newone001

Hi Experts,

I have not much studied this, so it may be basic questions for you.

I'm located overseas for longer duration.

I got email from my bank saying you can't hold domestic saving account and NRI account at the same time. I have been asked to "you will need to close/re-designate the accounts held by you under either one of the categories. In case you are currently a NRI/PIO, please initiate steps to re-designate your resident account as NRO".

What are my best options?

I want to keep sending money to my Non resident account and transfer that money to normal saving account and do FD.

Thanks in advance.

dheerajg77

pm me as i will let you know over the .

sbhushan

Change your domestic saving account to NRO. You can maintain NRO and NRE account. Keep sending money to any of these accounts. There is different of interest rate but then NRE is repatriable. If you don't plan to repatriate, then invest in NRO account & open FD to get benefits of weaker rupee & high interest rate on FDs. NRO can be converted back to resident once you are back to India.

newone001

Thanks a lot sbhushan .. !!! This really helps.

I'm talking to bank to change domestic saving account to NRO.

A question, what happens with current FD's in domestic saving accounts? Those will be as it is when Bank changes my account to NRO. Or I need to liquidate those (cost penalty 1% as per rule) and then do it again.

Thanks Again.

mansukh

Hi newone001, I also have same question, thinking to change resident account to NRO next week. Would like yo know what happens to existing FD or demat investments associated with resident account?. thanks.

djvjain

How does the tax issue work on the interest earned at the NRE account? Are FD rates as good as NRO or regular savings account?

newone001

We can re-designate (change) the account from domestic saving to NRO. However as I have the FD's in my domestic account. My bank (HDFC) told me to liquidate the FD's then change the account to NRO. They actually advice me to open NRO, transfer funds, close domestic account. I'm trying to re-designate account instead of closing and opening account.

We can't just transfer the FD's from domestic to NRO because tax structure is different.

For NRE with latest announcements FD rate is 9%. Those are tax free interest but we have to do FD for at least 1 year. If we liquidate before 1 year no interest paid, which is not case with NRO.

For NRO same FD rate as of normal saving account. However TDS will be around 31%, if we apply for DTAA then TDS will be 15%.

So if you are sure you will not need money at least a year then NRE is best way to put money in FD.