Useful Comparison : NRE Account Vs. Normal Saving account

Banking and handling bank accounts sometimes become a confusing task to us. It becomes more complicated when we start using an account without the full of detailed knowledge regarding it. Several questions arise on our mind as we start using any kind of bank account. As this is a matter of our valuable money that we are earning after day and night of hard work, it is better to get a clear picture of the types of accounts in a bank to avail the most suitable one for us. At least we should be aware of the particular account we are going to operate. 

For Indian citizens and Non-Indian Residents or NRIs, banks offer different kinds of accounts with different facilities. Choosing the right account or path for your earnings is always a difficult one, it comes up with more challenges if you are working in a foreign country, and you have your family residing in India. As there are different accounts offered by banks for Indian citizens and NRIs, one must know the best policies for them before going for any particular account. Here we will discuss the differences between NRE savings and normal saving accounts.

What is an NRE savings account?

This is a form of NRI account and can be classified as savings, recurring deposit, current or fixed deposit. It is an Indian rupee denominated account. This account cannot be used to deposit Indian rupee, one must deposit foreign currency, and at the time of deposition, it will be converted to Indian rupee. The income should be possessed outside India. This account is totally a tax-free income account. 

What is a normal savings account?

A regular saving account is only for Indian Citizens in order to keep their money safe while earning some interest. This account only entertains Indian currency. There are some limits of transactions one can avail using a savings account. ;

Differences between NRE account and normal saving account

After knowing what an NRE savings account and a normal savings account is, one can easily differentiate between the two. There are several differences between these two schemes offered by the banks. Here you will get detailed information on them.

Deposits and withdrawals process

NRIs can deposit the money in the form of only foreign currency, and the time of deposition it will be converted to Indian currency. So at the time of withdrawing, one will get the cash in the form of the Indian rupee. The scenario is a little different for the regular savings account. This account only accepts the deposition of Indian currency, and also one can withdraw in the form of Indian currency. 

Taxability 

The income of the NRIs’ is non-taxable. There is no income tax charged on the interest of the NRE savings account. However, in the case of a savings account, there is a certain tax one needs to pay on the interest. If one earns interest on the savings accounts more than 10,000, then one needs to pay a certain amount of tax for that.

Joint account

If anyone is willing to open an NRE saving account as a joint account, then it is compulsory that both the account holder has to be Non-Residential Indian or NRI. In case of a regular savings account, it can only be availed by anyone with Indian citizenship, both the account holder has to be Indian residents. 

Limited transactions

As per the Reserve Bank of India or RBI rule, there is a limitation on the transaction through any regular savings bank account. The number of the transaction along with the amount of transaction is limited for a normal savings account. However, there are no such limits for the NRE savings account, and one can operate it as many times as he or she wants. 

Flow of funds

The transaction in a savings account can be done wholly within India, while the Flow of funds of NRE savings account is done in overseas also. The flow of funds in a normal saving account is limited in Indian currency, while for NRE savings account both the foreign and Indian currency are engaged. In NRE savings account, the deposition is done from any foreign country and can be withdrawn from India. In the case of regular saving account, both the deposition and withdrawing can be done only within India.

As you get a detailed knowledge of both the NRE savings and normal saving account with their differences, it will be much easier for you to understand which account is needed in a specific situation. If you are staying and earning abroad, then it is preferable to open an NRE account on the other hand, as a citizen of India, there is always provision for creating a normal savings bank account. 

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