What are the differences between an NRE and an NRO account?

What are the differences between an NRE and an NRO account?

Non-Resident Indians (NRIs) can choose between two bank account types in India—Non-Resident External (NRE) and Non-Resident Ordinary (NRO). Each account serves a distinct financial purpose based on the source of funds and repatriation needs.

Comparison between NRE and NRO accounts

CriteriaNRENRO
PurposeUsed to invest income earned abroad in Indian capital marketsUsed to manage and invest income earned within India
RepatriationFull repatriation of principal and interestInterest is repatriable; principal repatriation capped at USD 1 million per financial year
F&O TradingNot permitted for derivatives tradingPermitted for Equity F&O with Custodial Participant (CP) code
TransferFunds can be transferred to an NRO accountTransfers from NRO to NRE accounts not allowed
TaxabilityInterest earned is tax-exempt in IndiaInterest earned is taxable under Indian tax laws
Deposits & WithdrawalsPermits deposits and withdrawals in INR and foreign currencyDeposits in both INR and foreign currency; withdrawals in INR only

Note: Repatriation refers to the ability to transfer funds from India to your country of residence.

What if...

ScenarioWhat you should know
You want tax-free earnings and easy fund repatriationChoose an NRE account
You receive rental income, dividends, or pension in IndiaAn NRO account is suitable for managing Indian income
You want to trade in Equity F&OYou'll need to use an NRO Non-PIS account with a CP code
NRE accounts are ideal for managing overseas income in India, while NRO accounts are designed to manage income originating in India. Choose the account based on your financial inflows and investment goals.

To get started with the NRI account setup process at FYERS, submit your details here.

Last updated: 24 Jun 2025

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