Sending Money from India to the UAE – A Step-by-Step Process

Set Hub Writes
19.08.24

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Sending Money from India to the UAE One of the biggest concerns that many Indians working in the UAE face is how to send money back home, all while trying to save on taxes. To save as much of your hard earned income as possible, it’s essential to understand how to manage the transfer of your finances. Keep reading to find out more on how to send your money back home!

Don’t let your money idle in bank accounts

Any individual who is employed full time in the UAE will have a bank account to which their monthly salary is credited. While a bank account is the place to keep your earnings safe, interest rates are quite low. Therefore, the best option for you would be to transfer your earnings back to a bank account in India where interest is likely higher than in the UAE.

Another benefit of moving your funds to an account in India is the fact that your money will enjoy the advantageous financial market conditions in India. Putting your hard earned cash in an account that performs well over time will result in interest that compounds. This will eventually lead to a growth in your savings. You should also take note that many of the fixed deposit product offerings in India are more beneficial to the depositor than those in the UAE.

Open an NRE or NRO Account

Several banks in India offer a product known as a NRE (Non-Resident External) or NRO (Non-Resident Ordinary) account. These accounts function with the needs of NRIs (Non-Resident Indians) in mind.

As an NRI, having both of these accounts would be critical to your financial well-being, purely because they pave the way for you to transfer your money in a manner that does not result in heavy tax burdens. These accounts have been developed specifically to cater to the many foreign currency transactions that NRIs tend to make, and they offer a range of services that make it easier to manage international transfers.

When to Open Your NRE/NRO Account

The prerequisite to open one of these accounts is to be considered as a NRI. In order to gain this status, you must reside outside of India for a period of 180 consecutive days.

As soon as you meet the criteria, it is advisable to open these accounts as delaying the process will mean that you will forfeit opportunities to save and manage your money more efficiently.For instance, if you’ve been living abroad for a few months but haven’t yet set up your NRI accounts, you’re likely losing out on potential tax exemptions and better interest rates that come with having a designated NRE/NRO account.

Here are the key difference between the two accounts:

NRE Account: Only for overseas earnings. Any income you transfer from UAE to India will go into this account. The best part? It’s tax-free!
NRO Account: Only for money earned inside India. This could be rental income or other earnings. Taxes are set at around 35-36%, as you’re an NRI earning money from India.

Do keep in mind that an NRE account will make it much easier to repatriate your earnings freely. So if the need ever arises, you can send earnings back to your account in the UAE without major restrictions. This will come in handy when you need to manage short term expenses or if you plan on making large purchases abroad.

Why You Need Both NRE and NRO Accounts

Having both of these accounts offers many advantages. If you have rental income in India, it can only be deposited in your NRO account. Your salary from the UAE will go into your NRE account. Having both accounts ensures you can manage all your finances seamlessly.

Keep your Indian income separate from what you earn in the UAE. This will keep you in compliance with Indian tax laws and will also help you understand your financial health more clearly, making it easier for you to plan for both immediate needs and long-term investments, such as property purchases, educational expenses, or retirement savings.

Documents Required to Open an NRE/NRO Account

To open these accounts, you’ll need:

A valid visa or resident permit.
An identity card or address proof.
A salary statement or company offer letter.

Make sure to close any existing Indian bank accounts, as you cannot hold both NRI and regular Indian accounts simultaneously.

Keep these documents on hand for a smoother process. Do keep in mind that some banks will ask for notarized copies of these documents, depending on your location and specific circumstances. Certain banks may even offer remote account-opening services, allowing you to start the process from the UAE itself.

Sending Money to India

The best way to start transferring money is through local exchanges. These exchanges offer competitive conversion rates and low transaction fees.

Local exchanges are preferable because of the added flexibility when compared to traditional bank transfers. They often have better exchange rates due to their bulk transactions and charge much lower fees, making them a more cost-effective option. By using local exchanges, you can also minimize the risk of currency fluctuations, as these services usually lock in the rate at the time of the transfer.

If you’re looking to send money to the UAE from India or transfer money from the UAE to India, local exchanges are far more cost effective than traditional bank transfers.

Final Thoughts

All you have to do is open the right accounts and use cost-effective methods to transfer money. Whether it’s through higher FD rates, mutual funds, or other investments, your NRE and NRO accounts will help you grow your wealth while you work abroad.

Review your financial strategy from time to time. As interest rates, tax laws, and exchange rates can fluctuate, staying in the loop will allow you to adjust your money management approach accordingly. Keeping track of current trends in both the UAE and Indian markets can help you maximize returns and minimize unnecessary expenses.

Why Choose SetHub

As a Non-Resident Indian (NRI), navigating the complexities of financial management can be challenging. At SetHub, we specialize in guiding NRIs through these processes, from setting up the right bank accounts to ensuring compliance with tax regulations. Whether you need to send money to the UAE from India or manage money transfer from the UAE to India, contact SetHub today to simplify your financial journey and make informed decisions that protect your wealth.