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Difference Between NRE and NRO account

What is the difference between NRE and NRO account?

Meta tags keywords: open a bank account, India, NRE, NRO, transfer funds, pension, Chartered Accountant, income.

Do you want to open a bank account in India? If yes, it is vital to know what will help you manage your foreign and India-earned income easily.

We can list the two readily available options here- NRE (Non-resident External) account and NRO (Non-resident Ordinary) account.

Here’s what you need to know about both of them.

  • NRE and NRO basics

An NRE account helps you transfer funds earned abroad to India and maintain them. An NRO account helps maintain the regular flow of income sourced from India, like your rent, pension earnings and more.

  • Repatriation simplicity

Funds in NRE can be repatriated without any difficulty. However, NRO has a few restrictions. You can only remit up to USD 1 million in a year and your paperwork must be completed by a Chartered Accountant.

  • Taxation Laws

NRE accounts are tax-exempt. In fact, the interest earned out of them is not subject to tax when the funds are repatriated. However, NRO is subject to various kinds of tax, including tax on interest earned.

  • Exchange rate

NRE accounts are subject to exchange loss. This is because the income is sourced out of India. NRO is subject to no such loss.

Choosing the right account depends on your and your family’s financial needs. If you foresee the need to repatriate more than USD 1 million funds, or if you want to maintain your savings in INR, an NRE account might make more sense. However, if you want to keep your India-based earnings in INR, you might choose to opt for an NRO account. Either way, managing funds as an NRI has simplified greatly with a window to more options. Choose from a range of accounts here.

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