The difference between NRE and NRO accounts in India.
NRIs can open rupee accounts in India in order to repatriate funds. The two most common accounts are the Non-Resident External (NRE) account and Non-Resident Ordinary (NRO) account. Here is the comparison between NRE and NRO accounts.
| Non-Resident External (NRE) Account | Non-Resident Ordinary (NRO) Account | |
| Purpose of this account | When customer is interested in Repatriation and also want to exempt from tax, NRE accounts are suitable. | These accounts are useful to the NRIs who are having income (like rent, dividend, pension) in India and to make local payments in Indian Rupees for their genuine needs in India. |
| Best Suited for | To park overseas savings remitted to India by converting to INR | To park Indian earnings like rent, Indian salary, dividend, etc |
| Who can open this account? | NRIs or OCBs outside India | Any person resident Outside India |
| Type of Deposits ? | Current, Savings, Recurring and Term Deposits. | Current, Savings, Recurring and Term Deposits |
| Currency in which account is maintained | Indian Rupees | Indian Rupees |
| Tax benefits | Tax free | Interest is taxable |
| Source of funds | Earnings abroad or from another NRE / FCNR account maintained in India | funds received from within India |
| Can I have joint account holder with an Indian resident ? | NO | Yes |
| Can I have joint account holder another NRI? | Yes | Yes |
| Can funds be transferred to another account? | Yes, to an NRO, NRE, or Resident account | Yes, to an NRO or Resident account |
| Can I transfer funds from NRE to NRO account and vice versa | Transferring money from NRE to an NRO account is easy ( Note: the amount is non-repatriable. That is, you cannot transfer it back) | No, you cannot transfer funds from NRO account to an NRE account |
| Can Power of attorney holder (ex: Father, mother, etc in India ) operate the account ? | Yes | Yes |
| What happens if NRI returns to India permanently ? | NRE account is converted into a regular resident account | NRO account is converted into a regular resident account |
