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What is the difference between NRE and NRO accounts?
NRE (Non-Resident External) and NRO (Non-Resident Ordinary) accounts are two types of bank accounts that Non-Resident Indians (NRIs) can open in India. They serve different purposes and have distinct features.
- Repatriation: NRE accounts allow full repatriation, whereas NRO accounts have restrictions on the repatriation of the principal amount.
- Taxation: NRE account interest is tax-free, while NRO account interest is taxable.
- Currency of Deposit: NRE accounts only accept deposits in foreign currency, whereas NRO accounts accept deposits in both foreign and Indian currency.
Choosing between an NRE and NRO account depends on the individual needs and financial goals of the NRI, including how they want to handle their foreign and Indian earnings.