Importance of NRE and NRO accounts

An Introduction NRE & NRO Account

We must first understand the importance of NRE and NRO accounts before we can appreciate the benefits. According to the Indian government, NRIs must have a NRE/NRO account for Indian transactions. According to Indian legislation, it is against the law for NRIs not to have savings accounts in India. We now have a better understanding about the lives of NRIs.

This can cause problems for NRIs who earn money in India and abroad. NRE and NRO Accounts are useful for managing finances, managing other bank accounts, sending and receiving money, and managing their own accounts.

Understanding the Difference Between An NRE Account And An NRO Account

It is important to understand the importance of these accounts before we move on. These are the following:


A NRE account is used to track money that has been generated outside India. This account is dominated by the Indian rupee. Any funds that are deposited into it will be converted to Indian Rupee. You can open it as a savings, current, or fixed deposit account. You can freely repatriate the principle and interest from this account. This means that you can transfer funds from your NRE Account into foreign accounts without restrictions or taxes.

Non Resident Ordinary Account (NRO).

A NRO account is used to track revenue generated in India. This can be in the form rent from property in India or income such as salary or pension. It is primarily a rupee account but you can also receive funds in Indian or international currency. You can open it as a savings, current, recurring, or fixed deposit account. TDS (Tax deducted at Source) is 30%. It is added to the interest earned on the NRO accounts, along with a surcharge or an education cess. It doesn't mean you have to worry about it. A tax refund can be obtained based on your income tax bracket.

The Advantages of NRO account

  • This account can be used to deposit any savings that you may have before you move to another country. This account can be used to deposit income from India from rents, dividends and other sources. You can also transfer money from your NRE account or outside to this account. This account is ideal for Indians who have earned money in India and own assets before moving to another country.
  • You can also open a joint NRO account on a survivor or former basis with a resident Indian. A resident Indian can be mandated (given the power of attorney to a person residing abroad) to help you with any banking or account-related matters for your NRO Account at Standard Chartered.
  • NRO account balances cannot be repatriated by NRIs or PIOs above USD 1,000,000

The Advantages of NRE account

You can use an NRE account to transfer income from other countries to India. Here are some benefits of an NRE account.

  • All NRE Savings account funds can be repaid. You can move any amount of money (including capital) out of India at your own discretion.
  • You have more control over your finances because interest earned in your NRE account will not be subject to Indian tax. This investment may be subject to tax depending on your tax laws.
  • A NRE account is kept in Indian rupees just like an NRO account. This account is used primarily to credit funds transferred from international accounts.
  • Standard Chartered allows you to mandate a resident Indian to open your NRE account. This is similar to what you can do with NRO accounts. You can only open a joint NRE with an NRI, or a member of your family who lives in India.

In a Nutshell - NRE and NRO Account

NRIs should convert any resident accounts to NRE/NRO Accounts as soon as they are granted Non-Resident Status.

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