NRE Fixed Deposit is gaining momentum due to the Soaring Interest Rate and Lucrative Exchange rates. And being exempted from tax, it has become of the best investment options for NRI looking to invest money in India.
Benefits of NRE Fixed Deposit Account
- Principle along with the Interest earned on fixed deposit is totally exempted from Income Tax and Wealth Tax.
- Both principle and interest earned are fully repatriable without RBI Permission i.e. money in NRE FD Account is easily convertible in foreign currency and allowed to send back to the home country of NRI.
- Current Highest Interest Rate of 9.3% per annum and Exchange Rate of approx. Rs.61 for 1 USD seems decent to invest in NRE FD.
NRE Fixed Deposit Interest Rate Comparison 2014
Point to Note:
- Shortest Duration for NRE FD is 12 months (1 year) and Maximum Duration is 10 years.
- No interest will be paid if FD is withdrawn within 1 year.
- Premature Withdrawal may attract penalty of 0.5% to 1%.
- NRI has to be NRI for the whole term of FD, else it will be converted into Normal FD and becomes taxable.
- Also money exchanged at the time of maturity is not taxable in India but may be taxable in the home country of NRI.
- Risk of daily changing exchange rate may cause in lower return from the anticipated return.