Synopsis
NRE stands for Non-Resident External and NRO stands for Non-Resident Ordinary.
NRE Account allows you to deposit foreign currency and it is held in Indian Rupees.
NRO Account allows you to deposit Indian currency, which is held in Indian Rupees.
When you’re no longer an Indian resident, you cannot use your resident Savings Account abroad. To manage your finances in India, you need to open NRI Accounts.
Non-Residential External (NRE) and Non- Resident Ordinary (NRO) Accounts are the two major categories of accounts available for you, as an NRI. They happen to be amongst the most popular options if you wish to save money in India.
NRE Account: Meaning
The full form of NRE is Non-Resident (External) Account. It allows NRIs to deposit foreign earnings in India, with balances fully repatriable and tax-free in India. The balances are held in Indian Rupees. NRE Accounts can help you manage overseas income efficiently while earning interest.
NRO Account: Meaning
The full form of NRO is Non-Resident (Ordinary) Account. It is used by NRIs to manage income earned in India, such as rent, dividends, or pension. NRO balances are partially repatriable, and the interest earned is taxable in India, making it suitable for domestic income management. The balances are held in Indian Rupees.
What is the Difference Between NRE and NRO Accounts?
The following table summarizes the difference between NRE and NRO Accounts -
Basis | NRE Accounts | NRO Accounts |
| An account that helps you park your foreign earnings in India, in Indian denomination. | An Account that helps you park your earnings from India in Indian Denomination. |
| Deposits in NRE accounts are Tax-Free, i.e. the principal amount, and the interest earned thereon, is exempt from tax. | The interest earned in NRO accounts is subject to TDS or Tax deductible at Source. |
| Money from NRE accounts is freely repatriable i.e. both the Principal amount and interest earned are freely and completely transferable. | Funds from the NRO Accounts can be repatriated post payment of applicable taxes with a limit of USD 1 million in a financial year. |
| You should opt for NRE Accounts if you want to hold or maintain your overseas earnings in Indian currency. NRE Accounts are also suitable if you wish to keep your savings liquid. | You should opt for NRO Accounts if you want to save your earnings from India in Indian currency itself. These earnings could include rent, income, dividend, sale of Property etc. |
| You can open an NRE account with another NRI and close relative Resident Indian. | You can open an NRO account with an NRI as well as any Indian resident. |
Looking to open an NRI Account? Click here to get started!
You can read more on the different types of NRI Accounts here.
* The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.
Video
What is an NRI account
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