NRO vs NRE vs FCNR Accounts for NRIs: Differences, Tax, Repatriation and Which to Open

Non-resident Indians (NRIs) cannot keep using their regular resident savings accounts once their status changes under FEMA. They must convert them or open NRI accounts. The three main options are NRO, NRE and FCNR(B), and each has a different purpose, tax treatment and repatriation rule. Choosing correctly saves tax and trouble.

This is general information, not financial, tax or legal advice. Rules, rates and limits change, so confirm current details with the official source or a qualified professional.

Quick comparison

Rules are set by the Reserve Bank of India and the Income Tax Department. Confirm the latest provisions with your bank.

NRO account

• For money earned in India: rent, dividends, pension, sale proceeds of some assets and gifts.
• Interest is taxable, and banks deduct TDS at a high rate, often 30% plus surcharge and cess, though double taxation avoidance agreements may reduce the rate. Submit a tax residency certificate and Form 10F where relevant.
• Resident family members can be joint holders and operate it.

NRE account

• For foreign earnings transferred to India through banking channels. You cannot deposit Indian rupee cash or local income here.
• Principal and interest can be freely repatriated.
• Interest is currently exempt from tax in India, but check tax rules in your country of residence.
• A resident can be a joint holder only on a "former or survivor" basis in limited cases, and cannot operate it independently.

FCNR(B) deposit

• A term deposit in a permitted foreign currency, usually for one to five years.
• Protects you against rupee depreciation. You get principal and interest back in the same currency.
• Interest rates are tied to international benchmarks.

Which should you open?

Taxes and reporting

• NRIs are taxed in India on income that is earned or received in India. File an ITR if your Indian income exceeds the basic limit. See how to file ITR.
• If TDS was deducted at a higher rate than your treaty rate, you can claim a refund through the return.
• Foreign tax rules, such as FATCA reporting for US persons, may apply. Consult an international tax professional.
• Repatriation of NRO funds needs Form 15CA and 15CB, certified by a chartered accountant.

When your status changes

When you move abroad for work or an indefinite stay, inform your bank, update KYC and convert resident accounts into NRO or NRE accounts. When you return to India for good, NRE and FCNR(B) accounts can usually continue until maturity, with NRO accounts becoming resident accounts. Tax residency is decided by the number of days spent in India, and rules changed in recent years. Check the current days-in-India tests.

Common mistakes

• Keeping a resident savings account after becoming an NRI. This violates FEMA.
• Depositing Indian income into an NRE account.
• Ignoring TDS on NRO interest and not claiming treaty benefits.
• Forgetting to declare Indian income in the country of residence.
• Not nominating a beneficiary.

Also see UPI for NRIs and using UPI abroad, and real estate investment.

Practical tips for NRIs managing money in India

• Choose a bank with good online banking, since you will operate the account remotely, and set up a power of attorney or a trusted resident contact for emergencies.
• Keep your PAN, Aadhaar status and KYC updated, and link your mobile number or an international number for alerts.
• Use a regulated remittance provider and compare exchange rates and fees, since small differences add up on large transfers.
• Keep records of every transfer and the source of funds, since banks and tax authorities may ask.
• Review your nominations and wills for assets in India and abroad, so that transfer to family is smooth.

Frequently asked questions

What is the difference between NRO and NRE?

NRO holds income earned in India and is taxable, while NRE holds foreign earnings and its interest is currently tax-free in India.

Can I repatriate funds from an NRO account?

Yes within limits, up to USD 1 million per financial year, with the required documents.

What is FCNR(B)?

A foreign currency fixed deposit that removes exchange rate risk.

Can a resident Indian be a joint holder?

NRO allows it, NRE has restrictions.

Do I need to file an ITR as an NRI?

If you have Indian income above the limit or want a refund, yes.

What happens when I return to India?

Accounts must be redesignated or continued under the rules, so inform your bank.

Last reviewed 8 November 2026. Rates, limits and rules change, so confirm figures with the official source before you act.