Difference Between NRE & NRO Account

Difference Between NRE & NRO Account

Mahesh is a Non Resident Indian (NRI) living in the UK. He is doing well in the business that he set up there. He has a dependent brother in India to take care of. He transfers money to his Non Resident External (NRE) account regularly. Also, his Non Resident Ordinary (NRO) account is credited on a timely basis.

Mahesh’s affection towards his brother made his co-worker, Andrew, inquisitive. Andrew wanted to know more about these accounts that Mahesh was handling despite being abroad. Here’s how Andrew’s queries were addressed:

Basis	NRE Account	NRO Account
Acronym	Non Resident External Account	Non Resident Ordinary Account
Meaning	It is an account of an NRI to transfer foreign earnings to India	It is an account of an NRI to manage the income earned in India
Taxability	Interest earned is tax free	Interest earned is taxable
Repatriability	Can repatriate	Can repatriate the interest amount, the principle amount can be repatriated within the set limits
Joint Account	Can be opened by two NRIs	Can be opened by an NRI along with an Indian citizen or another NRI
Deposits and Withdrawals	Can deposit in foreign currency, and withdraw in Indian currency	Can deposit in foreign as well as Indian currency, and withdraw in Indian currency
Exchange Rate Risk	Prone to risk	Not prone to risk

However, Andrew still wasn’t satisfied with Mahesh’s answer. So, Mahesh explained further:

The difference between NRE & NRO accounts

• An NRE account is a bank account opened in India in the name of an NRI, to park his foreign earnings; whereas, an NRO account is a bank account opened in India in the name of an NRI, to manage the income earned by him in India. These incomes include rent, dividend, pension, interest, etc.
• NRE accounts are exempt from tax. Neither the balance, nor the interest earned on these accounts is taxable. The interest earned on an NRO account is however taxable at 30% according to the Income Tax Act 1961.
• The principle amount in an NRE account, and the interest accumulated thereon is open to repatriation. In other words, you can transfer these amounts to a foreign account in case of an NRE account. In case of an NRO account, the interest amount can be repatriated; however, in case of the principle amount, you can remit only up to USD 1 million in a financial year.
• An NRI can open a joint NRO account with one or more NRIs or Indian citizens. However, there can be a joint NRE account only with another NRI.
• 
  
• Income originating outside India can be deposited into any of these accounts. However, income originating within India can be deposited only into the NRO account. Withdrawals from both the accounts can be made only in INR.
• In case of an NRO account, if the deposit as well as the withdrawal is made in INR, there is no exchange rate risk involved; whereas, in case of an NRE account, currency fluctuations make you prone to exchange rate risks.

Extention of due date R Vat 10A

Respected professional colleagues
Greetings of the day
RVAT Annual return filing date has been extended to 31st January 2017.

INCOME TAX Exemption For FY 2016-17

Hello everyone, Hope all of  you doing great; enjoy our latest updates with us. Today we will share income tax exemptions with you. Details are:-

• 80 C:- Max limit 150000/- (MF-ELSS, MF-Pension Plans, Life Ins Premium, One time investment in LI-Immediate Assured Pension Plans, NSC, etc.)
• 80CCD:-50000/- (NPS)
• 80CCG:- 25000/- or 50% of your investment which every is less
• 80D:-25000/- (Mediclaim Policy for self spouse, children)
• 30000/- for dependent parents u/s-80D. Medical reimbursement :- 15000/- US 17(2)
• 80DDB:- Medical expense occurred on dependent for specified illment
• 80TTA:- Up to 10000/- for Interest saving bank account
• Gift tax:- Exempted upto 50000/-. Above 50k full amount taxable (FY) from other than Blood relation.. Gift from Blood relation is 100% Exempted
• Transport allowance:- 19200/- (FY)
• C.E.A:- 2400/- (FY)
• HRA:- as per the calculation
• 24(b):- 200000/- (home loan interest)
• 80G:- full amount in few selected organisation. This exemption is 50%
• 80GGB:- 100% exemption for political parties
• 80EE:- unlimited (interest on education loan)

How to Learn CARO, 2015 in just a minute

👇👇

We have to learn one line to learn each point of CARO, 2015.

