Simple Differences between NRO and NRE account

Wednesday, Sep 20, 2023

The opportunity in India is immense and foreign investors are realising this. Especially NRI’s, those who are well rooted to India, and understand the potential of their birthland.

NRI’s have two ways to invest in the Indian markets, either through their NRE (non-resident external) account or through their NRO (non-resident ordinary) account.

Among many differences between the two types of accounts, funds from NRE account are repatriable to foreign accounts, while NRO account has restrictions and complications involved while transferring funds.

If you are earning in India, may it be in terms of interest or rental incomes, this will be deposited in the NRO account. In order to bring back the amount to the country of residence for an NRI, it can only be transferred to a foreign account or an NRE accounts if a certain set of requirements are met.

In order for this, the following forms/documents will have to be provided:

·       FEMA declaration – sample form

·       Form 15CA – sample form

·       Form 15CB – sample form

·       Document that mentions the source of funds

Metrics	NRO account	NRE account
Repatriable	Can repatriate up to USD 1 million per year. That’s close to INR 8.2 Crores per year.	No restriction
Documentation required for repartition	Form 15CA and 15CB; FEMA declaration; and others.	Not required
Level of complexity	High	Simple
Interest taxability	Taxable	Non-taxable
Capital Gains	Tax deducted at source	Tax deducted at source
Capital Gain rate	10% for Long term capital gains; 15% for Short term capital gains.

Another important pointer:

·       *  Filing of taxes isn’t compulsory for NRE or NRE investors but highly advisable. When shares are sold whether its through your own broker or via a portfolio management service provider, tax is deducted at source. However, you won’t be able to claim a rebate for capital losses you incurred during or before the year until you file taxes.

Over the years, we have built a large base of NRI investors. These investors are excited about the opportunity India offers. This article is part of a series we are doing in order to make investing in India simpler for NRI’s.

---

Share this post on social media: