NRO, NRE and FCNR Accounts: How Interest Is Taxed

NRIs usually hold their money in India in one of three account types. Each is taxed and used differently.

NRE account

Holds money you bring from abroad. Interest is generally exempt from Indian tax while you are a non-resident, and the balance can generally be sent back abroad.

FCNR account

A foreign-currency deposit. Interest is generally exempt from Indian tax while you are a non-resident.

NRO account

Holds income earned in India, such as rent, dividends and interest. Interest is taxable in India, and banks deduct tax at a high rate at source. A lower rate may be available under a tax treaty if you provide the required documents. If more tax was deducted than you owe, you can claim a refund by filing a return.

Moving money abroad

Funds in an NRO account can be sent abroad, subject to an annual limit under RBI rules and to tax papers such as Form 15CA and, where required, Form 15CB from a practising Chartered Accountant.

If you return to India

When you become a resident, these accounts generally need to be converted. Check the timing with your bank and tax advisor.

Tax in the country where you live may also apply. This is general information, and rules change, so confirm your position before acting.

Need help with this? See our NRI Services or book a consultation. This article is general information, not advice for your specific situation.

Benfer Antony A B, Finance & Tax Consultant and founder of Growth Circle. This article is general information. Tax rules change, so confirm your position before you act.