Dear Friends,
Good wishes.
We are happy to offer professional services for transfer of NRO balance to NRE account across all the Banks and cities in India. Our Office undertakes preparation of appropriate applications, Chartered Accountant certificates and followup with Bankers requiring the NRO account holder only to sign the dotted lines .
The Reserve Bank of India on 7th May '12 granted permission for direct credit/ transfer of balance in NRO account to NRE account upto US $ 1mn per year to NRIs/PIOs similar to facility of remittance abroad . Transfer from NRO to NRE is quite simple as it requires only :
.01 Account holder’s name and address
.02 TDS certificate which the bank is to provide ; source of NRO balance ; account number and
.03 Copy of PAN Card, if availed
Till May 2012 as the interest rates of NRO deposits were 9% + per year as compared to meager 3.5% in NRE deposits NRIs / PIOs placed huge amounts of NRO deposits inspite of interest being taxable and liable for tax deduction [tds] of 30% which was reduced to 12.5% for tax residents of UAE under India UAE Double Tax Treaty on the basis of self declaration; for residents of Oman, Kuwait and Qatar @10% and for tax residents of USA, UK, Kenya and Belgium @ 15% as the case may be .
But now as tax free interest rates of NRE deposits are same as taxable interest on NRO deposits it would be gainful to even prematurely close the NRO deposits and place the amount as 3 years NRE deposits at 9%+ or Foreign Currency [ FCNR ] deposits of US$ , Euro or GBP earning higher tax free interest.
However in the last Budget a change is made whereby NRIs/ PIOs wishing to benefit from lower rate of 12.5% ;10% or 15% TDS as per Tax Treaty are required to provide Tax Residency certificate by the Government of the NRI's / PIO's country of residence i.e. UAE ; Middle East ; USA , UK , Kenya or Belgium Government as applicable.
The tax calculation herein shows that interest income of Rs 5,00,000 only on NRE account will save tax of Rs. 31,000 as compared to interest even when Tax Residency certificate is provided and this will also save the cost of availing Tax Residency certificate; filing of tax return in India and the hassles of getting the refund of excess amount of tax.
Hope this is found useful and we will be happy to reply to any queries in the matter.
With regards
sincerely
Chief Executive
femaonline.com
ph ; (91 281 ) 2453367 ( four lines)
rajesh@femaonline.com ; councelor@nribanks.com
| Tax comparision for MIDDLE EAST Tax for the F.Y. 2012-13 | ||||||
| Interest Income in NRE / NRO A/C in Rs. | Tax Rate & Tax payable in NRE | Tax Payable in NRO Rs. | Average Tax Rate NRO % | UAE withholding Tax @ 12.5% Rs. | OMAN / KUWAIT / QATAR withholding Tax @ 10% | Withholding tax / TDS @30% Rs. |
| 200000 | 0 | 0 | 0% | 25000 | 20000 | 60000 |
| 500000 | 0 | 30900 | 6.18% | 62500 | 50000 | 150000 |
| 750000 | 0 | 82400 | 11.00% | 93750 | 75000 | 225000 |
| 1000000 | 0 | 133900 | 13.39% | 125000 | 100000 | 300000 |
| 1500000 | 0 | 288400 | 19.23% | 187500 | 150000 | 450000 |
| 3000000 | 0 | 751900 | 25.06% | 375000 | 300000 | 900000 |
| 5000000 | 0 | 1369900 | 27.40% | 625000 | 500000 | 1500000 |
| 10000000 | 0 | 2914900 | 29.15% | 1250000 | 1000000 | 3000000 |
| Tax comparision with US / UK / BELGIUM / KENYA Tax for the F.Y. 2012-13 | |||||
| Interest Income in NRE / NRO A/C in Rs. | Tax Rate & Tax payable in NRE | Tax Payable in NRO Rs. | Average Tax Rate NRO % | US / UK / BELGIUM / KENYA withholding Tax @ 15% Rs. | Withholding tax / TDS @30% Rs. |
| 200000 | 0 | 0 | 0% | 30000 | 60000 |
| 500000 | 0 | 30900 | 6.18% | 75000 | 150000 |
| 750000 | 0 | 82400 | 11.00% | 112500 | 225000 |
| 1000000 | 0 | 133900 | 13.39% | 150000 | 300000 |
| 1500000 | 0 | 288400 | 19.23% | 225000 | 450000 |
| 3000000 | 0 | 751900 | 25.06% | 450000 | 900000 |
| 5000000 | 0 | 1369900 | 27.40% | 750000 | 1500000 |
| 10000000 | 0 | 2914900 | 29.15% | 1500000 | 3000000 |
|
Contact us : counceloratnribanksdotcom |
FCNR deposits interest up by 0.75% to 1.75%
Date: May 05, 2012
Dear Friends,
.01 US $ deposits of 1 ; 3 and 5 years at annual rates of 3.05% ; 3.75% and 4.24 % resp ;
.02 GBP deposits of 1 ; 3 and 5 years at annual rates of 3.86% ; 4.32% and 4.62% resp and
.03 Euro deposits of 1 ; 3 and 5 years at annual rates of 3.48% ; 4.23% and 4.60% resp.
