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NRE & NRO Account

A Non-Resident Indian (NRI) is often faced with the situation of maintaining a Rupee account in India. Primarily there are two reasons for opening such account: NRI wants to repatriate overseas earned money back to India or he wants to keep India based earnings in India.  NRI has the option of opening a Non Resident Rupee (NRE) account or a Non Resident Ordinary Rupee (NRO) account. An NRO account can also be opened by a Person of Indian Origin (PIO) and an Overseas citizen of India (OCI).


Similarities between NRE and NRO accounts:

Both accounts can be opened as Savings as well as current accounts and are Indian Rupee accounts.


The Differences between NRE and NRO accounts:

1. Repatriation: NRE account is freely repatriable (Principal as well as the interest earned) while the NRO account has restricted repatriability as the remittance allowed from NRO is up to USD 1 million net of applicable taxes in a year after giving self declaration in Form 15CA and  a  certificate from a chartered accountant in Form 15CB

2. Tax Treatment: Income in NRE account is Tax free in India. Whereas the interest generated in NRO account is subjected  to income tax in India.

3. Deposit of Indian Income: If a NRI is generating an Indian Income (such as salary, rent, dividends etc.) then he is only allowed to deposit it in NRO account. No such earnings can be deposited in NRE account.

4. Joint Holding: NRE account can be held jointly with another NRI but not with any resident Indian. Whereas NRO account can be held with a NRI as well as with a resident Indian.

Choose NRE account:

  • If you want to park your overseas income remitted to India converted to INR
  • If you want to maintain savings in INR and keep them liquid
  • If you want to make a joint account with another NRI
  • If you want Rupee savings to be freely repatriable

Choose NRO account:

  • If you want to park India based earnings in INR in India
  • If you want to deposit Indian earnings like as rent, dividends etc.
  • If you want to open account with resident Indian

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