NRE V/s NRO
For NRIs, managing finances between India and abroad can be tricky. To help, Indian banks offer two key accounts: the NRE and NRO accounts. Here’s key difference:
👉 Non-Resident (External) Rupee Account (NRE)
Purpose: Used to park or transfer foreign earnings with full repatriation to the foreign country.
👉 Non-Resident Ordinary (NRO) Account
Purpose: Used to manage income earned in India (e.g., rent, dividends).
👉 Repatriability
– NRE: Both principal and interest can be freely transferred abroad.
– NRO: Only interest can be freely transferred. Principal can be transferred up to USD 1 million per
👉 Joint Account
– NRE: Can be opened only if all account holders are NRIs.
– NRO: Can be opened by an NRI with an Indian citizen or another NRI.
👉 Deposits & Withdrawals
– NRE: Only foreign currency deposits allowed; withdrawals in Indian currency.
– NRO: Can deposit in both foreign and Indian currency; withdrawals in Indian currency, subject to TDS.
👉 Taxability
– NRE: Interest earned is tax-free in India.
– NRO: Interest earned is taxed at 30% + cess and surcharge.
👉 Transfers
– NRE: Funds can’t be transferred from NRO to NRE account.
– NRO: Funds can be transferred from NRE to NRO account.
👉 Usage for Trading
– NRE: Can be used to open an NRE PIS account for stock market investments in India.
– NRO: Necessary for linking with trading and demat accounts for Futures and Options (F&O).