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NRE Account Guidelines: Avoiding the Enforcement Directorate

Updated on April 12, 2022 02:21 pm
Clipboard with NRE Account

It is common for a Non-Resident to open an NRE Account or other similar accounts, with a bank in India and transfer their earnings from their foreign country into these accounts. NRI's are not required to pay taxes in India on earnings that they received outside of India however these guidelines are frequently abused. An influx of cases of money laundering and unexplained funds in NRE accounts has prompted the Enforcement Directorate of India (ED) to crack down on irregularities in NRE account activities.

In one specific example, an individual transferred a large number of funds into a family members' NRE account. Upon investigation by the ED however, it was found that these funds were commission income which was generated abroad. He was then asked to furnish the overlaying contracts for these commission incomes and was penalized accordingly.

As an NRI with an NRE account, it is very important that you are able to explain the source of your funds in your account should you be contacted by the ED. Failure to explain the source of your funds in your account is considered to be a violation and can result in tax penalties.

In order to avoid being questioned by the ED in regards to NRE account activity, it is highly recommended that all NRI's protect themselves in the following ways:

  • Distinguish between current account transactions from capital account transactions.
  • Inform all applicable parties regarding any changes in residential status.
  • Distinguish between Person Resident in India & Person Resident Outside India.
  • Keep track of investments made in India from Rupee funds in India. For example, when their residential status is that of a Resident and the investments made from funds remitted from abroad and when their residential status is that of a non-resident.
  • Understand the sale proceeds of movable and immovable assets in India.
  • Comply with statutory guidelines for filing documents and reporting requirements for different transactions.
  • Do not enter into capital account transactions that are prohibited or are not covered under general provisions of permission.
  • Do not enter into current account transactions that are prohibited or restricted.
  • Avoid participating in any " net - off " transaction with a resident individual.
  • Never instruct or allow a resident to make an outward transaction on your behalf.

The Foreign Exchange Management Act (FEMA) extends to all of India and makes offenses related to foreign exchange, civil offenses. Such offenses are not taken lightly by the Indian government, which is why it is imperative that these guidelines are abided by and taken seriously as any violations will likely result in penalties and legal action. Running into issues with your NRE account and have to deal with the ED can be extremely stressful and nerve-wracking, which is why it is important to follow the above guidelines in protecting yourself from such circumstances.

Now that we've covered how to avoid any issues with your NRE account, find the best NRE account for you by using CompareRemit's NRE comparison page.

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As Diwali approaches, many NRIs (non-resident Indians) around the world send money to their families in India to celebrate this festival of lights. However, holiday seasons often see a rise in online scams, particularly in money transfer services. Scammers target people eager to send money home, taking advantage of the high volume of remittances and sometimes urgent deadlines.This article will provide you with essential tips on how to safely send money internationally during Diwali, helping you avoid common scams and use reliable services. Using platforms like CompareRemit can protect you from fraud by allowing you to compare trustworthy money transfer providers, see the best rates, and check real user reviews to make sure your funds are sent securely and cost-effectively.Why Scams Increase During DiwaliScammers are particularly active during Diwali due to the increased number of people sending money to India. 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These websites are designed to steal your personal information, so always verify the sender before clicking on any links.Fake WebsitesSome scammers create fake websites that look nearly identical to genuine money transfer services. These fake sites are often promoted through social media ads or search engines. Be cautious and ensure you are on the official website by double-checking the URL and looking for “https” at the beginning of the website address. Using a comparison tool like CompareRemit can also help ensure that you are choosing only verified money transfer providers.Phone ScamsPhone scams involve scammers calling you and pretending to be from your bank or money transfer company. They may claim that your account is at risk or that there is an issue with your transfer. These scammers often try to create urgency, making you feel pressured to provide personal information. 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Diwali 2024_A1
The Impact of Diwali on Exchange Rates: What to Expect in 2024

