NRI is a person who moved abroad for the employment from the date he left he will be considered as NRI or a person who is not physically present in home country for 181 days in a financial year. Financial year starts from April to March. He may be still considered as resident of India under Income Tax Act. in this case he has to reveal the length of the stay outside India to the bank authorities and then he has to open a bank accounts. Once the status is established He can select account according to his needs. , which can range from sending money to the home country for maintenance of family members, making investments, or even safeguarding the income earned from assets in India. There are two options given to NRI by banking sector. They are:-
1) NRE- Non Resident External Account- the one who wish to send their earning to India has to open NRE, an Indian rupee denominated account in India. . It can also be opened as joint account with other NRI(s) and Resident Indians. This account is for savings, fixed and recurring deposits. It is high liquidity and it gives advantage of benefitting from investments in India. This account is exempt from tax in India. It is useful when NRIs need to meet financial obligations back home such as household expenses, payment of children’s school fees and investing for retirement
2) NRO- Non-Resident Ordinary Rupee Account-it is also an Indian Rupee denominated accounts. This account is for those who wish to deposit their earnings from rent, dividends, salaries etc. The interest earned on this is taxable by 30% and other taxes applicable in India. In order to benefit himself by lower rate of tax NRI has to submit the tax residency certificate issued by tax authorities of the country of his residence. NRO account can also be joint account with other NRI and resident Indian (former or survivor basis only) In both accounts has nomination facility where a nominee can be appointed to be entitled to the proceeds of the account in the event of the death of the account holder. In both monthly balances is maintainable but varies according to the banks.