A Non-Resident Indian has multiple investment options in India. You can open a Fixed Deposit with potential tax benefits. India is one of the countries offering high interest and returns on them. Many NRIs have invested in fixed-income instruments like FDs to earn high returns and build a secure future.
The Indian investment landscape is dynamic. The government announces frequent policy changes to curb inflation and boost growth. The NRI Fixed Deposit rates also get influenced due to them. The following are some points to note before opening this account:
Interest rates
One of the first things to consider is the NRI FD rates. Most banks offer attractive interest on different types of deposits. The interest differs depending on the deposit type, investment amount, and tenure. Also, note that every bank offers varying interest rates on their deposits. Look for the options available and suitable for you while comparing the interest rates before opening the Deposit Account.
Repatriation
Not all NRI Fixed Deposits offer full repatriation of funds. Foreign Currency Non-Resident and Non-Resident External FDs are fully repatriable, while Non-Resident Ordinary Fixed Deposits have restricted repatriability. You can repatriate only up to USD 1 million in a financial year.
The principal amount is non-repatriable and can be used only for local payments. However, the interest earned is fully repatriable. Other current incomes, such as pensions, dividends, rent, etc., are also repatriable, subject to producing the appropriate certificate from a chartered accountant.
Taxes
While the interest earned on investments in India is usually taxable, you can open NRE FD or FCNR Deposits, where the interest you earn is not liable to tax. However, if you open NRO FDs, the interest earned is taxable in India. If you transfer funds overseas, opening Fixed Deposits can get you tax benefits.
Tenure
The FD duration determines the interest rate offered by the bank. Ensure you refer to the interest rate chart on their app and online portals and compare them. The minimum tenure is seven days to 10 years. Whether you open NRE or NRO FD, opting for a bank offering higher interest rates is recommended.
DTAA benefits
Many NRIs living in foreign countries have a source of income in India. In many cases, this income earned in India is subject to tax in India as well as overseas. The NRI would be subject to double tax for income earned in India. Therefore, if you are opening an NRI Deposit in a country that has signed the Double Taxation Avoidance Agreement with India, you should offer the declaration for every financial year.
Final thoughts
Once you open an NRI Account with the bank, you are directly eligible to open NRI Deposits from the app or Internet Banking platform. You may also submit FD or account opening form at the nearest bank branch. Contact your dedicated relationship manager for further assistance.
