Written by : Rajiv Singh
A Chartered Accountant in UK with 15+ years of experience in FinTech Consulting, Accounting & International Taxation. I enjoy being a Social, Foodie and Father of two young children, reachable at linktr.ee/RajivSingh.
India is a land of enormous choices and opportunities, especially when it comes to finance and investments. Whether you are an NRI or a resident of India, you have several financial investment options. Foreign Currency Non-Resident (FCNR) deposits have been among the most favorite investment options for Indian NRIs in the recent past. What makes an FCNR deposit account so popular is that it allows you to keep money in your desired currency that too tax-free. For a better understanding of the FCNR deposit account and its advantages, let's dive into the nuances of the same:-
One of the most bankable investment options for Non-resident Indians is the Foreign Currency Non-Resident -FCNR Account.
FCNR Account is another variation of fixed deposit account that you, if you're an NRI, can open in India in the currency of your current resident country. This FCNR Account facilitates you to earn a fixed rate of interest until maturity. But, you may wonder what might happen if your residential status changes to that of an Indian resident subsequently? Well, the answer is simple. Much to your delight, in case of residency change to Indian, you can continue to hold your already existing FCNR deposit account until maturity but at a contracted interest rate.
Of the many benefits, the biggest advantage of holding an FCNR (B) Account is that risks of exchange rate changes get mitigated since there is no change in the type of currency. For example, if you open an FCNR (B) Account and deposit USD 50,000, you will be able to withdraw the same, along with the earned interest, without conversation. If you want to save money on taxes as well as get competitive interest rates on your deposit, an FCNR account is the ideal choice for you in India. Since the funds are freely repatriable so that rules out the loss due to currency conversion rates. Even if you wish to discontinue in between, RBI allows premature withdrawal. The procedure and charges vary from bank to bank.
Well, you might ask why have we mentioned FCNR (B) everywhere and what is the difference between FCNR (A) account and FCNR (B) account? The major contrast between the two types of FCNR accounts is that FCNR (A) was replaced by the (B) version in 1993. You can deposit your earnings from any corner of the world through the latter and enjoy competitive tax-free interest on them with full repartitability.
What's better than having a tax-saving investment option? With Gotaxfile, you can open an FCNR deposit anytime and from anywhere at your convenience.
Opening an FCNR account can be a cakewalk if done right. The basic procedure includes deciding upon an appropriate bank and contacting them through internet banking or visiting their nearest branch. Keep in mind that it should be freely convertible foreign currencies. Another point to be noted is that different banks and currencies have different FCNR interest rates.
The fund's transfer is never an issue in FCNR accounts. You can easily transfer money into your FCNR account from your NRE (Non-Resident External) accounts in India and any foreign Currency Account outside India. In the case of transfer of funds from an NRE account in India, the foreign currency equivalent of the amount to be transferred gets calculated at prevailing exchange rates. The amount is then deposited in the FCNR account. However, one must consider that RBI does not allow funding of FCNR accounts from any third-party account.
Opening an FCNR (B) account in India will require several documents and form filling for various functions. Some of the important ones comprise:
Account opening form
Account closure form
Request form for an additional savings account/fixed deposit account
In case you want to add or remove a nominee or make any other changes in your FCNR account, there are different forms for that:-
These were some of the forms, applications, and documents that you may need in the process of opening an FCNR account in India.
Gotaxfile offers excellent facilities and services in the fields of finance, accounting, and taxation. We have an extremely experienced, skilled, and trained team of professionals. They would assist you greatly in all matters relating to various kinds of bank accounts and loan transactions and the underlying taxation rules. NRIs can avail of specialized consultancy for their distinct finance and investment requirements as well. Our team stays abreast of all recent developments, guidelines, and policies. Thus, relying upon u for such important matters would be a wise decision. Hire our services today!
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