NRE FD vs NRO FD — Which Account Is Right for Your Money?
Stop guessing. Answer a few simple questions and we'll show you:
- Which account you should use for your funds
- Plain-English explanation of why
- Exact expected taxation in India & overseas
- Repatriation rules & recommended next planner
Test Your Money Source Against NRE vs NRO Rules
Select where your money comes from to instantly see suitability, taxation, and repatriation rights.
NRE Fixed Deposit
Non-Resident ExternalMoney brought from abroad into NRE fixed deposits enjoys 100% tax exemption in India under Section 10(4)(ii). Both principal and interest are 100% freely repatriable back overseas anytime.
- Saving overseas salary tax-free in India
- 100% unlimited repatriation back to home country
- Indian rent, pension, or local property sales
NRO Fixed Deposit
Non-Resident OrdinaryAll income origin inside India must legally be deposited into an NRO account. Banks deduct 30.9% TDS by default, but you can reduce TDS to 10%–15% under DTAA tax treaties by submitting Form 10F and Tax Residency Certificate (TRC).
- Managing rent, property sale & domestic Indian income
- Repatriable up to $1 Million USD / year with Form 15CA/CB
- Holding foreign salary if you want tax-free status
Find My Correct Account
Answer 3 simple questions. Get an immediate recommendation with expected taxation, repatriation permissions, and your next step.
NRE Fixed Deposit (Non-Resident External)
Since your money is earned outside India, the NRE Fixed Deposit (~7.10% yield) is your optimal account. Interest earned is 100% exempt from Indian income tax under Section 10(4)(ii), and both principal and interest are 100% freely repatriable back abroad at any time with zero documentation.
0% Tax in India. Interest is taxable in United States based on worldwide income rules.
100% Freely Repatriable back overseas anytime without any limit or tax clearance.
How Money Moves: Simple Visual Diagram
Follow the legal pipeline from where your money originates to its final tax-free or repatriated destination.
Overseas salary, foreign business profits, or savings in USD, AED, GBP, CAD, AUD.
Remitted directly in foreign currency, automatically converted to Indian Rupees.
Locked into high-yield Indian Rupee bank FD (insured by DICGC up to ₹5 Lakh per bank).
Zero Indian tax deducted. Send principal & interest back overseas anytime without paperwork.
Rental income, property sale proceeds, dividends, domestic interest, pension.
Mandatory RBI account for local Indian Rupee income and bill payments.
Submitting TRC tax certificate reduces default 30.9% bank TDS down to 10%–15%.
Transfer up to $1 Million USD per financial year back overseas with Form 15CA/15CB.
Interactive NRE vs NRO Comparison Table
Click any row to expand deep plain-English guidance and practical advice.
| Feature | NRE FD | NRO FD | Details |
|---|---|---|---|
| Suitable For | Foreign Salary & Overseas Savings | Rent, Property Sale & Indian Income | |
| Taxation in India | 100% Tax-Free (Sec 10(4)(ii)) | 30.9% Default TDS (10%-15% DTAA) | |
Deep Guidance: Taxation in India Interest earned on NRE fixed deposits is completely exempt from Indian income tax. NRO interest is subject to 30.9% TDS by default, but submitting Form 10F and Tax Residency Certificate (TRC) reduces this to 10%–15% under Double Tax Avoidance Agreements (DTAA). | |||
| Repatriation Rules | 100% Freely Repatriable | Up to $1 Million USD / Year | |
| Joint Account Holding | With another NRI or Resident relative | With Resident Indian (Former or Survivor) | |
| Currency Held & Conversion | Held in Indian Rupees (INR) | Held in Indian Rupees (INR) | |
| Average FD Interest Rate | ~7.10% Compounding | ~7.50% Compounding | |
| Overseas Home Country Tax | Taxable in US/UK/CA (0% in UAE) | Taxable in US/UK/CA with FTC | |
| Best Use Case | Building long-term liquid capital | Local Indian expenses & family support | |
| Who Should Avoid? | Avoid for local Indian income | Avoid for foreign salary savings | |
NRE vs NRO Yield & Tax Calculator
Calculate exact net maturity, Indian TDS tax withholding, and DTAA savings for your deposit amount.
✓ 100% Freely repatriable back to United States without any tax clearance.
Everyday Situations Answered in Plain English
🇺🇸"I earn salary in the USA. Where should I keep it?"
Deposit your US salary directly into an NRE Account. In India, the ~7.10% interest is 100% tax-free under Section 10(4)(ii) and 100% repatriable. In the US, report the interest on IRS Form 1040 Schedule B and file FBAR if total foreign accounts exceed $10,000.
🏡"I receive rental income in India. Should it go into NRE?"
No! RBI strictly prohibits depositing Indian rent directly into an NRE account. It MUST go into an NRO account. To avoid losing 30.9% to bank TDS, submit Form 10F and your Tax Residency Certificate (TRC) to reduce TDS to 10%–15% under DTAA.
🏬"I sold an Indian property. Which account should I use?"
The buyer will deposit net sale proceeds into your NRO Account after deducting TDS under Section 195. You can repatriate up to $1 Million USD per financial year back to your foreign account by submitting Form 15CA and Form 15CB signed by a Chartered Accountant.
✈️"I want to send money back overseas. Can I repatriate?"
From an NRE Account, repatriation is 100% unlimited and requires zero approvals. From an NRO Account, you can repatriate up to $1 Million USD per year under the RBI Liberalised Scheme after submitting CA certificates.
👴👵"I want to gift money to my parents. Should it come from NRE or NRO?"
You can gift money from either account tax-free under Section 56(2) of the Income Tax Act. However, transferring from an NRE account directly to your parents' resident bank account is fastest. They can then invest in sovereign 8.20% SCSS or 7.40% POMIS for guaranteed quarterly income.
Frequently Asked NRE vs NRO Questions
Ready to act on your account decision?
Select your exact goal below to open the specialized planner built for your situation.
Gift NRE funds tax-free for parents SCSS & POMIS.
2-3 year RNOR tax shield & RFC account setup.
Navigate IRS Form 1040, Schedule B & FBAR rules.
Maximize 100% tax-free 7.10% NRE FD yields.
Compare all Indian fixed income instruments side-by-side.