The Differences between NRE and NRO accounts:

Repatriation

NRE accounts are freely repatriable (principal and interest generated), but NRO accounts are limited, with maximum repatriation of USD 1 million nett of relevant taxes every financial year after providing an undertaking and a certificate from a chartered accountant.

Tax Treatment

In India, NRE accounts are tax-free (no income tax, wealth tax, or gift tax). Interest generated in NRO accounts and credit balances, on the other hand, is subject to the appropriate income tax bracket as well as the applicable Wealth planning and gift tax.

Deposit of Rupee funds generated in India

If an NRI/PIO/OCI earns money from India (such as pay, rent, dividends, and so on), he or she can only deposit it in an NRO account. Such profits cannot be deposited in an NRE account.

Joint Holding

A resident Indian cannot jointly have an NRE account with another NRI. NRO accounts, on the other hand, can be held by both NRIs and resident Indians (close relatives) as specified by Section 6 of the Companies Act 1956

Choose NRE accounts if you...

(Primary reason) desire to park your remitted abroad earnings in Indian Rupees; want to keep your Rupee savings liquid; want to open a joint account with another NRI; want your Rupee savings to be freely repatriable. Visit our website as a learning centre.

Choose NRO account if you...

(Primary purpose) desire to park India-based profits in Rupees in India; want an account to deposit revenue generated in India, such as rent, dividends, and so on; want to create an account with a resident Indian (close relative)

NRE bank accounts are those that hold money that may be re-exported. Money in such accounts can be changed back to a foreign currency in this way. NRO bank accounts, on the other hand, are accounts that hold money that cannot be repatriated. NRO funds will remain in Indian rupees and will not be easily convertible.

If an investor has the option, we recommend investing in mutual funds through an NRO account. This is because the paperwork criteria for establishing an NRO linked mutual fund account are less stringent than those for an NRE account. Because money in NRE accounts is repatriable, mutual fund providers frequently request bank statement verification for each transaction to demonstrate that the funds came from an NRE account (FIRC rules). There are no such prerequisites for an NRO account. Get Portfolios Insight from us.

A note about mariners

If an NRI/PIO/OCI earns money from India (such as pay, rent, dividends, and so on), he or she can only deposit it in an NRO account. Such profits cannot be deposited in an NRE account.