and maintain them. While NRO accounts help maintain a regular flow of income earned in the form of rent, pensions, or dividends from India.
  • Effect of Exchange Rate Fluctuations: NRE accounts are exposed to two kinds of exchange loss, namely day-to-day fluctuations in the value of INR and conversion loss. NRO accounts are not at such risk.

Choosing the right account depends on examining your and your family’s financial needs. If you foresee the need to repatriate more than a million dollars or if you want to maintain savings in INR then an NRE account may be the better option. If you want to keep India-based earnings in INR, then opt for an NRO account. With both NRE and NRO accounts, managing your funds as an NRI is made much more convenient and secure.

 797639 views
Rate article:
(4.2)
 
 
Money Transfer FAQ's
Related Articles
Sending money to India
When is The Best Time to Send Money to India?

Sending money to loved ones in India is a heartfelt gesture, but navigating the complexities of international money transfers requires strategic timing to maximize your remittance's value. In these uncertain economic times, where currency fluctuations can significantly impact exchange rates, knowing when to initiate your transfer is essential to securing the best possible deal.What is Remittance?Remittance is the process of sending money to individuals or businesses in another country, typically by immigrants to support their families or contribute to their home country's economy. For those seeking to send money to India, CompareRemit serves as a trusted platform to compare and contrast the top remittance services, ensuring you find the most cost-effective and reliable option for your needs.How to Send Money to IndiaWhen using a remittance service, the process of transferring money to an account in India is relatively straightforward. After selecting your preferred remittance provider through CompareRemit, you will be guided to the provider’s website where you can begin the money transfer process. You'll typically need to provide the recipient's details and initiate the transfer either online or through a physical agent. The remittance service then converts your funds into Indian Rupees at the prevailing exchange rate and deposits the money into the recipient's bank account or offers cash pickup options, depending on their preferences.Determining the Best Time to Send Money to IndiaTiming is crucial when it comes to sending money to India, especially considering the fluctuating nature of exchange rates. Here are some tips to help you identify the optimal timing for your remittance:Consult Currency Experts or BrokersEngage with currency specialists who can provide personalized advice on when to send money to India. These experts offer insights into market trends and can help you navigate currency fluctuations to secure the best exchange rate for your transfer.Stay VigilantMonitor market trends and exchange rates yourself to identify favorable opportunities for sending money to India. Sign up for email or text alerts through CompareRemit to stay informed about rate fluctuations and compare remittance services to find the most competitive rates. With CompareRemit, you even have the capability to set preferences so you will be notified when the exchange rate you prefer is being offered. Visit our USD to INR Forecast for 2024 to view the forecasted exchange rates for the whole year to gauge an understanding of when you can expect to find the most optimal exchange rate. Utilize Historical DataAnalyze historical market data to understand past currency fluctuations and predict future trends. By studying historical patterns, you can make informed decisions about when to initiate your money transfer to India. Using CompareRemit’s Compare Page, you can stay informed on the historical trends of exchange rates across the top money transfer services. Explore Promotions and DealsKeep an eye out for promotional offers and deals from remittance services that can help you save money on your transfer. Whether it's discounted transfer fees, referral bonuses, or free transfers for exceeding a certain amount, taking advantage of these promotions can enhance the value of your remittance.Visit the CompareRemit Coupons Page to check for coupons and promotional deals that you may be interested in. Balance Urgency with SavingsWhile urgent financial needs may arise, exercising patience can lead to more favorable exchange rates and cost savings. Take the time to compare exchange rates and transfer fees across different remittance services to ensure you're getting the best deal for your money.ConclusionSending money to India is a meaningful way to support your loved ones, but timing your remittance correctly can significantly impact its value. By leveraging the resources available through CompareRemit and following these tips, you can navigate the complexities of international money transfers with confidence, ensuring your remittance reaches its destination at the best possible time and rate.