Remember this key 🔑

"FIL ID Code - SAD GUN"

1. F : Fixed assets
2. I : Inventories
3. L : Loans u/s 189
4. I : internal control system
5. D : Deposited
6. Code : Cost records
7. S : Statutory dues
8. A : Accumulated Losses
9. D : Default of repayment
10. G : Guarantee for Loan
11. U : Usage of Term Loan
12. N : Noticed any fraud? and its reporting?

Exception to CARO, 2015

Remember this way 

"BICOS-Private"

B- Banking Company
I- Insurance Company
C- Companies u/s 8 of Companies Act, 2013
O- One Person Company u/s 2(62)
S- Small companies u/s 2(85)
Private- Private company

All 3 condition must be fulfilled by private co for claiming exemption from CARO, 2015

"P L T"

P- paid up share capital and reserves not more than Rs. 50 lakhs. 

and

L - Loans O/s from banks and Financial institution not more than Rs. 25 lakhs.

and

T- Turnover not more than Rs. 5 crores at any time during Previous Year.

Corporate Affairs Minister Arun Jaitley said 1,707 listed companies, including public sector undertakings, do not have Women Directors

More than 2,000 listed and unlisted companies do not have a woman director on their boards, the government said on Friday (04.12.2015).

Corporate Affairs Minister Arun Jaitley said 1,707 listed companies, including public sector undertakings, do not have women directors.

Besides, there are 329 unlisted private and public sector firms without a woman director on their boards.

Prosecution has been launched against 121 defaulting unlisted companies (other than PSUs),” Jaitley said in a written reply to the Lok Sabha. 

Capital markets regulator Sebi had prescribed fines on listed companies, other than public sector undertakings (PSUs), between Rs 50,000 and Rs 1,42,000, depending on the period of default from April 1 – October 1, 2015.

Besides, a daily fine of Rs 5,000 is being imposed for continued violation after October 1.

“Sebi had requested the government to advise the concerned administrative Ministries to take appropriate steps for ensuring compliance by defaulting listed PSUs,” Jaitley said.

Thousands of corporates are required to have at least one woman director on their Boards under the provisions of the Companies Act, 2013, by end of March this year.

Certain class of listed and unlisted firms are required to comply with the woman director rules.

Every company having paid-up share capital of at least Rs 100 crore or a minimum turnover of Rs 300 crore is required to ensure compliance.

Most provisions of the Companies Act, 2013 came into effect from April 1, 2014.

RBI cancels license of 56 NBFC’s (Bajaj Finserv gives away license)

The Reserve Bank of India has cancelled a bulk of non-banking financial companies as those mostly little-known local lenders may have either violated regulatory norms or surrendered licence of their own.

The central bank has taken away “the certificate of registration of the 56 non-banking financial companies (NBFC’s), in exercise of the powers conferred on it”. “Following the cancellation of registration certificate, these companies cannot transact the business of a non-banking financial institution,” it said. Interestingly, Pune-based Bajaj Finserve has given away its licence.

“We now come under a classification “core investment company”, said Rajagopalan, President (Legal), Bajaj Finserv. “Since we do not have any public funds including deposits/borrowings as per the RBI regulations applicable to NBFC we are not required to be registered with RBI.”

“RBI do not regulate such companies and hence as required by RBI we have submitted the Registration certificate for cancellation,” he said.

BSE LISTING FEE INCREASED FROM 01.01.2016

A sudden steep rise in listing fee by BSE has taken aback the companies looking to migrate from regional stock exchanges (RSEs), and their shareholders.