Chief Executive
nribanks.com
DBOD.Dir.BC. 102/13.03.00/2011-12
May 4, 2012
All Scheduled Commercial Banks
(excluding RRBs)
Dear Sir/Madam
Interest Rates on FCNR(B) Deposits
Please refer to paragraph 2 of our circular No.DBOD.Dir.BC.59/13.03.00/2011-12 dated November 23, 2011 on Interest Rates on Deposits held in FCNR(B) Accounts. In view of the prevailing market conditions, it has been decided that until further notice and with effect from the close of business in India as on May 4, 2012, the interest rates on FCNR(B) Deposits will be as under:
|
Maturity Period |
Existing |
Revised |
| 1 year to less than 3 years | LIBOR/Swap plus 125 basis points | LIBOR/Swap plus 200 basis points |
| 3 - 5 years | LIBOR/Swap plus 125 basis points | LIBOR/Swap plus 300 basis points |
On floating rate deposits, interest shall be paid within the ceiling of swap rates for the respective currency/maturity plus 200 bps/300 bps as the case may be. For floating rate deposits, the interest reset period shall be six months.
2. Foreign currency loans out of FCNR(B) deposits may be given as Pre-shipment Credit in Foreign Currency (PCFC)/ Rediscounting of Export Bills Abroad (EBR) to exporters and other entities (including exporters who desire to avail of foreign currency term loans for creating export capability) having a natural hedge or entities having a risk management policy for managing the exchange risk.
3. All other instructions in this regard, as amended from time to time, will remain unchanged.
4. An amending directive DBOD.No.Dir.BC. 101/13.03.00/2011-12 dated May 4, 2012 is enclosed.
Yours faithfully,
(Rajesh Verma)
Chief General Manager
DBOD.Dir.BC. 101/13.03.00/2011-12
May 4, 2012
Interest Rates on FCNR(B) Deposits
In exercise of the powers conferred by Section 35A of the Banking Regulation Act, 1949, and in modification of the directive DBOD.No.Dir.BC.58/13.03.00/2011-12 dated November 23, 2011 on Interest Rates on Deposits held in Non-Resident (External) (NRE) Accounts and FCNR(B) Accounts, the Reserve Bank of India being satisfied that it is necessary and expedient in the public interest so to do, hereby directs that with effect from the close of business in India as on May 4, 2012 the interest rates on FCNR(B) deposits shall be as under:
|
Maturity Period |
Existing |
Revised |
| 1 year to less than 3 years | LIBOR/Swap plus 125 basis points | LIBOR/Swap plus 200 basis points |
| 3 - 5 years | LIBOR/Swap plus 125 basis points | LIBOR/Swap plus 300 basis points |
On floating rate deposits, interest shall be paid within the ceiling of swap rates for the respective currency/maturity plus 200 bps/300 bps as the case may be. For floating rate deposits, the interest reset period shall be six months.
(B. Mahapatra)
Executive Director
| Related Press Release/Notification | |
| May 4, 2012 | RBI takes measures to ease foreign currency flows |
| May 4, 2012 | Deregulation of Interest Rates on Export Credit in Foreign Currency |
NRE INTEREST @ 10 %
Dear Friends,
Good wishes. On 16th December 2011, Reserve Bank of India has de-regulated interest rates on Non-Resident External (NRE) deposits and Savings accounts resulting in the interest of NRE deposits shooting up to 10% to from the miniscule offer of 3.5% or so - an additional yield of almost 200% for Non-Resident Indians (NRIs) holding NRE deposits worth app. US$ 27bn.
As Investment Advisors, we suggest that a small action of prematuredly encashing the existing NRE deposits placed at lower interest rates in the range of 3.5% at cost of even paying penalty interest of 1% or so and placing the same as fresh NRE deposit, will boost interest income by almost 200% - " a small action in time - will multiply your NRE interest to nine ".[ in this case even ten]
Similarly, investments placed as Non-Resident Ordinary (NRO) deposits which are liable to income tax and Withholding Tax of 30% should also be prematuredly encashed , balance in NRO account be repatriated and thereafter converted to and placed as a fresh NRE deposits earning higher and tax free interest.
These NRE deposits be placed for a longer term of 5 years to 10 years as the RBI Governor has given clear indications of interest rates sizing down over next 2 years.And ideally the deposits be sliced and placed as multiples, say a INR 10 mn amount be placed as 10 NRE deposits of INR 1 mn each which will facilitate encashment of part of funds if the same are required during the term of deposit.
We suggest that maturity of NRE deposit should not be awaited as the RBI Governor has given indication for reduction of interest rates and as the deregulation seems to be an emergency action to strengthen the Indian Rupee, one may not be surprised if the interest rates for NRE deposits are once again bought down in near future .
You can view the interest rates on NRE deposits of all the banks across India on our website at http://www.nribanks.com/currency.php?id=36 and in case you need any further information or assistance, please inform otherwise we wish a wonderful and joyous New Year 2012 for you and family.
With regards.
Sincerely.
RAJESH H DHRUVA
