Non-Resident External (NRE) and Non-Resident Ordinary (NRO) fixed deposits cater to Indians living abroad. Both accounts are held in Indian rupees but differ in their source of funds, repatriability and taxation. The table summarises these differences.
| Feature | NRE FD | NRO FD |
|---|---|---|
| Source of funds | Overseas earnings remitted to India | Income earned in India (rent, dividends, salary) |
| Currency | Indian rupees; funds converted at prevailing forex rates | Indian rupees; no currency conversion |
| Repatriability | Principal and interest fully repatriable | Principal repatriable up to US$1 million per financial year; interest repatriable after taxes |
| Taxation | Interest exempt from Indian tax | Interest taxable; TDS applies |
| Tenure | 1–10 years | 7 days–10 years |
NRE accounts are ideal for parking foreign earnings and enjoy full repatriability and tax-free interest, while NRO accounts are meant for income earned in India. Investors should choose based on the nature of their funds and taxation considerations.