Last week, BSE wrote to several companies that had already applied for direct listing, saying the processing fee for direct listing was revised with immediate effect to Rs 25 lakh. And, from January 1, further to Rs 50 lakh. In comparison, the processing fee of rivals Metropolitan Stock Exchange of India (MSEI) and National Stock Exchange (NSE) is Rs 3.5 lakh and Rs 1 lakh, respectively.

In an e-mail, responding to questions from this newspaper, a BSE spokesperson said they’d listed many more companies as compared to both rivals but had begun to have reservations about the quality of companies coming out of these regional bourses.

Of 244 such companies listed on BSE, eight have since been suspended and a little over half are under investigation. Approximately 30 per cent have issued preferential shares and a little over 15 per cent have seen their stock prices increase by about 500 per cent since their direct listing on BSE. The total market cap of these companies increased by Rs 4,930 crore.

“Given the heightened surveillance activities to avoid manipulative and tax avoidance practices using stock markets, Sebi (the Securities and Exchange Board of India) and other agencies have raised several questions on the lack of corporate governance in such companies. In view of the same, BSE has recently tightened its direct listing criterion, including increasing the initial listing fees, to avoid frivolous companies from listing and using (our) platform for price manipulation and tax avoidance schemes,” the spokesperson added.

However, many professionals feel a increase in fee might not necessarily result in an improvement of quality and people coming with an intention to manipulate might be more prepared to pay it than the genuine ones. “If the (genuine) companies will not get listed, the ultimate sufferer will be the investors,” Anang Shandilya, a practising company secretary, said in a letter to the finance ministry.

BSE said it was also changing several other aspects of its framework, to avoid frivolous companies from coming on its board. And, to have better regulations to ensure their platform was not used for any sharp practices. These include price bands ranging from daily to annual and risk-based sub-segments.

Shandilya has sought the Ministry’s intervention to roll back the fee raise, saying it had jumped 50 times from the Rs 1 lakh at the time Sebi issued its exit policy for RSEs. According to his letter, there are a little over 7,000 companies in 16 regional bourses.

Earlier this year, Sebi gave these companies 18 months to apply to any of the national exchanges for direct listing, failing which they are supposed to give direct exit options to shareholders. Ram Avtar Agarwal, 55, is a chartered accountant based in Agra. Due to the knowledge acquired through his profession, he has been investing in shares for nearly three decades. Agarwal said he owned shares of stocks listed in several RSEs and many of these were stuck. “Their principal investment value must be in Rs 10-12 lakh. These have been acquired over years. Their market value could be much more. But, since there is no trading, there is no price discovery,” he said.

He points to shares of Jullundhar Auto, originally listed on the Delhi Stock Exchange. Though there was hardly any trading activity, Agarwal used to get offers for his shares at Rs 20 and 30. “I didn’t sell because I was not sure of the price. Today, the shares are listed on a national exchange and are trading at around Rs 200 and I’m still holding on to these,” he said. The rest of his portfolio has not been as lucky, as these have not been able to get to the big three bourses. S D Jain, a Delhi-based chartered accountant says sums of about Rs 1 crore belonging to a dozen of his clients are stuck.

According to Sebi guidance, companies may list on any of the three national bourses. However, due to more stringent criteria (minimum paid-up capital of Rs 10 crore), NSE listed only eight of these companies. While it did not comment, MSEI, youngest of the three bourses, said it had listed about 110 companies. Their spokesperson said, “Few of these companies have a good business track record as well as financial health. As these companies were listed at RSEs, there was no trading in the securities of these companies for a number of years. After getting exposure of a nationwide stock exchange, these companies have the potential to do better because of wider participation of investors.”

BSE, which initially courted these companies, has listed 244 such. Anjali Aggarwal, partner, Capital Market and Stock Exchange Services, said: “For the purpose of direct listing, BSE has issued relaxed norms, mandating a minimum paid-up capital of Rs 1 crore and a net worth of Rs 3 crore. These relaxed norms are an investor-friendly move, making a large chunk of RSE-listed companies eligible for BSE direct listing.” She suggested a slab system for fees based on a company’s paid-up capital or net worth could help.