NRE Accounts vs. NRO Accounts
Key Differences
What is NRE Account?
NRE stands for Non-Resident External (NRE). It is a bank account that is opened by depositing foreign currency and the currency can be tendered in the form of traveler’s checks or notes. It is a saving or current account held in Indian that allows the accounts holder to repatriate funds that come from outside earnings and transfer earnings to Indian conveniently and securely. Money transferred to an NRE account from any foreign currency is converted to Indian rupees. It allows the NRI to maintain and hold foreign currency earnings in Indian rupees. The account holder may repatriate all the funds along with the interest earned at any point of time without having to pay tax on the interest amount. Any NRI can open an NRE account.
What is NRO Account?
NRO stands for Non-Resident ordinary (NRO). It is a normal bank account opened by an Indian going abroad with the intention becoming an NRI. He can also open NRO account by spending remittances from his home country or by transferring funds from his other NRO account. It offers the same services like NRE account except that any repatriation done via this account should be reported to RBI by filling up prescribed forms. It helps NRIs to manage income earned in India such as rent, dividends or pension from abroad. The account holder can deposit and manage accumulated rupee funds conveniently via an NRO account. Foreign currency deposited into the NRO account is converted into Indian rupees.
