Here is a detailed comparison and explanation of NRE (Non-Resident External) and NRO (Non-Resident Ordinary) accounts for NRIs (Non-Resident Indians):
NRE vs NRO Account for NRIs
| Feature | NRE Account | NRO Account |
|---|---|---|
| Purpose | To park foreign income in India | To manage income earned in India |
| Currency | Indian Rupees (INR) | Indian Rupees (INR) |
| Deposits Allowed | Only foreign income (from outside India) | Both foreign and Indian income |
| Repatriation | Freely repatriable (principal + interest) | Interest repatriable freely Principal restricted (limit of $1 million per year with conditions) |
| Taxability | Interest is tax-free in India | Interest is taxable in India |
| Joint Holding | Only with another NRI | With NRI or Indian resident |
| Exchange Rate Risk | Subject to currency fluctuations | Not applicable |
| Account Types | Savings, Current, Fixed Deposit, Recurring Deposit | Savings, Current, Fixed Deposit, Recurring Deposit |
| Opening Requirement | NRI/PIO with valid passport, visa, and proof of residence abroad | Same as NRE |
| Use Case | For savings from abroad | For handling income in India like rent, dividends, pension, etc. |
Key Differences Summarized:
- ✅ NRE is ideal for saving foreign earnings in India.
- ✅ NRO is best for managing Indian income (like rent, dividends, etc.).
- ❌ NRE is tax-free, NRO is taxable.
- 🔁 NRE funds are fully repatriable, NRO has restrictions.
Documents Required (Common for Both)
- Copy of passport with valid visa
- Proof of NRI status
- Overseas address proof
- FATCA declaration
- PAN Card (recommended)
This infographic is for informational purposes only and does not constitute financial advice. Please consult your bank or financial advisor for account-specific guidance. All trademarks and terms belong to their respective owners.
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