Five Things To Consider Before Investing In A NRI Fixed Deposit

The Indian in you always has the propensity to invest in their home country. The rates of interest are very high in our country when compared to other nations. That makes India the best place to save. The DTAA or the Double Tax Avoidance Agreement tax rates allow the NRI Fixed Deposits to be very attractive. The tax rates are as low as 5% if the remittance comes from a few select countries. If you can provide a declaration that DTAA is applicable to you, you can get the best FD rates.

Most financial institutions will provide the best services to NRI clients. Not only Fixed Deposits, but you also access the banking portal where you can interact with the representative who can get you statements of accounts within minutes. The process is smooth and seamless.

NRE and NRO Accounts

NRI’s can invest in Fixed deposits through both NRE and NRO accounts. The Non-resident External Account or NRE allows you to deposit money in a foreign currency. The interest is tax free and both the interest and the principal are repatriable fully. The currency rate fluctuations are applicable as usual.

NRO Fixed deposits are for NRI’s in India. The tax rate is 30% as per the income tax laws of 1961. You can repatriate the interest fully but not the principal amount. The best part is that there are no risks about the exchange rate. So, if you are an NRI with income in Indian Rupees from any source this is the best avenue for you to invest your hard earned money in your home country.

NRE fixed deposits

It is one of the most effective ways to invest foreign currency in India. You can earn high returns and pay lower tax rates. The FD can be used to take a loan of 90% of the accrued amount. As the tenure is from one to ten years it is a good way to park your investments. You can keep up to two crore in an NRE account. The minimum amount is usually Rs 25000.

The operation of the account is also simple. You can present foreign currency in cash when you reach India, or you can remit the funds through an existing account or even more simply many banks allow direct remittance of the amount to them. This makes your job simpler when you want to find the best FD rates in India.

Tips to remember

  • Joint NRE accounts can only be opened in conjunction with another NRI. You cannot attach your India based family in the account.
  • You get to open a tax free NRE account where you can deposit foreign currency directly.
  • Your withdrawals are in INR only.
  • Your investment is a little volatile as the account follows the current exchange rates. Currency valuations are dynamic, so you have to take a moment to track the FOREX rate before remitting or withdrawing money.
  • The account can only be opened and operated with the money earned abroad. You cannot park income from India in this account.
  • Returns are lower than equity but fd is the safest investment option.