NRE And NRO Accounts And What You Need To Know About Them

A non-resident Indian (NRI) is an Indian national who leaves India for employment, education, or for other reasons. This status can pose a problem when it comes time to open an NRI account in India. If you’re in this type of living situation, there are two options for you. The non-resident external rupee (NRE) and the non-resident ordinary rupee (NRO) are the accounts available to you.
Both accounts have their advantages depending on your income and your plans, so knowing the difference between an NRE vs an NRO account is important when deciding which one is best for you. Here is a brief overview of both types of NRI accounts.
An NRE account is an Indian Rupee denominated account which is freely repatriable. This account for non-resident Indians can be a savings, current, recurring, or fixed deposit account. The income accepted into this account must be income earned outside of India. Therefore, the owner of an NRE account can only deposit foreign currency into this account. The NRE account does accept foreign currency and converts it into an Indian rupee at the time of the deposit. Interest earned on the balances within the account is free from any income tax.
An NRO account is a savings or current account held in India. This type of account assists NRIs in managing income earned in India. Examples include rent, dividends, or pensions from abroad. A holder of the account can make deposits and manage rupee funds through an NRO account. Any foreign currency deposited into the NRO account will convert to Indian rupees.
There are a few similarities between the NRE and NRO accounts:
There are multiple differences between the two accounts. Here are the major ones:
The answer to this question depends on what your plans might be and what your sources of income are.
If you are a non-resident Indian, you have a choice between these two options. If your total income includes income earned in India and you desire to manage it within India, an NRO account might be the option for you. If you wish to transfer foreign income to India without taxation liability, then knowing how to open an NRE account from the USA may be a good choice.
Whether you decide to open an NRO or an NRE account, living outside your home country can have risks. Be ready for an emergency with the help of Visitor Guard visitor insurance. Contact us today with any questions or to find out more about visitors insurance.