Question 1

What is the difference between NRE, NRO, and FCNR accounts?

Accepted Answer

NRE (Non-Resident External): For foreign earnings, interest is tax-free, fully repatriable. NRO (Non-Resident Ordinary): For Indian income (rent, dividends), interest is taxable with TDS 30.9%, repatriation limited to $1M/year. FCNR (Foreign Currency Non-Resident): Deposits held in foreign currency, no forex risk, interest tax-free.

Question 2

Which NRI account is best for my situation?

Accepted Answer

Use NRE for parking foreign salary and savings - tax-free interest and full repatriation. Use NRO for receiving Indian income like rent or selling property. Use FCNR if you want to avoid forex fluctuation risk and plan to take money back abroad.

Question 3

How can NRIs reduce TDS on NRO account interest?

Accepted Answer

Get a Tax Residency Certificate (TRC) from your country of residence to claim DTAA benefits. TDS can be reduced from 30.9% to 12.5% (UAE) or 15% (USA/UK). Submit TRC and Form 10F to your bank before interest payment date.

Question 4

Can NRIs transfer money from NRO to NRE account?

Accepted Answer

Yes, NRO to NRE transfer is allowed up to USD 1 million per financial year. CA certificate (Form 15CA/15CB) is required. All taxes must be paid, and ITR filing may be required. This makes the funds fully repatriable.

Question 5

What happens to NRI accounts when I return to India?

Accepted Answer

NRE/FCNR accounts must be converted to regular resident accounts or RFC (Resident Foreign Currency) accounts. NRO becomes regular savings account. RFC allows you to keep foreign currency balances if you've been NRI for 1+ year. Complete conversion within 6 months of returning.

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