NRE vs NRO Account NRI Banking FAQs
NRE vs NRO Account Frequently Asked Questions
Short Answer: NRE is for foreign income, NRO is for Indian income.
Long Answer: An NRE (Non-Resident External) account is used to park income earned abroad in Indian Rupees, while an NRO (Non-Resident Ordinary) account is meant for managing income earned in India such as rent, dividends, or pensions.
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Short Answer: No, only foreign currency deposits are allowed.
Long Answer: NRE accounts only accept deposits in foreign currency, which are then converted into INR. If you have Indian Rupee earnings, you must deposit them in an NRO account.
Short Answer: Yes, both principal and interest are fully repatriable.
Long Answer: In an NRE account, you can freely transfer your funds (principal and interest) back to your country of residence without restrictions, subject to bank procedures.
Short Answer: Yes, but with limits and documentation.
Long Answer: You can repatriate up to USD 1 million per financial year from an NRO account after paying applicable taxes and providing necessary documents such as Form 15CA/CB.
Short Answer: NRE – tax-free; NRO – taxable.
Long Answer: Interest earned on an NRE account is tax-free in India, while interest on an NRO account is subject to TDS (Tax Deducted at Source) as per Indian tax laws.
Short Answer: Yes, most NRIs hold both.
Long Answer: Many NRIs maintain an NRE account for foreign income and an NRO account for income originating in India. This helps in keeping funds and tax obligations separate.
Short Answer: NRE – only with an NRI; NRO – with an NRI or resident Indian.
Long Answer: NRE accounts can only be held jointly with another NRI. NRO accounts can be held jointly with either an NRI or a resident Indian, making it useful for managing family expenses in India.
Short Answer: NRO account.
Long Answer: Since rental income is considered Indian-sourced income, it should be deposited into an NRO account. You can later repatriate funds after paying applicable taxes.
Short Answer: Yes, it can be converted to NRO.
Long Answer: Once you become an NRI, you must inform your bank and convert your resident savings account into an NRO account. An NRE account needs to be opened separately for foreign income.
Short Answer: NRE account.
Long Answer: Since NRE accounts allow deposits in foreign currency and hold funds in INR, you benefit from favorable exchange rates when converting your foreign earnings to Indian Rupees, especially during currency appreciation.
