Here’s a detailed breakdown of NRE, NRO, and FCNR (B) accounts to help Non-Resident Indians (NRIs) manage their finances efficiently.
As an NRI, choosing the right type of bank account is crucial for managing Indian income, foreign earnings, and investments. Indian banks offer three types of accounts tailored to different needs:
| Account Type | Purpose | Deposit Source | Repatriability | Taxability |
|---|---|---|---|---|
| NRE (Non-Resident External) | Hold foreign earnings in India | Only foreign income | Freely repatriable | Tax-Free (No tax on interest) |
| NRO (Non-Resident Ordinary) | Manage income earned in India | Indian & foreign income | Repatriable up to $1 million/year (after tax compliance) | Taxable (30% TDS on interest) |
| FCNR (B) (Foreign Currency Non-Resident – Banks) | Hold savings in foreign currency | Only foreign income | Freely repatriable | Tax-Free (No tax on interest) |
1. NRE Account – For Foreign Income
The Non-Resident External (NRE) Account is ideal if you want to: ✅ Deposit foreign earnings in India
✅ Maintain funds in Indian Rupees (INR)
✅ Enjoy tax-free interest income in India
✅ Have full repatriation (principal + interest)
Best For: NRIs who earn abroad and want to send money to India with ease.
Cons:
- Can’t deposit Indian earnings (e.g., rent, dividends).
- Exchange rate fluctuations may impact INR value.
2. NRO Account – For Indian Income
The Non-Resident Ordinary (NRO) Account is best for managing income earned in India, such as: ✅ Rental income, dividends, pensions, or business profits
✅ Deposits in INR or foreign currency (converted to INR)
✅ Withdrawals in INR
Repatriation Rules:
- Up to $1 million per financial year can be repatriated after paying applicable taxes and filing Form 15CA/CB.
Tax Implications:
❌ Interest earned is taxable at 30% (plus surcharge & cess)
❌ TDS applies, but can be reduced using DTAA benefits
Best For: NRIs who have income sources in India.
Cons:
- Funds are not freely repatriable beyond $1 million.
- Higher tax deduction compared to NRE & FCNR accounts.
3. FCNR (B) Account – For Foreign Currency Savings
The Foreign Currency Non-Resident (Bank) [FCNR (B)] Account is useful if you want to: ✅ Hold deposits in foreign currency (USD, GBP, EUR, etc.)
✅ Avoid exchange rate risks
✅ Earn tax-free interest in India
✅ Have full repatriability of funds
Best For: NRIs who want stable foreign currency savings with no INR exchange risk.
Cons:
- Fixed deposit structure (minimum tenure: 1 year).
- No savings/current account option.
Which Account Should You Choose?
| Your Situation | Best Account Type |
|---|---|
| You earn abroad & want to save in INR | NRE Account |
| You have income sources in India (rent, pension, etc.) | NRO Account |
| You want to hold savings in foreign currency | FCNR (B) Account |
Pro Tip: Many NRIs maintain both NRE and NRO accounts to handle foreign and Indian income separately.
Would you like assistance with tax-saving strategies or repatriation processes? 🚀
