BASIC | NRE(Non-Resident External) | NRO (Non-Resident Ordinary) |
Purpose | NRE (Non-Resident External) accounts are designed for NRIs to manage their foreign earnings, allowing them to repatriate funds without any restrictions | NRO (non-resident ordinary) accounts, on the other hand, are meant for managing income earned in India, such as rental income or dividends. |
Eligibility | Open to NRIs and Persons of Indian Origin (PIOs). | Open to NRIs and PIOs |
taxation | Interest earned on NRE accounts is completely tax-free in India. | Interest earned on NRO accounts is subject to income tax in India. |
Joint account | Can be opened jointly with another NRI or PIO, or with a resident Indian relative on a "former or survivor" basis. | Can be opened jointly with another NRI or PIO, or with a resident Indian on a "former or survivor" basis. |
Repairability | Repatriation: Funds from NRE accounts can be freely repatriated to foreign countries without any restrictions | Funds from NRO accounts can be repatriated up to USD 1 million per financial year after paying applicable taxes. |
Deposits and withdrawals | Only foreign currency deposits are allowed. Withdrawals are allowed only in Indian currency | Can deposit in foreign as well as Indian currency and withdraw in Indian currency, subject to applicable TDS. |
How can I transfer funds to an Indian bank? | NRE to NRO/NRE to another transferred the fund without any charges | - NRO to NRE: Transfers from NRO to NRE accounts are not allowed due to different rules.
- NRO to Another NRO: Transfers between NRO accounts are allowed within the same classification.
- NRO to Indian Citizen’s Account: Funds can be transferred to an Indian citizen’s savings account, subject to FEMA regulations.
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Stock Market Trading: | - Allowed: NRIs can trade in Indian stock markets using an NRE account, but they need to have a separate trading account linked to it.
- Repatriation: Funds in an NRE account can be repatriated freely to your country of residence. Any earnings from stock market trading (capital gains, dividends) are also repatriable.
- Deposits and Withdrawals: You can deposit foreign income into an NRE account and withdraw funds in Indian rupees or repatriate them to your country of residence.
| - Allowed: NRIs can trade in Indian stock markets through an NRO account, but it requires a separate trading account. However, any investments or trades in the Indian market should be conducted under the rules specified by the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI).
- Repatriation: Funds from the sale of investments or trading profits are not directly repatriable. They must be routed through the NRO account and are subject to Indian tax regulations.
- Deposits and Withdrawals: You can deposit Indian income into an NRO account. Withdrawals are in Indian Rupees, and its non-repatriate
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