NRE vs NRO FD: what NRIs should know

NRE and NRO fixed deposits can look similar because both are rupee deposits, but the source of money, tax treatment and repatriation rules are different.

An NRE FD is usually used for income earned abroad and kept in India in rupees. An NRO FD is usually used for income earned in India, such as rent, pension, dividends or sale proceeds.

NRE FD interest is generally treated as exempt from Indian income tax while the depositor qualifies as a non-resident. NRO FD interest is generally taxable in India, and banks may deduct TDS before crediting interest.

Quick answer

If the money was earned abroad, look at NRE. If the money was earned in India, look at NRO. Always confirm tax status, DTAA paperwork and repatriation documents with your bank or advisor.