Quick answer:
NRE and FCNR(B) accounts are fully repatriable and the interest is tax-exempt in India while you are non-resident; NRO is best for managing Indian-source income but interest is taxable and principal is repatriable up to USD 1 million per financial year (net of taxes and with documentation). (Income Tax India, Reserve Bank of India)
Last updated: 15 August 2025
Download the interest-taxability mini-chart.
A full comparison table is displayed above in your viewer.
What are NRE, NRO and FCNR(B) accounts?
- NRE (Non-Resident External) Rupee Account: INR-denominated savings/FD account used to park overseas income in India. Permitted credits include inward remittances and transfers from other NRE/FCNR(B) accounts; certain current income may also be credited if it retains repatriable character. Fully repatriable. (Reserve Bank of India)
- NRO (Non-Resident Ordinary) Rupee Account: INR-denominated account to collect and manage Indian-source income such as rent, dividends, pension, etc. Interest is taxable in India; repatriation of balances is capped (see below). (Reserve Bank of India, SBI)
- FCNR(B) (Foreign Currency Non-Resident) Deposit: A foreign-currency term deposit (e.g., USD/GBP/EUR/JPY) that protects you from INR exchange risk; typical tenors 1–5 years; principal and interest are fully repatriable. (SBI, Avantis CDN Production Storage)
Who can open? NRIs and PIOs/OCIs are eligible for NRE/NRO/FCNR(B) accounts (bank-specific documentation applies). (SBI)
Side-by-Side: What really differs?
At a glance (high impact points):
- Currency: NRE/NRO = INR; FCNR(B) = Foreign currency. (FCNR shields you from INR depreciation risk.) (SBI)
- Source of funds: NRE = overseas income; NRO = Indian income; FCNR(B) = overseas income or transfers from NRE. (Reserve Bank of India)
- Tax in India (interest): NRE & FCNR(B) exempt for non-residents under Section 10(4)(ii); NRO taxable (TDS applies). (Income Tax India, SBI)
- Repatriability: NRE/FCNR(B) fully; NRO up to USD 1 million per FY (plus current income) with Form 15CA/CB and taxes paid. (Reserve Bank of India, ICICI Bank)
- Tenor: FCNR(B) deposits: 1–5 years (RBI direction); NRE/NRO FDs usually 7 days–10 years as per bank policy. (Avantis CDN Production Storage)
Visuals: See the Interest Taxability mini-chart (NRO = taxable, NRE/FCNR = exempt while non-resident) and the interactive comparison table above.
Taxation: What you’ll actually pay
- NRE and FCNR(B) interest is exempt in India while you are non-resident (Section 10(4)(ii) of the Income-tax Act). If you return and become Resident/RNOR, the exemption can stop—check your residential status each year. (Income Tax India)
- NRO interest is taxable, with TDS typically deducted by the bank; surcharge/cess may apply based on your total income. (SBI)
Quick TDS math (illustration):
If annual NRO interest = ₹5,00,000, and bank deducts 31.2% (30% + 4% cess; ignoring surcharge), TDS ≈ ₹1,56,000.
Formula: TDS = Interest × applicable rate.
Tip: If your actual slab/treaty rate is lower, file a return to claim a refund.
Repatriation rules you must know
- NRE/FCNR(B): Principal and interest are freely repatriable anytime through normal banking channels. (Reserve Bank of India)
- NRO: You can remit up to USD 1 million per financial year (April–March) net of taxes, including sale proceeds/income, subject to documentation—Form 15CA/CB and CA certificate as per CBDT Circular 10/2002. Transfers from NRO to NRE are allowed within this limit after taxes. (Reserve Bank of India, Reserve Bank of India, ICICI Bank)
Tenor, rate ceilings & recent RBI moves
- FCNR(B) deposit tenors are 1 year to 5 years as per RBI directions. (Avantis CDN Production Storage)
- In Dec 2024, RBI temporarily raised the ceiling on banks’ FCNR(B) rates (ref. rate +400 bps for 1–3 years; +500 bps for 3–5 years) to attract forex inflows—banks adopt these selectively. Always check current bank cards. (Reuters)
Which account should you pick? (Simple decision guide)
- You earn abroad and want INR access + full repatriation: Choose NRE.
- You have Indian income (rent/dividends/pension) and Indian expenses: Use NRO.
- You want to avoid INR risk on deposits and lock foreign-currency rates: Go with FCNR(B) for 1–5 years. (SBI)
Operational FAQs
Can I hold the account jointly with a resident?
Yes, joint holding rules differ by type and bank; large banks allow certain combinations (e.g., NRO/NRE/FCNR(B) with resident relative on ‘former or survivor’ basis). Check your bank’s specific policy. (SBI)
Can I transfer funds from NRO to NRE?
Yes, up to USD 1 million per FY from NRO to NRE after paying taxes and with documentation (Form 15CA/CB). (HDFC Bank, ICICI Bank)
Are mutual fund investments possible from these accounts?
Yes—repatriable investments typically route via NRE/FCNR(B); non-repatriable via NRO. (MEA India)
What credits are allowed in NRE?
Inward remittances, interest, transfers from other NRE/FCNR(B), and certain current income if it remains repatriable. (Reserve Bank of India)
Common mistakes to avoid
- Mixing sources: Don’t park Indian-source income in NRE; use NRO to stay compliant. (Reserve Bank of India)
- Ignoring residency changes: On becoming Resident/RNOR, re-evaluate tax on NRE/FCNR(B) interest and convert accounts appropriately (e.g., to RFC/resident accounts as per bank guidance). (SBI)
- Under-documenting remittances: Keep Form 15CA/CB, CA certificates, and proofs ready for NRO repatriations. (ICICI Bank)
Real-world scenarios (India-centric)
- NRI with Dubai salary + Mumbai expenses:
Credit salary into NRE (fully repatriable, tax-exempt interest), transfer monthly to NRO for rent/utility payments. (Reserve Bank of India) - US-based NRI with a leased flat in Pune:
Collect rent in NRO (taxable interest). Once a year, remit excess savings abroad up to USD 1 million post-tax with 15CA/CB. (Reserve Bank of India) - Hedging INR risk on deposits:
Place surplus in FCNR(B) 1–5 years to avoid rupee exposure; review bank-offered rate ceilings. (Avantis CDN Production Storage, Reuters)
Key takeaways
- NRE & FCNR(B): Fully repatriable; interest tax-free in India while non-resident.
- NRO: Best for Indian income; taxable interest; USD 1 million annual repatriation limit with documentation.
- FCNR(B): Foreign-currency deposit for 1–5 years, minimizes INR risk. (Income Tax India, Reserve Bank of India, Avantis CDN Production Storage)
Mini-FAQ (rich snippet friendly)
Is NRE interest taxable in India?
No, it’s exempt while you are non-resident under Section 10(4)(ii). (Income Tax India)
Is NRO interest taxable?
Yes. Banks deduct TDS; final tax depends on slab/treaty. (SBI)
How much can I repatriate from NRO?
Up to USD 1 million per financial year (net of taxes) with Form 15CA/CB. (Reserve Bank of India)
What is the FCNR(B) deposit tenor?
1–5 years. (Avantis CDN Production Storage)
Any recent change impacting FCNR(B) rates?
RBI raised rate ceilings in Dec 2024 to attract forex inflows; check current bank rates. (Reuters)