Money Management
How to Make the Most of Your Money Transfer

In today’s world, money transfers are not just about sending money abroad. They serve as a vital link connecting families across borders. For immigrants, sending money back home is not just a transaction; it's a lifeline, a means of support, and an investment in the future. Whether you're sending money to India, the Philippines, or any other part of the globe, understanding how to make the most of your remittances is essential. In this comprehensive guide, we'll delve into the intricacies of remittance, how to leverage CompareRemit for the best services, and practical advice for managing your transferred funds wisely.What is Remittance? Remittance, at its core, is the act of transferring money from one country to another, typically by migrant workers to support their families and loved ones back home. It's a tangible expression of love, care, and responsibility, providing essential support for daily expenses, education, healthcare, and more.How to Use CompareRemit for the Best Money TransferCompareRemit stands as a trusted ally for individuals seeking to send money home efficiently and affordably. By offering a comprehensive comparison of top remittance services, it empowers users to make informed decisions based on factors such as exchange rates, transfer fees, and delivery options. With CompareRemit, users can navigate the complex landscape of remittance services with confidence and ease.Understanding the Transfer ProcessTransferring money through a remittance service involves a series of steps, each of which can impact the value of your remittance. Exchange rates, transfer fees, and the final destination of funds all play critical roles in determining the overall value received by the recipient.Exchange RatesExchange rates dictate the conversion of currency, directly influencing the amount received by the recipient in their local currency. Keeping an eye on exchange rate fluctuations and timing your transfers strategically can help maximize the value of your remittance.Transfer FeesWhile some remittance services charge a flat fee for each transaction, others operate on a commission-based model, deducting a percentage of the total amount sent. Understanding these fee structures is essential in optimizing the value of your transfer.Final Destination of FundsWhether funds are deposited directly into a recipient's bank account or made available for cash pickup can impact accessibility and convenience. Consider the preferences and needs of your recipient when selecting a delivery method.Smart Money Management Strategies:Once your remittance reaches its destination, the journey towards financial success continues. Here are some practical tips to help you make the most of the money received:Budgeting:Create a comprehensive budget that allocates funds towards essential expenses, savings, and discretionary spending. Tracking your expenses ensures that your money is utilized wisely and efficiently.Saving for the Future:Prioritize saving a portion of your remittance for future needs and goals. Whether it's creating an emergency fund, saving for education, or investing in retirement, setting aside funds for the future provides financial security and peace of mind.Investing in Education or Small Business Ventures:Consider using a portion of your remittance to invest in education or entrepreneurial endeavors. Education opens doors to opportunities, while small businesses can generate sustainable income and foster economic independence.Managing Money for Elderly Parents:For those managing money on behalf of elderly parents or family members, prioritize their well-being and financial security. Set up automatic transfers, establish emergency funds, and seek professional advice when necessary to ensure their needs are met.Seeking Financial Advice:When in doubt, don't hesitate to seek guidance from financial advisors or money managers. These professionals can provide personalized insights and strategies tailored to your unique financial situation and goals.In conclusion, maximizing the value of your remittances requires careful planning, informed decision-making, and effective money management. By leveraging CompareRemit’s compare tool, navigating the transfer process wisely, and implementing smart money management strategies, you can ensure a brighter financial future for yourself and your loved ones.

Travel Insurance
How to Save on Travel Insurance (2024)

