Question 1

What is the difference between NRE and NRO accounts?

Accepted Answer

NRE (Non-Resident External) accounts are for parking foreign income earned outside India — interest is tax-free in India and balances are fully and freely repatriable. NRO (Non-Resident Ordinary) accounts are for managing Indian-source income like rent, dividends and pension — interest is fully taxable in India (30% TDS plus surcharge and cess) and repatriation is capped at USD 1 million per financial year after tax. Most NRIs open both.

Question 2

Are NRI account balances insured by DICGC?

Accepted Answer

Yes. NRE, NRO and RFC savings balances at any RBI-licensed scheduled commercial bank are insured by DICGC up to ₹5,00,000 per depositor per bank, including principal and accrued interest. FCNR (B) deposits are term deposits in foreign currency and are not separately covered by DICGC but are governed by RBI prudential norms and the bank’s own balance sheet.

Question 3

Is interest on NRE accounts taxable in India?

Accepted Answer

No. Interest earned on NRE savings accounts and FCNR (B) term deposits is fully exempt from Indian income tax under Section 10(4)(ii) of the Income Tax Act, 1961. However, the interest is treated as ordinary income in your country of residence (US, UK, UAE, Singapore, etc.) and must be declared in your foreign tax return. Interest on NRO accounts, in contrast, is fully taxable in India.

Question 4

How much money can an NRI repatriate from India each year?

Accepted Answer

Under FEMA, an NRI can repatriate up to USD 1 million (or its equivalent in any freely convertible currency) per financial year from NRE and FCNR accounts — these are freely repatriable with no supporting documentation beyond the bank’s standard form. NRO balances can also be repatriated up to USD 1 million per financial year net of applicable Indian taxes, with the bank requiring Form 15CB and a CA certificate. Repatriation above USD 1 million per year requires prior RBI approval.

Question 5

What documents do I need to open an NRI account?

Accepted Answer

Standard KYC: (1) passport with valid visa/employment page, (2) overseas address proof (utility bill, bank statement, lease agreement — not older than 3 months), (3) Indian address proof, (4) PAN or Form 60, (5) FEMA declaration (Form 10F plus the bank’s NRI status declaration), and (6) a recent photograph. Most banks now accept Aadhaar-based video KYC for the Indian leg and overseas documents are uploaded digitally.

Question 6

What is FCNR (B) and why is it useful?

Accepted Answer

FCNR (B) — Foreign Currency Non-Resident (Bank) deposits — are term deposits held in foreign currency (USD, EUR, GBP, JPY, AUD, CAD) with tenures from 1 to 5 years. Principal and interest are fully repatriable, the deposit is exempt from Indian income tax, and there is no FX risk on the principal because the bank takes the foreign-currency exposure. FCNR (B) deposits are useful for NRIs who want to lock in a foreign-currency rate without repatriating funds back to their country of residence.

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