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The blog outlines the key differences between NRO and NRE Accounts for NRIs, focusing on aspects like taxation, repatriability, and suitable conditions for holding and managing earnings in India.
With so many products and accounts available in the market, you can find yourself a little confused and hassled about what product to opt for. Knowing the many available choices better can help you make an informed decision. It also helps if you can differentiate between the various available avenues. That way, you can better choose where to invest all your hard-earned money. You can generate better returns on your money based on your preferences and requirements.
Non-residential external (NRE) and Non-Resident Ordinary (NRO) Accounts are the two major categories of accounts available for you, as an NRI. They are among the most popular options for saving money in India.
The following table summarises the difference between NRE and NRO Accounts-
Basis |
NRE Accounts |
NRO Accounts |
|
An account that helps you park your foreign earnings in India in an Indian denomination. |
An Account that helps you park your earnings from India in Indian Denomination. |
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Deposits in NRE accounts are Tax-Free, i.e. the principal amount and the interest earned thereon are exempt from tax. |
The interest earned in NRO accounts is subject to TDS or Tax deductible at Source. |
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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. |
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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, dividends, sale of Property etc. |
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You can open an NRE account with another NRI and close a 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.