Travel insurance is an essential aspect of trip planning, providing financial protection against unforeseen events such as trip cancellations, medical emergencies, and lost luggage. However, finding the right travel insurance plan at an affordable price can sometimes be challenging. In this comprehensive guide, we'll explore strategies to help you save money on travel insurance without compromising on coverage or quality. Understanding Travel InsuranceBefore diving into ways to save money on travel insurance, it's crucial to understand what travel insurance entails. Travel insurance typically offers coverage for various aspects of your trip, including trip cancellation or interruption, emergency medical expenses, baggage loss or delay, and travel assistance services. By purchasing travel insurance, travelers can mitigate financial risks associated with unforeseen events during their journey.Why Some Plans Cost More Than OthersThe cost of travel insurance can vary depending on several factors, including:Coverage Options: Comprehensive plans that offer extensive coverage for emergency medical events during one’s travels tend to command higher premiums than limited coverage plans, but offer more overall benefits and protection.Destination: Traveling to countries with higher healthcare costs or greater risks of natural disasters may result in higher premiums.Medical Costs: The cost of travel insurance is closely tied to the healthcare expenses in the destination country. Countries with higher medical costs often have correspondingly higher insurance premiums.Trip Duration: Longer trips typically incur higher insurance premiums due to increased exposure to potential risks.Age: Older travelers may face higher premiums due to increased health risks and potential for pre-existing medical conditions.Coverage Limits: Plans with higher coverage limits and lower deductibles may have higher premiums.Add-Ons and Optional Coverage: Additional coverage options such as adventure sports coverage, rental car protection, or cancel for any reason (CFAR) coverage can increase the cost of insurance.Tips for Securing Affordable Travel InsuranceIf you are apprehensive about giving away your money on travel insurance, there are many ways to cut down on the cost of the insurance plan.Here are some tips to save money on your travel insurance plan.Compare PlansConduct thorough research and compare quotes from multiple insurance providers to find the most suitable plan at the best rate.Utilize online comparison tools to evaluate coverage options, premiums, and exclusions across multiple plans. Websites like VisitorsCoverage allow you to compare prices and coverage options from various insurers, allowing you to make an informed decision for your needs.As shown here, comparison sites, like VisitorsCoverage, allow you to compare and contrast various travel insurance plans based on your custom needs. You can customize the plans available to you by specifying your coverage amount, plan features–including COVID-19 coverage and pre-existing conditions coverage–available, and additional coverage options.If you are considering visiting multiple comparison sites, let us save you the hassle. Insurance prices are regulated. This means that the same plan with all conditions remaining constant will not have a lower price at other agents, travel insurance aggregators, the insurance company issuing the plan, or any other source.However, similar plans by different companies may have a price differentiation depending on the customizations you enter, hence it is critical to evaluate inclusions and exclusions in the policies.Only Buy Coverage You NeedDon’t pay for coverage you don’t need. It is vital that you customize your plan to get the most specific coverage for you. Luckily, modern-day comparison tools and insurance providers allow us to do just that. When purchasing your policy, a big money saver can be avoiding purchasing unnecessary add-ons or upgrades that may inflate the cost of your policy. Assess your travel needs and opt for coverage that aligns with your specific requirements.It is important to know what exactly your travel insurance plan entails and what it covers. Make a list of things that you need to be covered depending on the types of trips you will be taking and if there are any specific medical conditions that may need attention.The details are always in the fine print. Don't just look at the premium value, read the policy document for inclusions and exclusions in the plan. In the long term, this will save you money and trouble.However, there is a strong caveat to this. While opting for the cheapest plan may seem cost-effective initially, inadequate coverage could lead to significant expenses in the event of a claim. Should you run into an emergency that is not covered, you will have to pay out of pocket. At the end of the day, the cheaper plan may end up costing a whole lot more. Read policy documents thoroughly to understand coverage details and exclusions before making a decision.Bypass Travel Site OffersWhen booking flights or accommodations, you may encounter offers to purchase travel insurance directly from the booking site. Skip the checkbox for travel insurance on these booking sites. These plans often come with commissions and may not provide tailored coverage. For optimal savings and personalized coverage, opt for a separate plan from reputable insurers.Sometimes, these add-on plans might seem like a good deal. However, keep in mind that, many