What are NRI Fixed Deposits?
NRI Fixed Deposits allow Non-Resident Indians to invest their foreign earnings directly into high-yield Indian bank deposits. Because Indian interest rates are historically higher than global averages, NRI FDs are an exceptionally popular tool for remittance and capital appreciation.
NRE vs NRO: Which to pick?
- NRE (Non-Resident External) FD: Designed to deposit income earned abroad. The interest earned is fully tax-free in India. The entire amount is freely repatriable back to your foreign resident country.
- NRO (Non-Resident Ordinary) FD: Designed to deposit income earned in India (like rent, dividends). Interest earned here is subject to Indian Income Tax (TDS @ 30%). You must pay taxes in India first before repatriation.
- FCNR (Foreign Currency Non-Resident): These are term deposits maintained in foreign currencies (USD, GBP, EUR). They protect the investor entirely against the exchange rate risk of the Indian Rupee depreciating. The interest is completely tax-free in India.