How To Transfer Money From An NRE Account

how to transfer money fron nre account us to india

As more and more Indians increasingly work abroad, remittances to the country are soaring. In 2022, non-resident Indians (NRIs) sent home a whopping USD 80 billion. The country topped the list globally in terms of inward remittances. China, Mexico, and the Philippines trail behind India on this count. 

The growth in remittances to India has been spectacular. From USD 62.7 billion in 2022 the kitty swelled to USD 65.3 billion in 2023, accounting for 2.7% of the country’s gross domestic product (GDP). The World Bank estimates that the projected growth in remittances may shrink slightly. That’s because the surge of developed economies like the United States is expected to moderate and migration to the Gulf countries is becoming tougher. Nevertheless, the World Bank is maintaining a sub-5% growth rate for developing countries (including India) in 2023.

International money transfers have come of age. So, if you want to transfer money to India, it is no longer a hassle. There is no ceiling on how much you can transfer. You must simply ensure that the taxes applicable to the country of origin are duly paid. 

Why You Need An NRE Account 

Most Indians find it easy to transfer money by opening a Non-Resident External (NRE) account. What is an NRE account? This is a rupee account maintained in India where the remitted money accumulates. NRE accounts can be both savings and current accounts. 

The Reserve Bank of India (RBI) stipulates that you need to maintain a minimum balance of Rs 10,000 in the account. Such accounts do not attract any tax—be it wealth tax, gift tax, or income tax. And you can open such an account jointly with only another NRI. 

NRE To NRE Account Transfer Is Hassle-Free 

There is no restriction on transferring money from one NRE account to another. 

Example: Suppose you and your spouse operate separate NRE accounts. You can freely move funds between them. Perhaps it is your spouse’s birthday and you want to gift them some money. You can transfer the money with ease and without having to worry about any tax implications. Such transactions are entirely tax-free for the NRE accounts of both the giver and the receiver. 

How An NRE To NRO Transfer Works 

Non-Resident Ordinary (NRO) accounts are rupee bank accounts maintained in India. Unlike NRE accounts, NRO accounts allow you to accumulate the money you earn in India. For instance, an NRI may be earning rental income from a property in India. This income would be deposited in the person’s NRO account. 

Transferring money from an NRE to an NRO account is easy. You can make the transfer through the National Electronic Funds Transfer (NEFT) mode. However, the transaction must comply with provisions of the Foreign Exchange Management Act, 2000 (FEMA), and the Wire Transfer Guidelines. 

Money Transfer From NRE To FCNR Account 

The Foreign Currency Non-Repatriable (FCNR) account is a fixed-term bank account that NRIs are free to open in India. Such accounts keep you insulated from currency fluctuations. They are maintained only in specified currencies and do not allow conversions to the Indian Rupee. Presently, an FCNR account can be maintained with: United States Dollar (USD), Pound Sterling (GBP), Euro (EUR), Japanese Yen (JPY), Australian Dollar (AUD), and Canadian Dollar (CAD). 

Keep in mind that FCNR is a foreign currency deposit. So, the reverse exchange rate will apply to convert funds from the NRE account to the currency in which the FCNR account is maintained. This may prove detrimental and is often best avoided. Instead of sending money from an NRE account, you could open an FCNR fixed deposit with the currency that you hold. 

Sending Money From NRE To Resident Account In India 

With an NRE account, you can send money to any savings account in India with ease. If your parents, spouse, or children live in India, you are free to send them money as a gift. This would be non- taxable as per the present laws. 

Summing Up 

The NRE account carries multiple benefits for NRIs. Other than allowing limitless transactions, it also attracts tax benefits. Making money transfers from an NRE account to any other format is simple and hassle-free. And what happens when you give up your NRI status and return to India? The NRE account can be easily converted to a resident savings account.

I hope you enjoyed this blog post about how to transfer money from an NRE account when transferring from US to India.

Interested in more articles about finances in and with India?

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