RESIDENT ACCOUNTS TO NRO ACCOUNT

As per instructions of Reserve Bank of India (RBI) contained in RBI Circular no. RBI/2012-13/75 DBOD No.Dir.BC.1/13.03.00/2012-13 dated 02.07.2012 (copy available at RBI Website), when a resident becomes a Non Resident Indian (NRI), his/ her existing normal resident accounts should be converted in NRO Account.

 The said stipulation is applicable to all Banks operating in India as well as all type of accounts i.e. Savings / Current / Fixed Deposits etc, so being a statutory requirement we advise you to approach your Bank for conversion of your Normal Accounts to NRO Account, for this your bank may ask for copies of Passport & Visa / Green Card / OCI Card etc. Conversion of Normal Account to NRO Account is a simple process and will not change your account no. / ATM Card / Internet Banking Pass book etc

 Details and other operative instructions are available in the said RBI Circular

For other details / queries, drop a mail at prashant.singh@sbi.co.in

NRE RECURRING DEPOSIT BENEFITS

Recurring deposit is very popular in salaried class resident Indians, but I personally feel that this is the best way to save for future planning’s as it locks your present rate of interest for future savings , say if a persons invests in fixed deposit today he will get today’s rate of interest and after 6 month if he will again deposit in FD then he will be getting the then prevailing rate of interest , but in RD if you opt for a period of 10 years then each and every instalment will get the benefit of today’s rate of interest

 Maturity values for different interest rates and period

 If a person starts a NRE RD of Rs. 10000.00 and his bank offers interest rate at 8.50% then maturity value for different period will be as under

i)        For 12 months (1 year)     =       1.24 lacs (approx)

ii)       For 36 months (3 year)     =       4.08 lacs (approx)

iii)      For 60 months (5 year)     =       7.44 lacs (approx)

iv)      For 120 months (10 year)  =       18.81 lacs (approx)

 

Normally Banks are charging penalty @ Rs.1.5 to Rs.2.00 per Rs.100 per month for delayed payment of instalment

In case of premature withdrawal, banks are usually giving the interest 0.50% below the rate applicable for the period the deposit remains with the bank or 0.50% below the contractual rate which ever is lower

If you break this deposit before 1 year, you might not get any interest

 

For other details / queries, drop a mail at prashant.singh@sbi.co.in

NEW CURRENCIES FOR FCNR/FCNB DEPOSIT

Reserve Bank of India has given permission to the banks for accepting FCNB deposits in several other currencies and now some Banks have started accepting deposits in Switzerland Franks (CHF), New Zealand Dollar(NZD), Swedish Kroner (SEK) ,Denmark Kroner (DKK) in addition to existing six currencies viz., USD, GBP, JPY, EUR, CAD, AUD

 for latest rate of interest visit respective Banks website 

For other details / queries, drop a mail at prashant.singh@sbi.co.in

TAXATION FOR NRI

Taxable Income (Indian Income)

Only the income which is earned, received or accrued in India is taxable here. Income which is earned outside the country, even if it is later remitted to India is non-taxable. The following are some examples of taxable income-

• Income earned from any property or transfer of property/capital asset in India.
• Dividend paid by an Indian company outside India is deemed to be accrued in India.
• Salary paid by the Indian Govt. to an Indian citizen for services rendered abroad is deemed to have accrued in India.
• Interest, royalty and dividends, professional fees paid by the Govt. of India, even if it is paid outside India.

Exempt Indian Income

• Interest on Non Resident External (NRE) A/c.
• Taxable Income up to the basic threshold limit specified for NRIs by Income Tax authorities. For the financial year 2012-2013, it is Rs. 2,00,000/-.
• Interest on notified securities or bonds.

Taxable Indian Income

• Short Term capital gains on investments in equity shares and mutual funds at flat 15 %.
• Long term capital gains at 20 %.
• Interest earned on Non Resident Ordinary (NRO) A/c.
• Special tax rates apply on dividends/interest and capital gains earned on units of mutual funds and shares purchased in foreign currency.

Filing Income Tax Returns

Filing of income tax returns becomes mandatory for a Non Resident Indian if his total taxable Indian income in a particular financial year exceeds the basic exemption limit. But if the NRI has earned short term or long term gains, filing returns is mandatory even if the amount is less than the exemption limit. It is advisable and more convenient for NRIs to obtain a digital signature and file their returns online.

Double Taxation Avoidance Agreement (DTAA)

The Double Taxation Avoidance Agreement is an agreement between India and certain foreign countries which states that if an NRI who is a resident of any of these specified foreign countries pays taxes on his income earned in the foreign country, then he or she is eligible for a lower rate of deduction of tax on income earned in India in that financial year. This lower tax help in encourage Non residents to invest in their country of origin.

For other details / queries, drop a mail at prashant.singh@sbi.co.in

NRE VS FCNR

Today when growth rate of India is moving downwards, confusion has been coming in NRI’s mind i.e. whether invest in Rupee Fixed Deposit or opt for foreign currency fixed deposits

I personally feel that in coming 2 years (or up to coming general elections) rupee will show weakness and after that it will again start improvement

In search of the solution of NRE Vs FCNR, I tried to illustrate the best and worst case scenario in both the case for this I have presumed that in best case rupee will come to 50 and in worst case it can go up to 58, so I will take these two figures in illustration. I am considering present rupee rate as 55, present NRE interest rate 8.5% and present FCNR rate 3.75%

 

Case –1 Investment in NRE

 Investment of $100

$100 = INR5500

Invest for 2 years @8.5% then maturity value = INR 6508

After 2 years

If Rupee performs well

Then rupee rate will be 50

Maturity value INR6508 reconverted to $ @ 50 = 6508/50 = $130 (approx)

In 2 years $100 will turn to $130 i.e. 15% yield

 

If Rupee performs worst

Then rupee rate will be 58

Maturity value INR6508 reconverted to $ @ 58 = 6508/58 = $112 (approx)

In 2 years $100 will turn to $112 i.e. 06% yield

 

Case –1         Investment in FCNR 

Investment of $100

$100 Invest for 2 years @3.75% then maturity value = $107.7

In 2 years $100 will turn to $107.7 i.e. 3.85% yield

 

So in the present circumstances investment in NRE is suggestable

For other details / queries, drop a mail at prashant.singh@sbi.co.in

NRI BANKING THROUGH EMAIL

Recently due to tech revolution it has been observed that peoples are feeling comfortable with IT platforms during their dealing with banks in which use of email for communication is most popular way to deal with the banks , here I suggest some do’s & don’ts while using email communication with the banks
 

Do’s

1                     Always send email to official ID of Bank / Branch available at Bank’s official website

2                    whenever you send any email to other than Bank / Branch ID then always mark CC to Branch / Bank official Id

3                    Whenever you require any Bank rule / charges details always ask your Bank to provide the same through email so that it can be used in future in case of dispute

4                    Always raise your complaint through email , in case you have directly talked to branch official then also send a mail quoting that communication

5                    Try to send regular emails to your Branch ( at least once in a month) , this will help your Branch to easily recognize you as NRI’s are not regular visitors of the Branch

6                    Whenever you get any message from your Branch regarding your account ,try to respond at the earliest otherwise Branch may stop your account which will result Cheque bounce events

 

 Don’ts

1                     never ask account balance through email, always make call to Bank / Branch officer

2                    never reveal your ID & Password in email messages even if Branch officer demand so

3                    never send any fund transfer instruction through email

4                    don’t use reply button , always start new message and type email id

5                    never open any attachment before 100% confirmation of genuineness of email 

 

For other details / queries, drop a mail at prashant.singh@sbi.co.in