India is one of the few countries that offer high returns on financial instruments globally. A Fixed Deposit is one of them. Therefore, global Indian investors prefer growing their wealth in India. With more Indians shifting abroad, such investments are soaring. The reason for this is an account meant for Non-Resident Indians called an NRI Deposit.
This account lets you park your foreign and Indian income in your home country. You can do this through a Non-Resident External, Non-Resident Ordinary, or Foreign Currency Non-Resident Account. The FD rates for FCNR, NRO, and NRE Fixed Deposit are as high as resident FDs. This lets you earn higher returns on your saved-up capital and use it to hedge against market volatility. But before that, consider these factors before initiating the deposits:
- Documentation process
You need to fulfil the general KYC requirements to open the NRE/NRO Fixed Deposit. This entails passport photos, identity proofs, address proofs, etc. Also, prove your NRI status. For this, you need to submit the following:
- Indian passport
- Visa copy
- Work permit
- Overseas address proof, etc.
Note that these documents should be self-attested. The foreign embassy or a local notary should also authorise them.
- Interest rates
You can choose between NRE and NRO FDs based on your financial needs. Irrespective of your choice, both offer lucrative returns without any risks. This, however, also depends on the bank you choose. Hence, you should check the interest rates offered for the NRE Deposit. Banks specify this on their website to help you compare easily. They also provide valuable tools like an interest calculator to guide you properly.
- Repatriation
You can easily manage the funds in your NRI Accounts. However, the fund transferability depends on the NRI FD you choose. Therefore, ensure you find out the same for an informed decision. For example, an NRE FD lets you repatriate funds into your Overseas Account anytime.
But, like an NRO Account, you can only conduct transfers up to a specific limit in an NRO FD. The FCNR Deposit accepts funds in foreign currency. Hence, it is entirely repatriable.
- Taxation
An important thing to consider as an NRI is how much you spend on fund transfers. This aspect is important in your investment choices as it goes beyond your opening charges. The most influential factor in this is tax. In most cases, an NRE Fixed Deposit Account is exempt from taxes. But NRO Deposits are subject to a tax deduction of up to 30%. As for the FCNR Accounts, both the principal amount and interest are entirely exempt from taxes.
- Term
Term Deposit durations are crucial. They determine the interest you earn on the funds. The longer the tenure, the higher the returns you get.
