Things You Should Know Before Investing In The NRI FDs

The popularity of fixed deposit investment is not only limited to the ones living in India; even the NRIs enjoy it. NRI fixed deposits offer a great way to build wealth in India while living and earning outside, that too without taking too many risks.

If you are planning an investment, then there are a few things that you need to know about this investment instrument to make a better decision.

Things to know before investing in NRI FDs

  • Sub-type

The first thing to consider here is the sub-type. Now, there are three sub-types of NRI FDs, NRE, NRO and FCNR. The difference between these three is in terms of investment and taxation. The return, however, remains guaranteed.

  • Taxation

The second point to be aware of when you open an FD online for NRIs is the taxation applicable to it. Now, if you invest through NRE or FCNR accounts, then the income generated in the FD is not liable for taxation. But, the FD interest income of the NRO account will come under income tax deduction.

  • Reparation

The next thing to evaluate here is the reparation benefits. Now, it is crucial to know that not all FDs will come under reparation benefits. The NRE and FCNR FDs come with full reparation benefits, while the NRO deposits offer partial reparation benefits.

  • DTAA advantages

Last but not least, as an investor, you should know the DTAA benefits before investing in an NRI FD. The DTAA benefits apply when the country you live in has a Double Tax Treaty Agreement with India. Under this agreement, you are not required to pay taxes on the income generated in India in the country you live in if you have paid income tax in India.

You may also love to read about - Different types of fixed deposits

These are some essential points to be aware of before investing in FD for NRIs. Keep them in mind and invest in growing your income.


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