- Earning abroad and want flexibility to take money back out? Use an NRE account — tax-free interest, no repatriation limit.
- Earning income inside India (rent, dividends, pension)? That money must go into an NRO account — interest is taxable and repatriation is capped at USD 1 million per year.
- Want to hold foreign currency without rupee risk? Use an FCNR(B) fixed deposit — held in USD/GBP/EUR, tax-free in India, fully repatriable.
- Most NRIs end up holding both an NRE and an NRO account — they serve different money flows. FCNR is an optional add-on for forex savers.
Why This Choice Actually Matters
Almost every NRI opens a bank account in India at some point — to receive rent, support family, invest in mutual funds, or simply keep a rupee balance. The mistake we see most often at Mintra is NRIs routing the wrong type of money through the wrong account: parking foreign salary in an NRO account (and then struggling to repatriate it), or trying to credit Indian rental income into an NRE account (which is not permitted). The account you choose dictates three things that directly affect your wealth: whether your money is freely repatriable, whether the interest is taxed in India, and what compliance you face when you move money out.
Get the structure right at the start and your cross-border money movement stays clean and tax-efficient for years. Get it wrong and you create avoidable TDS, repatriation paperwork, and in some cases FEMA non-compliance. Here is exactly how the three accounts differ.
NRE Account — for Your Foreign Earnings
An NRE (Non-Resident External) account is a rupee account funded only by income earned outside India. You remit your foreign salary or savings, the bank converts it to INR, and it sits in your NRE savings or fixed deposit account.
- Repatriation: Fully and freely repatriable. Both principal and interest can be sent back abroad at any time, in any amount, without RBI approval or a CA certificate.
- Taxation: Interest is exempt from Indian income tax under Section 10(4)(ii), as long as you remain a non-resident under FEMA. No TDS is deducted.
- Currency risk: You bear rupee depreciation risk — because foreign currency is converted to INR on deposit, a falling rupee erodes the dollar value of your balance.
- Best for: NRIs who want a flexible rupee base for investing in India (SIPs, FDs) while keeping the option to pull funds back out freely.
NRO Account — for Your India-Sourced Income
An NRO (Non-Resident Ordinary) account is the mandatory home for any income that arises in India — rent from property, dividends, mutual fund proceeds, pension, or money from the sale of Indian assets. As soon as you become an NRI, your old resident savings account must be redesignated as NRO.
- Repatriation: Capped at USD 1 million per financial year (April–March), and only after applicable taxes are paid and Form 15CA (you) and Form 15CB (a Chartered Accountant) are filed.
- Taxation: Interest is fully taxable in India. Banks deduct TDS at around 30% plus surcharge and cess on NRO interest — often higher than your actual liability, which you then reclaim by filing an Indian return.
- Joint holding: Can be held jointly with a resident Indian, which makes it convenient for managing family finances.
- Best for: Receiving and managing Indian income; you cannot avoid it if you have rent or other India-source receipts.
The tax side of this is exactly where NRIs lose money to errors and missed deadlines. Mintra works with an in-house Chartered Accountant who has over 15 years of experience handling NRI tax matters — from DTAA claims and TRC/Form 10F to ITR filing, TDS refunds and Form 15CA/15CB repatriation certificates. We offer this as an add-on tax advisory service alongside your investments, so your portfolio and your compliance stay aligned under one roof. Ask Our NRI Tax CA on WhatsApp
FCNR(B) Account — for Forex Savers Who Hate Rupee Risk
An FCNR(B) — Foreign Currency Non-Resident (Bank) — account is a term deposit held in a foreign currency (USD, GBP, EUR, JPY, CAD, AUD and others), for a tenure of 1 to 5 years. Because the money never converts to rupees, the principal carries zero exchange-rate risk.
- Repatriation: Fully repatriable — principal and interest.
- Taxation: Interest is tax-free in India.
- Currency risk: None on the deposit currency — you get back exactly the foreign currency you put in, plus interest.
- Best for: NRIs who want a safe, tax-free parking place for foreign-currency savings — particularly those who intend to take the money back abroad and do not want rupee exposure.
NRE vs NRO vs FCNR: Side-by-Side
| Feature | NRE | NRO | FCNR(B) |
|---|---|---|---|
| Source of funds | Income earned abroad | Income earned in India | Income earned abroad |
| Held in | Indian Rupees | Indian Rupees | Foreign currency |
| Interest taxable in India? | No (tax-free) | Yes (TDS ~30%) | No (tax-free) |
| Repatriation | Free, unlimited | Up to USD 1M/yr + 15CA/15CB | Free, unlimited |
| Rupee exchange risk | Yes | Yes | No |
| Account type | Savings / FD | Savings / FD | Term deposit only (1–5 yrs) |
| Joint with resident? | Former-or-survivor basis | Yes | Former-or-survivor basis |
NRE and FCNR interest is tax-free in India — but your country of residence may still tax it as worldwide income. US persons (citizens and Green Card holders) are taxed by the IRS on global income, so NRE/FCNR interest is reportable and taxable in the US even though India exempts it. This is exactly the kind of cross-border nuance where a mistake compounds quietly for years.
Not Sure How to Structure Your India Accounts?
A 30-minute call with a SEBI-registered advisor will map NRE/NRO/FCNR to your actual money flows and goals.
Which Account Should You Use?
Match the account to the money, not the other way around:
The tax side of this is exactly where NRIs lose money to errors and missed deadlines. Mintra works with an in-house Chartered Accountant who has over 15 years of experience handling NRI tax matters — from DTAA claims and TRC/Form 10F to ITR filing, TDS refunds and Form 15CA/15CB repatriation certificates. We offer this as an add-on tax advisory service alongside your investments, so your portfolio and your compliance stay aligned under one roof. Ask Our NRI Tax CA on WhatsApp
Let Us Set Up Your India Money Correctly
One video call. We structure your NRE/NRO/FCNR accounts, your SIPs, and loop in our NRI tax CA where needed.
Frequently Asked Questions