NRE, NRO, and FCNR Accounts for NRIs
NRE (Non-Resident External) Account
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Nature: External account, repatriable in foreign currency.
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Purpose: Used for foreign currency earnings.
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Interest: Tax-free in India.
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Currency: Maintained in Indian rupees by converting foreign currency.
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Usage: Funds can be used for spending in India.
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Repatriation: Amount in rupees is converted back to foreign currency; currency rates at the time of conversion are important factors.
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Account Types: Can be opened as Savings, Recurring, or Fixed Deposit accounts.
NRO (Non-Resident Ordinary) Account
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Nature: Resident account, non-repatriable.
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Purpose: Used for managing income earned in India (e.g., rent, dividends).
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Interest: Taxable in India, with TDS @ 30%.
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Currency: Maintained in Indian rupees.
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Usage: Income arising in India must be deposited in an NRO account.
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Account Types: Can be opened as Savings, Recurring, or Fixed Deposit accounts.
Transfer Between NRO and NRE Accounts
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Limit: Up to USD 1 million per financial year.
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Process: Requires submission of Income Tax form 15CA (online self-declaration) and form 15CB (Chartered Accountant certificate).
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Regulations: Governed by FEMA and RBI regulations; handled by Authorized Dealers (banks).
FCNR (Foreign Currency Non-Resident) Account
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Nature: Fixed Deposit account in foreign currency.
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Tenure: Periods from 1 to 5 years.
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Permissible Currencies: US Dollars, Pounds Sterling, Euro, Japanese Yen, Australian Dollars, Canadian Dollars.
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Interest: Tax-free in India; rates are lower than NRE accounts.
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Currency Stability: No exchange loss from conversion between rupees and foreign currency.
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Transferability: Can be transferred to other NRE/FCNR accounts before maturity, subject to penalties for premature withdrawals.