Understanding NRE account interest rates

Open an NRE Savings Account

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Key Takeaways: One of the compelling reasons to use an NRE account is that the interest earned on an NRE account is exempt from taxes. Read on to know more.

NRE accounts provide many benefits to NRIs: the ability to manage foreign income earned outside india, secure transfers of money to fulfil their India obligations and unlimited repatriations. In addition to this, interest earned on an NRE account is exempt from tax in India, making it an attractive savings option especially since many banks offer highly competitive interest rates.

NRE savings account interest rates

An NRE account can be maintained as savings and deposits. Most banks calculate the NRE savings account interest on the balance available in the account at the end of the day. Interest is often paid quarterly or as decided by the bank. These interest rates differ depending on the account balance slabs. Most interest rates for NRE savings account begin from 3.5% per annum*. If you want to earn higher interest rates, you can opt for an NRE fixed deposit.

Open an NRE Savings Account

NRE fixed deposit interest rates

NRE fixed deposit rates depend on the tenure for which you invest. Private and public sector banks typically offer interest rates starting from 3.5% per annum* for 1 to 5 year tenures. Fixed deposits are best suited for you if you are looking to balance your portfolio of high-risk investments with a lower risk asset.

Tax advantage

The balance and interest earned in an NRE account are fully repatriable. Added to this, the interest earned on this account is tax-free in India. Unlike for other accounts in India, tax deducted at source (TDS) is not applicable for NRE savings and fixed deposit accounts. Funds in this account can be transferred to a Non-Resident Ordinary (NRO) Rupee account as well as to the country of residence. However, TDS will be applicable for interest earned in an NRO account.     

Final Note: A higher interest rate combined with other conveniences such as full repatriability and easy remittances make an NRE account a must-have for NRIs.

*Please note that the interest rates are applicable as on April 2020 and are subject to change.

Disclaimer: This article has been shared purely from an information perspective and we recommend you conduct extensive research before proceeding.

Open an NRE Savings Account