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Differences Between NRO And NRE Account You Need To Know

If you’re a Non-Resident Indian (NRI) or planning on becoming one, then knowing the difference between an NRO and NRE account is extremely crucial. Contrary to popular opinion, both NRE accounts and NRO accounts are not the same although their functions are quite similar to one another. And that’s exactly what we’re going to be exploring in this article. But before we actually get to the main part, let’s quickly take a look at what these two accounts are.

NRO and NRE accounts are basically bank accounts. When you go from being a resident Indian to a Non-Resident Indian, you will not be permitted to use the bank accounts that you used when you were in India. Instead, you’re required to open new bank accounts, which can either be an NRO account or an NRE account, to be able to transact financially. 

  • What is the difference between NRE vs NRO account

Okay so, now that you’ve been introduced to these accounts, let’s quickly take a look at the key differentiating points. 

NRE Accounts

NRO Account

NRE is an acronym for Non-Resident External. 

NRO is an acronym for Non-Resident Ordinary. 

These accounts allow you to hold foreign earnings in Indian rupees. 

These accounts allow you to hold Indian earnings in Indian rupees. 

The balance in NRE accounts, including both principal and interest, can be freely repatriated. 

The balance in an NRO account can only be repatriated after paying all the appropriate taxes. Also, there’s a limit for repatriation of USD 1 million per year too.  

If you hold any deposits in an NRE account, the interest that you earn from it is completely tax-free. 

If you hold any deposits in an NRO account, the interest that you earn from it is taxable and would be subject to TDS. 

Joint NRE accounts can be opened only with another NRI or with a resident Indian, provided that the individual is closely related to you. 

Joint NRO accounts can be opened with either another NRI or with any resident Indian. 


As you can see from the above, these are the differences between NRE vs NRO accounts. Opening an NRE account is advisable if you prefer to keep your money liquid and if you wish to hold your foreign earnings in Indian rupees. On the contrary, opening an NRO account is advisable if you have any Indian income despite being a Non-Resident Indian. This is because only NRO accounts can hold Indian income, whereas NRE accounts cannot. 

That said, irrespective of the type of account that you open, if you’re ever in need of a demat account, visit Motilal Oswal’s website. You can open a demat account within just a few minutes in a completely paperless process. Why don’t you check it out now?

Related Articles: How to Open a Demat Account Without a Broker | Factors to Keep in Mind While Opening a Demat account | Factors to Consider When Opening a Demat Account | 10 Points to Remember When Operating your Demat Account | Types Of Demat Account & Trading Account

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