Difference : NRE and NRO Accounts

in Q & A


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

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