Who Can Open NRE Accounts?

NRE accounts are exclusively for:

• NRIs (Non-Resident Indians)
• PIOs (Persons of Indian Origin)
• OCIs (Overseas Citizens of India)

Both individuals and entities can open NRE accounts as long as they meet the criteria.

Types of NRE Accounts

Under NRE accounts, you can have four different types:

• Savings Account
• Current Account
• Fixed Deposit Account
• Recurring Deposit Account

1. Full Repatriability

The principal amount as well as the interest earned is fully repatriable. This means the funds in the NRE account can be transferred abroad without any restrictions.

2. Tax Benefits

Income earned on NRE accounts is completely tax-free in India. This is a major advantage over NRO accounts.

3. Joint Accounts

You can hold an NRE account jointly with another NRI, PIO, or OCI holder.

✅ Pros

• Tax-free income — Interest earned on NRE accounts is completely tax-free in India
• Full repatriability — Transfer funds from your NRE account abroad without any restrictions
• No transfer limits — You can transfer any amount to your NRE account
• Higher interest rates — Typically, interest rates on fixed deposits are higher than what you can get abroad

❌ Cons

• Can't deposit Indian income — You can't deposit income from India into the NRE account
• Joint account restrictions — You can hold accounts only with another NRI or PIO, but you can't hold accounts with a resident of India jointly
• Currency risk — Subject to INR depreciation because you are holding the funds in Indian rupees

Allowed Credits (Deposits)

• Inward remittances from a foreign bank (savings or earnings) — completely allowed
• Transfer from another NRE account or an FCNR account — allowed
• Transfer from NRO account — allowed, but you have to meet tax compliances, file certain forms and declarations (work with your CA)

Allowed Debits (Withdrawals)

• Day-to-day expenses in India
• Permissible investments
• Repatriate money back abroad without any restrictions

❌ Don't Make These Mistakes

• Depositing Indian income — You can't deposit income earned in India (rent, pension, dividends) into your NRE account
• Forgetting tax-free status — Remember, interest on NRE accounts is completely tax-free
• Joint account with resident — You can't jointly hold your NRE account with a resident of India

Who Can Open NRO Accounts?

• NRIs (Non-Resident Indians)
• PIOs (Persons of Indian Origin)
• OCIs (Overseas Citizens of India)

Types of NRO Accounts

You can have four different types of NRO accounts:

• Savings Account
• Current Account
• Recurring Deposit Account
• Fixed Deposit Account

1. Income Management

Income that you earn in India can be deposited into NRO account — rents, dividends, etc.

2. Repatriation (With Limitations)

You can repatriate money from your NRO account back abroad, but there are certain limitations:

• Transfer up to $1 million US per year
• Includes sales proceeds, interest, principal, etc.
• Requires documentation (Form 15CA, 15CB)

3. Taxation

Interest earned on NRO accounts is subject to TDS (Tax Deducted at Source) at typically 30%.

4. Joint Account Flexibility

You can hold an NRO account with either a resident or with another NRI — you can hold it jointly with any of them.

✅ Pros

• Simple income management — Easy way to manage your funds in India or income earned in India
• Flexible joint holding — Can jointly hold with an NRI or a resident of India

❌ Cons

• Limited repatriation — Repatriation is limited and requires tedious paperwork for foreign transfers
• Taxable income — Taxes apply on income earned on NRO accounts
• TDS deduction — Can't avoid TDS (Tax Deducted at Source) unless you are proactive

Allowed Credits

• Indian income — rent, dividends, pensions, etc.
• Inward remittances from abroad
• Transfer from NRE or FCNR accounts (if applicable)

Allowed Debits

• Day-to-day expenses in India
• Investments
• Repatriation — but with limitations, tedious paperwork, and subject to $1 million US per year after completing documentation (Form 15CA, 15CB, etc.)

❌ Don't Forget These

• Interest is taxable — The interest earned is taxable and TDS is deducted at source
• Repatriation limit — There is a limitation on the amount of money you can repatriate: $1 million US per year

✅ Important Takeaways

• You can hold both an NRE as well as an NRO account
• NRO account is for Indian income — rents and all that stuff will be deposited into NRO
• NRE account is primarily for foreign remittances — from there you can invest or make payments because money in NRE is fully repatriable

⚠️ Critical FEMA Compliance

You need to close or convert your NRE/NRO accounts after you move back to India — and it has to be done as soon as possible.

This is a requirement from FEMA (Foreign Exchange Management Act).

Important: FEMA defines residency as your intent. If you have an intent to move back to India, then you are considered a resident of India and need to convert the NRE/NRO accounts to resident accounts as soon as possible.

Note: This is not based on your income tax resident status. It is based on FEMA resident status — which is the intent of your plan to move to India, stay in India, etc.