Diwali is one of the most important festivals for millions of people around the world. It is a time of celebration, family gatherings, and giving gifts, including sending money back home. For many people living abroad, sending money to India during Diwali is an important tradition, and getting the best exchange rate can make a significant difference. In this article, we’ll explore how exchange rates have historically changed during Diwali and provide insight into what you can expect for Diwali 2024.We’ll also show you how to use CompareRemit to find the best Diwali money transfer promo and help you save money on fees. Whether you’re planning to send money home for Diwali or looking for the cheapest way to send money to India, our goal is to help you make the best financial decisions when you send money during this festive season.How Diwali Affects Exchange RatesDiwali is one of the busiest times for money transfers, especially for people sending money to India. Every year, millions of people send money home to support family, friends, and businesses during this important festival. This high demand can impact exchange rates.Historically, exchange rates during Diwali fluctuate due to increased demand for Indian rupees (INR). People sending money to India often notice that exchange rates might not be as favorable as during other parts of the year. This is because, as more people send money home for Diwali, the demand for the rupee goes up. When demand increases, the value of the rupee strengthens, which means you get fewer rupees for every dollar, euro, or pound you send.Tip: If you are planning to send money to India during Diwali, it is essential to monitor exchange rates and look for the best time to transfer money when rates are more favorable. Try to avoid sending money at the last minute, as the closer you get to the day, the higher the chance the conversion rate will not be in your favor. Historical Exchange Rate Patterns During DiwaliTo understand what to expect in 2024, let’s first look at some past trends. Over the last few years, exchange rates during Diwali have shown consistent patterns:2019-2021: During these years, the value of the rupee strengthened slightly during Diwali, mainly due to high remittance flows. However, global economic factors such as inflation and oil prices also influenced the exchange rate.2022: In 2022, the rupee weakened against the US dollar leading up to Diwali due to global uncertainty and rising inflation rates in India. However, the demand for remittances slightly 2023: This year, the rupee remained relatively stable, though the global economy’s struggles with inflation still affected exchange rates.These patterns show that while Diwali typically leads to a slight increase in the rupee’s strength, external economic factors (such as inflation, oil prices, and global markets) play a big role in the exchange rate as well.Predictions for Diwali 2024Looking ahead to Diwali 2024, we can expect some similar trends. While exchange rates fluctuate depending on several factors, the usual rise in money transfers to India for Diwali will likely cause the rupee to strengthen slightly again. However, we must consider the ongoing global economic conditions, including inflation and currency instability.As we approach the Diwali season, you might see:Slight strengthening of the rupee: More people will be sending money to India during Diwali, which might cause the rupee to rise slightly against major currencies like the US dollar, euro, or pound.Potential volatility: External factors like inflation, interest rate changes, and oil prices could create volatility in exchange rates. It is important to watch the trends in the weeks leading up to Diwali.Tip: If you’re planning to send money to India for Diwali, it’s a good idea to start watching exchange rates early. Look for the best time to transfer when the rates are more favorable.Using CompareRemit to Find the Best Money Transfer Deals for DiwaliWhen sending money during Diwali, finding the best deal can save you a lot of money. CompareRemit makes it easy for you to compare different money transfer services based on exchange rates, fees, and transfer times. Even better, during Diwali, many companies offer special promotions and discounts, so it’s important to check which service offers the best Diwali money transfer promo.Tip: CompareRemit also shows you which companies are offering money transfer deals for Diwali, so make sure to use this feature to find the most cost-effective way to send money.Best Ways to Send Money to India for Diwali 2024There are many ways to send money to India during Diwali, and the method you choose can affect how much money your recipient gets. Some of the best ways to send money from the US to India include:Online Money Transfer Services: These services usually offer better exchange rates and Diwali money transfer promotions. Companies like Wise, Remitly, and Instarem are popular choices. Banks: Banks are a fantastic option for those looking for a trustworthy service and convenience. Many banks, like ICICI Bank and SBIC, allow you to do a direct-to-bank transfer or even cash pickups – allowing your loved ones to customize how they would like to receive money. However, remember that banks may not offer the most competitive exchange rates during Diwali.Digital Wallets: Services like PayPal or Google Pay allow you to send money directly to a recipient’s bank account or mobile wallet, making it a convenient option during the busy Diwali season. Note that these services most probably will not offer any sort of Diwali promotion. Conclusion: Make Smart Money Transfers During DiwaliDiwali is a wonderful time to celebrate with family and friends, and sending money home is a meaningful way to support your loved ones during this festive season. By understanding how exchange rates change during Diwali and using CompareRemit to find the best deals, you can ensure that your money goes further. Don’t forget to take advantage of Diwali money transfer promos and compare different services to get the best rates and save on fees.

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