NRE vs NRO Account: Which Should You Use?
If you earn in the US and send money to India, you need to know which account type to use. The wrong choice can mean paying unnecessary taxes or struggling to repatriate funds later.
Quick Answer
NRE Account
For money you earn abroad and send to India. Tax-free interest. Fully repatriable. Best for most NRIs.
NRO Account
For money earned inside India (rent, dividends, pension). Interest taxed in India at 30%. Repatriation capped at $1M/year.
Full comparison
| NRE Account | NRO Account | |
|---|---|---|
| Full form | Non-Resident External | Non-Resident Ordinary |
| Fund source | Foreign earnings sent to India | India-sourced income (rent, dividends, etc.) |
| Currency | Held in INR (converted on deposit) | Held in INR |
| Interest taxable in India | No — fully tax-free | Yes — 30% TDS |
| Repatriation | Fully free, no limit | Up to $1M/year after tax compliance |
| Joint account with resident Indian | Not allowed | Allowed (on former or survivor basis) |
| Ideal for | Sending US salary to India | Collecting rent from Indian property |
| DTAA benefit | N/A (no India tax) | Yes — US-India tax treaty may reduce TDS |
| Can receive NRI transfers | Yes | Yes |
Which one do you need?
Open an NRE account if you…
- Earn in the US and want to send money to family in India
- Want to save in India and bring the money back later
- Have parents or siblings you support financially
- Pay an EMI on an Indian home loan
- Want tax-free interest on Indian savings
Open an NRO account if you…
- Receive rental income from an Indian property
- Get dividends from Indian stocks or mutual funds
- Receive a pension from an Indian employer
- Have a joint account with a resident Indian family member
- Receive interest from existing Indian fixed deposits
Most NRIs need both
Use your NRE account for sending US income to India (tax-free). Use your NRO account to collect Indian income like rent. Many NRIs maintain both — linked to the same Indian bank account.
Tax implications in the US
NRE interest: Technically taxable in the US even though it's tax-free in India. If you earn interest in your NRE account, you should report it on your US federal return (Schedule B). The US-India tax treaty does not exempt NRE interest from US tax.
NRO interest: Subject to 30% TDS in India. You can claim a foreign tax credit on your US return to avoid double taxation. File Form 1116 to claim this credit.
FBAR / FATCA: If the combined balance of all your Indian accounts exceeds $10,000 at any point during the year, you must file an FBAR (FinCEN 114). If it exceeds $50,000 (end of year) or $75,000 (at any point), file Form 8938 with your tax return.
Best Indian banks for NRE/NRO accounts
SBI (State Bank of India)
Most accessibleLargest network, easy for parents to access cash
HDFC Bank
Best digital experienceBest mobile app, fast IMPS credits, good FD rates
ICICI Bank
Remitly usersRemitly instant credit supported, wide NRI support
Axis Bank
Good FD ratesCompetitive NRE FD rates, good US customer service
Now find the best rate to fund your NRE account
Compare Wise, Remitly, Xoom and more — see exactly how much INR lands in your account.
Compare live rates freeFAQs
Can I convert my existing savings account in India to NRO?
Yes. Once you become an NRI (stay abroad for 182+ days in a financial year), you must convert your resident savings account to NRO within a reasonable time. Most banks allow this online or at a branch.
Can I transfer money from NRO to NRE account?
Yes, up to $1 million per financial year, subject to payment of applicable taxes and submission of a CA certificate (Form 15CA/15CB). Many NRIs do this to then freely repatriate funds.
What happens to my NRE/NRO account if I move back to India?
When you return to India permanently and become a resident, you must convert NRE and NRO accounts to resident accounts. Your NRE account typically becomes a regular savings account; NRO can remain as-is briefly.
Are NRE fixed deposits safe?
NRE FDs are covered by Deposit Insurance and Credit Guarantee Corporation (DICGC) up to ₹5 lakh per bank. For larger amounts, spreading across multiple banks is prudent.