Everything to know about NRE & NRO Accounts
- 04 Aug 2022
- By: BlinkX Research Team
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Everything You Need to Learn About NRE & NRO Accounts in India
An NRI (Non-Resident Indian) who earns money in India and abroad frequently struggles to manage their finances. They also have trouble tracking down foreign bank accounts and even trying to transfer money back to their domestic account. NRE & NRO accounts are practically a boon in disguise for them.
An NRI is not permitted to open a savings account in India in their name under the Foreign Exchange Management Act (FEMA) regulations. All the savings (cash earned overseas) must be transferred to a Non-Resident External Account (NRE) or Non-Resident Ordinary (NRO) account. Because of this, if one were to continue to utilise the savings account in the nation of origin may result in severe penalties. Non-Resident Indians have the option of opening an NRE or NRO account. It can benefit NRIs in two different ways. One, they have the flexibility to send their profits at any time to India. Two, they can keep their income from India (via any assets) in their place of origin.
Let’s look at the major differences between NRE and NRO accounts
| Parameter | NRE accounts | NRO accounts |
| Deposits and Withdrawals | You can withdraw money in Indian currency and deposit money in foreign currencies. | You can withdraw Indian money and deposit it in international currency. |
| Transfer of funds | You can transfer money from an NRE account to an NRE and an NRO account. | Money can be moved from one NRO account to another NRO account, but not from one NRO account to an NRE account. |
| Effect of Exchange Rate Fluctuations: | NRE accounts are vulnerable to conversion losses and changes in the rupee's value relative to other currencies. | There are no risks connected to NRO accounts |
| Taxability | Interest earned is tax-free | Interest earned is taxable |
| Joint Account | Can be opened by two NRIs | Can be opened by an NRI along with an Indian citizen or another NRI |
| Repatriability | Can repatriate | The interest amount, the principle amount can be repatriated within the set limits |
