Module: | NRI Banking Basics & NRE Accounts
Q6: Anita, who has held an NRE account for years, returns to India, and takes up permanent employment, staying for more than 182 days. She informs her bank, of her change in residency status. What happens to her existing NRE deposits?
1. Her NRE savings account must be re-designated as a resident account, or Resident Foreign Currency (RFC) account.
2. Her existing NRE Fixed Deposits can continue to run until maturity, at the originally contracted interest rate.
3. The interest earned on these deposits will now become taxable in India.
4. She must immediately close all accounts, and withdraw the cash.
2. Her existing NRE Fixed Deposits can continue to run until maturity, at the originally contracted interest rate.
3. The interest earned on these deposits will now become taxable in India.
4. She must immediately close all accounts, and withdraw the cash.
✅ Correct Answer: C
On becoming a resident, NRE savings must be re-designated as resident/RFC.
Existing FDs can run to maturity at the contracted rate, but interest becomes taxable.
Existing FDs can run to maturity at the contracted rate, but interest becomes taxable.