Non-Resident Indians (NRIs) continue to send significant funds back home, with recent RBI data showing a massive 23% growth in NRI deposits by February 2025. To manage these funds, many NRIs prefer opening joint bank accounts with their family members in India. The Reserve Bank of India (RBI) has released updated master directions in January 2025 regarding how these accounts can be operated and who can be added as a joint holder.
Rules for Opening Joint Accounts with Residents
According to the latest guidelines, the type of account determines who can be a joint holder. For NRE and FCNR (B) accounts, an NRI can only add a resident relative as a joint holder, as defined under the Companies Act, 2013. However, for NRO accounts, an NRI is allowed to open a joint account with any resident Indian, regardless of whether they are related or not.
The operation of these accounts follows a strict ‘Former or Survivor’ mandate. This means that as long as the NRI (the primary account holder) is alive, only they can operate the account. The resident joint holder gains the right to operate the account only after the death of the primary holder. If an NRI wants a resident to handle transactions while they are abroad, they must grant a Power of Attorney (PoA). The PoA holder can make local payments but is not allowed to send money outside India.
New Tax Limits and Financial Changes for 2025
The Union Budget 2025 has introduced several financial reliefs for NRIs. The limit for Tax Collected at Source (TCS) exemption under the Liberalised Remittance Scheme (LRS) has been increased. Now, remittances up to ₹10 lakh will not attract any TCS, compared to the previous limit of ₹7 lakh. Additionally, the basic income tax exemption limit for NRIs has been raised from ₹3 lakh to ₹4 lakh for the financial year 2025-26.
Other key financial updates include:
- LTCG Tax: Long Term Capital Gains tax on property sales has been reduced to 12.5% for holdings over 2 years.
- Claim Settlement: Under draft rules expected to be effective from January 2026, banks will settle claims up to ₹15 lakh in accounts without nominees without requiring a court order.
- Interest Rates: RBI has extended higher interest rate limits on FCNR deposits until March 2025 to attract more foreign inflows.
