Save money earned abroad in Indian NRE account?

POSTED BY Sachin ON April 30, 2014 10:25 am COMMENTS (6)

Hi Folks,

I work in US.  The checking and savings account interest rate is very little here. I got to know that NRE account in Yes Bank will get us 7% interest rate for deposits of more than 1 lakh INR.

So, this seems a very good idea. My question is how much does it cost to transfer money from Indian to US bank account.

If I transfer 50k Rs per month to NRE account, then considering 7% interest rate, at the end of 1 year, I will get around 25k as interest.

Also, NRE accounts are exempt from tax. What  I want to know is that if I want to transfer money from India to US account, will I be in loss or profit ? Also, could anybody share per day interest rate calculator which is used for calculating interests in Indian bank accounts?



6 replies on this article “Save money earned abroad in Indian NRE account?”

  1. vijay says:

    Yes. In my own case thought it’s easier mainly because I am absolutely positive of settling down in India for good. If you are still on the fence though, you might have to worry about those repatriation charges, if any. Maintain some emergency funds in the US accounts and transfer some in bunch of NRE FDs to earn healthier returns…

  2. Sachin says:

    Thanks Vijay,
    So you believe we can earn higher interest rates by parking the money in Indian Accounts?

  3. ashalanshu says:

    Dear Sachin, it’s not about assumption. Please check first.



  4. vijay says:

    I’ve never had to transfer anything back to my US account, so I don’t know if it involves any fees. However, for interest earned calculations, you could just use the compound interest equation with quarterly compounding. If your bank doesn’t already provide with a calculator page, just google “RD calculator” or “FD calculator” and you’ll find plenty options there.

    One point though – for FD, I think the minimum tenure with most banks is for one year. Check the breaking penalties as well.

  5. Sachin says:

    Hi Ashal,
    Ok. I will check about reporting global income but assuming that I do not have to report global income, could you please answer my questions above?


  6. ashalanshu says:

    Dear Sachin, the NRE FD interest is tax free in India not in USA as you need to report your global income and pay tax in USA.

    So please check this issue with your Tax professional in USA.



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