Should NRIs invest in FCNR deposits with forward cover?

It is a suitable investment only if you want money in INR, else it is better to invest in a straightforward FCNR deposit account. Some tax experts are of the opinion that the amount gained due to the difference in the exchange rate might be taxable in India though banks sell the product as a tax-free product.

What are FCNR deposits?

FCNR stands for Foreign Currency Non Resident Account (Banks) Account Opening. This is a kind of fixed deposit account opened for depositing income earned overseas. The account is held in foreign currency.

What is FCNR deposit with forward cover?

An FCNR deposit is placed for a specific tenure and a forward cover is taken to provide fixed returns in Indian rupees to your account on the date of maturity. Due to the forward cover, the returns are guaranteed on maturity regardless of currency fluctuations.

Can NRI invest in ELSS?

Equity-linked saving schemes (ELSS) allow tax saving under Section 80C of the Indian Income Tax Act. An investment of up to ₹ 1.50 lakh in ELSS can be claimed as deduction from taxable income in India. These tax-saving benefits are available to both Indian residents and NRIs.

What is FCNR deposit?

What is FCNR B deposits in India?

FCNR(B) stands for Foreign Currency Non-Resident (Bank) deposits. Essentially, banks were encouraged to woo their NRI clients to deposit surplus dollars at a fixed interest rate, with the RBI promising to shield banks from the exchange rate risk.

Can NRI invest in index funds?

Can NRIs invest in mutual funds in India. NRIs are allowed to invest in mutual funds in India – as long as they adhere to the rules of the Foreign Exchange Management Act (FEMA).

Is FCNR a good option for NRI?

Yes, if you are an NRI looking for a term deposit scheme, a FCNR term deposit is a suitable option. Are FCNR deposits repatriable? Yes, with a FCNR account, you can easily repatriate the principal as well as the interest earned to the country of residence/origin.

What is FCNR(B) deposit?

The principal and interest on FCNR (B) deposits are fully repatritable and is not taxable in India. Loans upto Rs. 1 crore are allowed on FCNR (B) deposits with reference to their base rate and repayment can be made in either INR or foreign currency. Banks allow FCNR (B) deposits up to a maximum tenure of five years.

Why should NRIs invest in 0fcnr(B) deposits?

FCNR (B) Deposits are really a win win situation for NRIs, Banks and RBI. NRIs get more returns without currency risk. Banks generate more deposits and income. RBI gets more Dollar inflow. Also, to be a successful long term investor, having a well drafted financial plan will be of immense help.

What are the benefits of a FCNR account?

A FCNR account is a lucrative option for NRIs in terms of attracting foreign remittances. The interest rates offered by a FCNR account depend on the type of currency held and the bank. FCNR accounts are protected against forex rate risks.