Features & Benefits
Who is eligible to open an RFC account?
A person resident in India can open or hold an RFC account out of Foreign Exchange received
What funds can be credited to RFC accounts of Returning Indians?
The entire amount of foreign exchange brought to India at the time of their return to India for permanent settlement as well as the balances standing to the credit of their NRE and FCNR accounts at the time of return can be credited to RFC accounts. However, if the aggregate value of the foreign exchange in the form of currency notes,
bank notes or travelers cheques brought in exceeds USD 10,000/- or its equivalent and/or the value of foreign currency exceeds USD 5,000/- or its equivalent, it should be declared to the Customs Authorities at the Airport in the Currency Declaration Form (CDF), on arrival in India.
Are the balances in NRE/FCNR account permitted to be credited to RFC account?
RFC deposit accounts can be opened by transfer of balances in FCNR deposits with banks in India. This also includes the maturity proceeds of the Resurgent India Bonds (RIBs). The account cannot be opened with funds from an NRE Rupee Account. However, once the RFC account is opened with eligible funds as above, the balances in the NRE Rupee Account of the depositor can be transferred into the RFC account.
Is the interest earned on RFC account liable to tax?
The treatment of deducting tax at source on interest earned on RFC Deposit Account is similar to Domestic Term Deposits. The tax on interest income from RFC is exempted till such time as the Returning Indians maintain the status of ' Non Resident ' or 'Resident But Non Ordinary Resident’. A returning NRI covered by the definition of resident in current year will be considered ‘resident but not ordinarily resident ' if he is a non-resident for 9 out of 10 immediately preceding financial years or if he been in India for not more than 729 days during the preceding seven financial years.
In which currencies can the accounts be opened?
RFC term deposits can be opened in following currencies: USD, GBP, EUR, CAD, AUD and JPY
Who can be a joint holder for such an account?
The account can be held jointly with another person resident in India who is eligible to open an RFC account.
What is the interest rate and tenures for RFC deposits?
The interest rates offered for RFC Deposits is at par with FCNR deposits and the tenure ranging from minimum of 1 year to maximum of 5 years.Premature withdrawal will attract 1% penalty plus swap cost if applicable will be deducted.
Can funds in the RFC account be repatriated abroad?
Yes. Funds in RFC accounts can be remitted abroad for any bonafide purpose of the account holder or his dependents including exchange required for travel and other personal purposes and investments.
Can RFC account be opened anytime after returning to India?
Yes, there is no restriction as long a resident in India meets the condition of eligibility as stated above. Further, for returning NRIs, the eligibility to open this account is not linked in any way with their RNOR status under the Income Tax Act.
For further details
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