NRE vs NRO Account
Your Indian rent legally can't go where most NRIs put it — find your right account
Reviewed by the PaisaTools Editorial Team · Last reviewed September 2026
How to use: Answer where your money comes from and what you plan to do with it — the right account, its tax treatment and the repatriation rules appear instantly.
ExampleForeign salary + Indian rent → you need both: NRE for the salary, NRO for the rent
Your situation
Do you earn or hold money abroad?
Salary, savings or investments outside India.
Do you have Indian income?
Rent, dividends, pension or interest arising in India.
Selling Indian property or investments?
Sale proceeds follow special repatriation rules.
Will you need to move this money out of India?
Worried the rupee weakens against your currency?
If yes, FCNR(B) holds the money in foreign currency instead.
Planning to move back to India within ~2 years?
You need
NRE
NRE — tax-free interest and unrestricted repatriation
• For your foreign earnings, an NRE account is the straightforward choice: interest is tax-free in India and both principal and interest are fully repatriable.
• It's held in rupees, so you carry the currency risk — but you also earn Indian rupee interest rates and can withdraw any time.
Side by side
| Account | Tax on interest | Repatriation | Rupee risk |
|---|---|---|---|
| NRE | Tax-free in India | Fully repatriable, no limit | Yes — held in rupees |
| NRO | Taxable; TDS ~30% + surcharge & cess | Capped at USD 1 million per financial year | Yes — held in rupees |
| FCNR(B) | Tax-free in India | Fully repatriable, no limit | No — stays in foreign currency |
Before you act
- • Both accounts can usually be held jointly, but the rules differ (an NRE account joint with a resident is generally on a 'former or survivor' basis). Confirm with your bank.
Runs entirely in your browser — nothing is uploaded. Educational guidance on FEMA and tax rules, not advice: confirm with your bank and a qualified professional before opening or moving accounts.
Most NRE-versus-NRO comparisons present the two accounts as a choice. For a large part of the decision, they aren't. Under FEMA, income that arises in India — rent, dividends, a pension, proceeds from selling a flat — cannot be credited to an NRE account. If you have Indian income, an NRO account isn't preferable, it's required.
The real choice sits on the other side: money you earn abroad. That can go into an NRE account (held in rupees, tax-free interest, freely repatriable) or an FCNR(B) deposit (held in foreign currency, also tax-free and repatriable, but immune to a falling rupee). Both are tax-free in India — the honest difference between them is currency risk, not tax.
The costs that surprise people are on the NRO side: interest is fully taxable with TDS around 30%, and taking money out is capped at USD 1 million a financial year with Forms 15CA and 15CB. This tool asks where your money comes from and what you need to do with it, then tells you which accounts you need — and flags the paperwork before you commit.
Based on the FEMA framework for non-resident accounts and current Indian tax treatment (verified July 2026): NRE and FCNR(B) interest is exempt in India with free repatriation of principal and interest; NRO is the required account for income arising in India, with interest taxable and TDS at approximately 30% plus surcharge and cess, and repatriation limited to USD 1 million per financial year using Forms 15CA/15CB. DTAA relief on NRO TDS requires Form 10F and a Tax Residency Certificate. FCNR(B) is a foreign-currency term deposit, typically 1–5 years. Deposit rates vary by bank, currency and tenor and change often — check live rates. This is educational guidance, not tax or legal advice; confirm with your bank and a qualified professional.
- Repatriation limits and documentation vary by bank.
- Indian-source income legally cannot be credited to an NRE account.
- What is the main difference between NRE and NRO accounts?
- An NRE account is for money earned abroad: interest is tax-free in India and both principal and interest are fully repatriable. An NRO account is for money arising in India — rent, dividends, pension, sale proceeds — where interest is taxable, TDS is deducted at roughly 30% plus surcharge and cess, and repatriation is capped at USD 1 million per financial year.
- Can I put my Indian rent into an NRE account?
- No. Under FEMA, income arising in India cannot be credited to an NRE account — it must go into an NRO account. This is the part most comparisons bury: for Indian income you don't get to choose, and using the wrong account is a compliance problem rather than a preference.
- Do I need both an NRE and an NRO account?
- Most NRIs do, and that's correct. If you earn abroad and also have Indian income, the two accounts do different jobs — NRE (or FCNR) for foreign earnings, NRO for anything arising in India. Keeping them separate also keeps your tax position clean.
- How much TDS is deducted on NRO interest, and can I reduce it?
- Banks deduct roughly 30% plus surcharge and cess on NRO interest. That is often more than your actual liability. A Double Taxation Avoidance Agreement can reduce the rate, but only if you submit Form 10F and hold a valid Tax Residency Certificate. You can also reclaim excess TDS by filing an Indian return.
- What is FCNR(B), and when is it better than NRE?
- An FCNR(B) deposit holds your money in foreign currency — dollars, pounds, euros — rather than rupees. Interest is tax-free in India and it is fully repatriable, just like NRE, but because it never converts to rupees you carry no currency risk. The trade-off is that it exists only as a term deposit (typically 1–5 years); there is no FCNR savings account.
- What happens to these accounts when I move back to India?
- They must be redesignated once you become a resident again. NRE balances typically move into an RFC (Resident Foreign Currency) account, which lets you keep holding foreign currency. The tax-free status of NRE interest ends with your NRI status, so it's worth planning the switch rather than discovering it later.