With so many people leaving the country to work abroad or living in other countries for extended periods of time a common question lots of NRI’s are asking is how can they invest in fixed deposits in India? There is no doubt about the fact that fixed deposits have been a favourite choice for investment in India for a long time and these days, with lakhs of people living and earning outside the country it NRE deposits have become increasingly popular.
So what are NRE fixed deposits? NRE fixed deposits are just like regular term deposits where NRIs use NRE accounts to open fixed deposits. The basic requirement for NRE deposits are NRE accounts that can be opened with various banks. These accounts can be opened without the permission of the RBI and are virtually tax free.Eligibility criteria for NRE fixed deposits
To be eligible to open NRE fixed deposits, you need to have NRE accounts. You also need to be a Non Resident India (NRI) or a Person of Indian Origin (POI). To open an NRE deposit you might need documents like your passport, a valid work visa and address proof.Features of NRE deposits
NRE deposits come with a wealth of features that are meant to make banking that much easier for the customers. Some of these features are:
The interest earned on an NRE deposit depends on the duration for which the deposit is opened but it can easily be up to 8% per annum or more, depending on the banks policy. As far as taxes on these deposits are concerned you should know that as of now interest earned on an NRE deposit is not taxable in India.
Word to the wise, close an NRE fixed deposits before 1 year is over and it could result in some banks not paying any interest on it, so try to avoid premature closure of these deposits.Benefits of NRE deposits
There are many benefits to having NRE fixed deposits in India. Some of these are:
The only down side to an NRE fixed deposit is that if the bank offers special interest rates for senior citizens, they would not be applicable to NRE deposits.