An NRE account holds money you bring in from abroad, and it is generally easy to send back out. An NRO account holds income you earn in India, such as rent, and sending it abroad has limits and paperwork. This is general information, not tax or legal advice.
What is an NRE account used for?
An NRE account is a rupee account for money earned abroad and brought to India. Funds in it can generally be sent back abroad, both the principal and the interest, under the rules for such accounts. Interest has so far not been taxed in India for NRIs, though your country of residence may tax it.
Rules change, so confirm the latest conditions with your bank.
Some people also hear about FCNR deposits, which hold foreign currency. They are a separate product, so ask your bank if they suit your plans.
What is an NRO account used for?
An NRO account is meant for income that arises in India: rent, dividends, pension, sale proceeds. Interest is taxable in India, and banks deduct tax at source. The rate is high unless a tax treaty gives you a lower one, which usually needs paperwork such as a tax residency certificate.
Sending money abroad from NRO is allowed up to a yearly limit, normally with a chartered accountant certificate and tax forms. Ask your bank for the current limit and the forms.
Keep rent and other Indian income documents tidy. Your bank may ask for proof of the source when you move money out, and your tax return will need the same figures.
NRE vs NRO at a glance
These are general patterns. Your bank and a qualified adviser can tell you how they apply to you.
Banks also differ in forms and charges. Compare minimum balances, online access and how easily family in India can help you with day to day tasks. A small difference in service often matters more than a small difference in interest.
- NRE: money that comes from abroad, easier to send back.
- NRO: income that arises in India, with limits on sending out.
- Tax on interest differs, so ask a chartered accountant.
- Joint holders and nominees follow the bank and regulator rules.
Can you hold both an NRE and an NRO account?
Many NRIs do. They use NRE for savings from abroad and NRO for rent and other Indian income. Keeping them separate also makes your tax return cleaner, because it is clear where each rupee came from.
A common pattern is to send foreign salary savings to NRE and have the tenant pay rent into NRO. That way the tax picture is clear, and the paperwork for sending money abroad stays simple.
What happens to your accounts when your status changes?
If you move abroad, your old savings account should be converted to NRO. If you return for good, NRE and NRO accounts also need to be redesignated. Tell your bank about every change and ask what must be done, so nothing lapses by accident.
We4NRI is a Chennai based paperwork service, not a bank or a tax advisor. We help with documents and coordination, and we work with qualified professionals for advice.
Check also what your bank does about nominees and joint holders when your status changes. These small details are often missed until a family emergency.
Quick questions
NRE holds money earned abroad and is generally easier to send back out. NRO holds income that arises in India and has limits and paperwork for sending it abroad. Tax treatment also differs, so ask a chartered accountant about your case.
Many NRIs do, using each for its own purpose. Confirm current rules and the options your bank offers before you open them, and ask about joint holders and nominees, since those rules can differ between the two account types.
Rent is Indian income, so it normally goes into an NRO account. Ask your chartered accountant how to report it and how tax deducted by the tenant is handled, because the details depend on your residence country and treaty position.
No. We help with paperwork and coordination from Chennai, and we work with qualified professionals for advice. Tax and banking rules change, so check current rules with your bank and adviser before you act on anything you read here.
This guide is general information, not legal, tax or immigration advice. Check current rules with the receiving office and a qualified professional.
