NRE Accounts: Transfer And Remittance Options Explained
September 23, 2024
As a Non-Resident Indian (NRI), managing your financial commitments in India can be challenging. To make it easier, you can open an NRE (Non-Resident External) account, which allows you to conveniently deposit your foreign earnings in India and withdraw them in Indian rupees. One of the significant advantages of an NRE Account is the ability to remit funds back to India without any restrictions.
In this article, we will explore the benefits of an NRE account and provide valuable insights on how to transfer money to and from these accounts, as well as various NRE account remittance options.
Benefits of an NRE Account
1. Exempt from Taxes
The interest earned on the principal amount in an NRE savings account is tax-free. This means that you can grow your savings without worrying about taxes eating into your returns.
2. Easy Transfers
With an NRE account, you can transfer both the principal amount and the interest earned to another foreign bank account without any restrictions. Additionally, you can transfer funds quickly from one NRE account to another or even to an NRO (Non-Resident Ordinary) account under certain terms and conditions.
3. Simplify Investments
You can utilise funds from your NRE account to make investments in India, whether it's in equity or debt mutual funds. This flexibility allows you to grow your wealth while taking advantage of investment opportunities in the country.
4. Joint Account Holding
If both account holders are NRIs, you can opt for joint account holding in an NRE account. You can also authorise a resident family member to operate the account on your behalf. However, it's important to note that joint resident Indian account holders can be added on a 'former' or 'survivor' basis, and they must be related, such as a parent.
5. Easy Withdrawal
NRE accounts offer convenient withdrawal options. With an international debit card, you can access your funds 24/7 from anywhere in the world. Additionally, internet and mobile banking services enable you to manage your money online, making transactions hassle-free.
6. Excellent Interest Rates
NRE accounts provide attractive interest rates. For example, Ujjivan SFB offers high-interest NRE Savings Account that comes with multiple benefits. This helps you make the most of your foreign earnings.
What are the Various NRE Account Remittance Options
Please note that the transfer process illustrated here is for general informational purposes only. For transfer of funds from NRE Account or rather NRI Account, please contact Ujjivan Small Finance Bank at 1800 208 2121 or write to us at customercare@ujjivan.com.
1. Transfer Money from One NRE Account to Another
Transferring money from one NRE account to another is a straightforward process that requires a few simple steps:
- Collect information about the NRE account-
Gather the necessary details of the recipient's NRE account, including their bank name, branch address, account number, and Indian Financial System Code (IFSC).
- Pick the preferred method of remittance-
Decide how you want to transfer the funds between the NRE accounts. You can choose between online banking, visiting a bank branch in person, or using a trusted money transfer app.
- Determine the amount you wish to transfer-
Decide on the amount you wish to transfer from your NRE account to another NRE account. Ensure that you have sufficient funds available in your account.
- Verify bank details and transfer the decided amount
Double-check the recipient's bank details and the transfer amount to avoid any errors or delays. Ensure that all information is accurate before proceeding with the transaction.
- Complete the payment and finish the transaction
Make the payment for the transfer using your preferred method, such as through net banking or by providing cash at the bank branch. Follow the instructions provided by your chosen transfer method. Submit all the necessary information and initiate the transfer according to the instructions provided by your bank or money transfer provider. Keep a record of the transaction for future reference.
2. Transfer Money from NRE to NRO Account
As an NRI, you may also need to transfer funds from your NRE account to an NRO Account, which is used for managing your income earned in India. Here's how you can do it:
- Determine the preferred method of remittance
Choose the most convenient way to transfer money from your NRE account to an NRO account. Options include online banking, in-person transactions at a bank branch, or using a reliable money transfer app.
- Have the details of the NRO account ready
Provide the necessary details of your NRO account, including the bank branch's IFSC code, which ensures smooth and accurate processing of the transaction.
- Decide on the amount to transfer
Decide on the amount you want to transfer from your NRE account to the NRO account. Consider any specific financial requirements or obligations that necessitate this transfer.
- Provide additional documents if required
In some cases, you may be required to provide additional supporting documents for the transfer. This could include proof of income, tax-related documents, or other relevant paperwork. Ensure that you have these documents ready if needed.
- Verify and confirm the transaction details
Double-check all transaction details before proceeding with the transfer. Make sure that you have entered accurate information and that all amounts and recipient details are correct. Accept any terms and conditions associated with the transaction and enter any One-Time Password (OTP) required for verification purposes. Once you have completed these steps, your payment request will be processed.
3. Transferring Money from NRO to NRE Account
Earlier, transfer of funds from NRE to NRO accounts was strictly prohibited. However, on 7 May 2012, the Reserve Bank of India (RBI) permitted transfer of funds from NRO account to NRE account subject to certain terms and conditions.
Rule 1: You can transfer only up to USD 1 million in a financial year.
Rule 2: NRO accounts attracts tax. So, it's necessary to pay your taxes before transferring the amount.
Rule 3: You need to submit signed cheque/ letter for funds transfer. Additionally, you need to provide FEMA declaration which states that you're eligible to transfer funds from NRE to NRO account as per the FEMA regulations. Also, you will have to submit form 15CA and 15CB.
What is Form 15CA?
As per Section 195, every person making a payment to Non-Residents (not being a Company), or to a Foreign Company shall deduct TDS if such sum is chargeable to Income Tax and the details are required to be furnished in Form 15CA. A person responsible for making such remittance (payment) has to submit the form 15CA, before remitting the payment.
What is Form 15CB?
Form 15CB is a certificate to be furnished by an Accountant in cases where any payment / aggregate of payments exceeding ₹5 Lakh in a financial year, chargeable to income tax is made to a Non-Resident, not being a company or to a Foreign Company, and a certificate from the AO u/s 195 / 197 is not obtained.
In form 15CB, a CA certifies the details of the payment, TDS rate, TDS deduction and other details of nature and purpose of remittance. In other words, Form 15CB is the Tax Determination Certificate in which the CA examines a remittance with regard to chargeability provisions.
Final Thoughts
In conclusion, an NRE account offers numerous benefits for NRIs, allowing you to easily manage your financial commitments in India and making non-resident remittance simple and easy. With tax exemptions, free transferability, and competitive rates, an NRE account provides a secure and convenient way for non-residents to handle their finances.
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