What is the difference between NRE and NRO accounts?

1. The purpose of a non-resident external (NRE) account is to deposit foreign earnings in India, whereas a non-resident ordinary (NRO) account is used to deposit income earned in India.

2.The funds from NRE accounts are fully repatriatable, whereas NRO accounts have a limit of $1 million a year.

3.The interest and principal are tax-free in an NRE account. The interest is subject to TDS in an NRO account.


4.In an NRE account, the deposit is made in foreign currency and withdrawals are in INR, whereas in an NRO account, the deposit is either in INR or foreign currency and withdrawals in INR.

5.The funds in an NRE account are subject to exchange rate fluctuations. This is not the case in an NRO account.

Content courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.