NRE / NRO / FCNR Account Advisory

NRIs and OCIs may hold three categories of Indian bank accounts under the Foreign Exchange Management (Deposit) Regulations, 2016 (Schedules 1, 2 and 3), each with distinct repatriation and tax treatment.

A Non-Resident External (NRE) account holds foreign-earned income remitted to India; both principal and interest are fully and freely repatriable, and interest earned is exempt from Indian income tax under Section 10(4)(ii) of the Income-tax Act, 1961, for as long as the account holder remains a person resident outside India under FEMA.

A Foreign Currency Non-Resident (Bank) — FCNR(B) — account is a term deposit held in a foreign currency (US Dollar, Euro, GBP, etc.), fully repatriable in both principal and interest, with interest also exempt from Indian income tax on the same basis as NRE deposits.

A Non-Resident Ordinary (NRO) account is used to hold India-sourced income (rent, dividends, pension, etc.). Interest on an NRO account is taxable in India, with tax deducted at source under Section 195 of the Income-tax Act, 1961. Repatriation of NRO balances abroad is capped at USD 1,000,000 per financial year (inclusive of all eligible NRO remittances by that individual), and requires a chartered accountant's certificate in Form 15CB and self-declaration in Form 15CA before the remitting bank will process the transfer.

Our engagement covers account-structuring advice (which account type to use for a given income stream), NRO repatriation certification (Form 15CA/15CB), and annual review of repatriation limits against the USD 1,000,000 cap.

NRE, NRO and FCNR (B) advisory is the management of the non-resident's rupee and foreign currency accounts under the Foreign Exchange Management Act 1999 and the RBI's regulations. The NRE account holds the foreign earnings in rupees with the interest exempt from income tax under the Income-tax Act 1961 and the free repatriation; the NRO account holds the Indian income in rupees, taxed in India with the TDS and repatriable within the limits; and the FCNR (B) account holds the foreign currency deposits with the interest in the currency of the deposit. The framework of the three accounts is the complete structure of the NRI's Indian money.

The three accounts are the containers of the non-resident's Indian financial life — the foreign earnings, the Indian income and the foreign currency savings — and the use of each account decides the tax and the repatriation of the money. The accounts' taxation follows the residency and the source rules of the Income-tax Act, and their operation follows the RBI's directions under FEMA. The structure is simple to design and costly to undo.

The cost of a wrong account structure is the unnecessary tax and the blocked repatriation: the interest taxed because the account was wrong, the funds stuck because the account's repatriation limits were hit, the currency risk carried because the FCNR was not used.

This service is for NRIs managing accounts in India. We structure the NRE, the NRO and the FCNR (B) accounts under the FEMA framework, manage the tax positions under the Income-tax Act — the exempt interest, the TDS, the reporting — plan the repatriation within the limits, and keep the accounts and their compliance current as the non-resident's circumstances change.