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
Criteria | NRE | NRO |
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Purpose | Used to invest income earned abroad in Indian capital markets | Used to manage and invest income earned within India |
Repatriation | Full repatriation of principal and interest | Interest is repatriable; principal repatriation capped at USD 1 million per financial year |
F&O Trading | Not permitted for derivatives trading | Permitted for Equity F&O with Custodial Participant (CP) code |
Transfer | Funds can be transferred to an NRO account | Transfers from NRO to NRE accounts not allowed |
Taxability | Interest earned is tax-exempt in India | Interest earned is taxable under Indian tax laws |
Deposits & Withdrawals | Permits deposits and withdrawals in INR and foreign currency | Deposits 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...
Scenario | What you should know |
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You want tax-free earnings and easy fund repatriation | Choose an NRE account |
You receive rental income, dividends, or pension in India | An NRO account is suitable for managing Indian income |
You want to trade in Equity F&O | You'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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