An important step towards liberalisation of foreign exchange facilities available to individual residents was, the permission by Reserve Bank of India to allow a resident in India to open, hold and maintain with a licensed Bank (which is also an authorised dealer) in India, a Foreign Currency (Domestic) Account and foreign exchange acquired from any of the sources specified as under can be kept in this account by the resident.
Type of Account: Current Account.
Currency: Foreign Currency such as USD, GBP & EURO.
Eligible Credits: Out of Foreign Exchange acquired from the sources specified as above in the form of currency notes, bank notes and travellers cheques.
Eligible Debit: Payment towards current and capital account transactions in accordance with existing foreign exchange regularities.
Ceiling: No upper ceiling on balances held in account is stipulated by Reserve Bank of India.
Interest: No interest will be payable on balances held in account.
Any person resident in India can open or hold an RFC account out of Foreign Exchange received:
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 travellers 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.
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.
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.
The account can be held jointly with another person resident in India who is eligible to open an RFC account.
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 3 years. Premature withdrawal will attract 1% penalty plus swap cost if applicable will be deducted.
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.
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.
RFC term deposit accounts can be opened in following currencies: USD, GBP and EUR
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