NRE vs NRO Account: Which One Should an NRI Open?
Quick Answer
Open an NRE account to park foreign earnings in India; both principal and interest are fully tax-free and freely repatriable. Open an NRO account to manage income earned within India (like rent or dividends); interest earned is subject to 30% TDS plus surcharge.
NRE vs NRO: Key Differences
For Non-Resident Indians (NRIs), choosing between an NRE (Non-Resident External) and an NRO (Non-Resident Ordinary) account is a fundamental financial decision.
| Feature | NRE Account | NRO Account |
|---|---|---|
| Purpose | Transfer foreign earnings to India | Manage income earned in India |
| Taxability | Tax-Free (Interest & Principal) | Taxable (30% TDS on interest) |
| Repatriability | Freely Repatriable | Limited (Up to $1M/year) |
| Joint Account | With another NRI only | With NRI or Resident Indian |
Which one do you need?
If your goal is to save your overseas earnings in Indian Rupees and enjoy tax-free interest with the flexibility to take the money back any time, the NRE account is superior.
If you have income sources in India like house rent, pension, or dividends from Indian shares, you must have an NRO account to receive these funds. Resident accounts must be converted to NRO once your status changes to NRI.
Try the Calculator
Get your exact numbers using our free fd calculator.