Three Accounts, Three Purposes

The nri bank account india framework revolves around three account types. Each serves a distinct purpose, and understanding the difference between nre and nro — and where an fcnr deposit fits — is the foundation of clean FEMA compliance.

NRE (Non-Resident External) Account

• Holds foreign earnings remitted to India
• Interest is completely tax-free in India
• Fully repatriable — you can send the money back overseas anytime
• Maintained in Indian Rupees

NRO (Non-Resident Ordinary) Account

• Holds India-sourced income (rent, dividends, pension)
• Interest is taxable in India (TDS at 30%)
• Repatriation limited to USD 1 million per financial year
• Requires CA certificate for repatriation

FCNR (Foreign Currency Non-Resident) Account

• An fcnr deposit is a fixed deposit held in foreign currency (USD, GBP, EUR, etc.)
• No exchange rate risk — deposit and withdrawal in same currency
• Interest is tax-free in India
• Fully repatriable

Common Mistakes

1. Depositing India rental income into an NRE account (this is a FEMA violation)

2. Not converting accounts after becoming a Resident Indian

3. Using NRO for all remittances (losing the tax-free interest benefit of NRE)

4. Ignoring TDS on NRO interest (which can be reclaimed only via ITR filing)