times, these plans try to be a one size fits all solution. The amount of premium will vary depending on who is buying the plan. For example, an older person traveling with medical issues will pay more premium than a young person traveling with no medical issues. Using a “one size fits all” option may lead to a situation where you have to pay out of pocket in the case of an uncovered medical emergency. Use Your Credit Card Travel InsuranceFor those looking for trip insurance rather than travel medical insurance, there is a great option you may already be accessing without realizing. Some credit cards offer complimentary travel insurance benefits, such as trip cancellation, trip interruption coverage, and baggage delay protection. Cards such as Chase Sapphire Reserve are well known for their comprehensive travel insurance coverage. Review your credit card's terms and conditions to understand the extent of coverage provided and consider leveraging these benefits as a supplement to your travel insurance plan.You could always use travel protection offered by your card as a top-up to another policy that covers the emergency medical expenses. There is no reason to spend extra money on trip insurance when you are getting the benefits as a cardholder.Utilize Review WebsitesExplore review websites and rating platforms to gain insights into the products and services offered by leading travel insurance companies. Reading reviews can help you make informed decisions and ensure you receive excellent customer service.There are several review websites and rating websites such as VisitorInsuranceReviews.com, Trustpilot where you can read in-depth on the products and services offered by leading travel medical insurance companies.It is also important that you have access to excellent customer service from your insurance providers to get the best value for your money. Even if you save a few dollars in insurance costs but face unresponsive customer service for hours on end, the situation gets more costly.VisitorsCoverage is a one-stop shop for travel issuance which also offers an award-winning, industry-leading customer service team. They also offer AI-based customer support for those wanting quick and easy help. You can get in touch with the call team via WhatsApp messages and email. Or call them using their toll-free line number: 1-866-384-9104.Evaluate Optional Riders Such As “Cancel For Any Reason”"Cancel for Any Reason" is an upgrade option that lets you cancel a trip for any reason for 40%-75% of your insured trip costs. This option can help you save a lot of money should you run into a reason your trip is canceled. While these riders offer added flexibility, they also come with additional costs that may not be worthwhile for every traveler. But you have to pay extra to include it in your plan.Insurance companies usually have a list of the covered reasons in “Cancel For Any Reason” trip insurance. These include terrorism, natural calamities, traffic accidents, and more. If it is not listed, it will not be covered.Sift through the list with a fine toothed comb to see which scenarios are covered. Most travelers find their trip cancellation reasons covered. If you don't need the optional "Cancel for any reason", don't add it.Some plans have promotional offers that may include this coverage if you purchased the plan within a certain time frame. Make sure to check for any promotions and offers like this. Consider Annual Multi-Trip PlansFor frequent travelers, annual multi-trip insurance plans offer significant savings compared to single-trip plans. With coverage extending for an entire year, these plans provide convenience and cost-effectiveness for individuals who travel overseas multiple times a year.Avoid Insuring Refundable CostsIf your travel expenses, such as airfare or hotel bookings, are refundable, there's no need to purchase insurance for them. If you insure a refundable cost and try to seek reimbursement in the event of cancellations, you will need to show proof that certain prepaid costs were non-refundable or your claim will be denied. Instead, focus on insuring non-refundable expenses to minimize coverage redundancy and reduce premiums. This will reduce the coverage and lessen the premium of the travel insurance that you plan to purchase. It is cost-effective to know which trips need to be insured and when you don't need a policy in the first place.While the prospect of traveling without insurance can be daunting, finding affordable travel insurance doesn't have to be. By following these practical tips and strategies, you can secure comprehensive coverage without breaking the bank. Remember, investing in travel insurance is an investment in peace of mind, ensuring that you're financially protected against the unexpected twists and turns of travel. Safe travels!Get Quote And Save On Travel Insurance

Download the CompareRemit App
Download the CompareRemit App
Personalize your CompareRemit experience with your preferred corridor and receive target exchange rate notifications, seamless transitions to partner apps, and real-time comparisons of top remittance providers at your fingertips.
Personalize your CompareRemit experience with your preferred corridor and receive target exchange rate notifications, seamless transitions to partner apps, and real-time comparisons of top remittance providers at your fingertips.

Get Listed or Advertise

Download Our Free App

Try our faster, enhanced mobile app for a better experience

CompareRemit App