NRO vs NRE Account

by Manshu on April 18, 2011

in NRI

Updated on Jan 9 2012

A few days ago I wrote about how you could open a NRE / NRO account while still abroad, and some people had a question on which is the better among the two.

Like most other things – it depends on what your specific needs are but now the big difference in NRO and NRE accounts is that the fixed deposits that you open in your NRE account are tax free in India. Here is a list of some of the best NRE fixed deposits with Indian banks.

Here is a post with differences between the two accounts, and you can go through these main points to see which one suits you most.

Difference between NRO NRE  Accounts

1. Interest on NRE account is tax free where NRO is taxable in India: It used to be that NRE accounts paid a lower interest than NRO accounts, but recently RBI allowed banks to set up their own NRE rates, and as a result now NRE fixed deposits pay as much as a NRO fixed deposit.

The big difference is that there is no tax in India on the interest on this NRE account, so it makes much more sense to open a fixed deposit using a NRE account instead of a NRO account.

2. NRE accounts are tax free whereas NRO accounts are not: You don’t have to pay any taxes on your NRE account, but interest income on the NRO deposit is taxed in India. There was a comment the other day from a reader stating that NRO tax rates have gone down, but I can’t find confirmation of that anywhere, so if you have any information on that then please leave a comment.

3. Up to a Million Dollars is Repatriable in NRO Account: Repatriable in this context means money transferred from India to another country, and it used to be that money from a NRO account wasn’t repatriable at all.

However, RBI has made some changes and now up to a million dollars can be repatriated from a NRO account in a year. However, a friend who was trying to do this told me that it’s a bit of a hassle transferring money from NRO account when compared with a NRE account.

If you foresee the need to repatriate more than a million dollars then you should opt for a NRE account.

Conclusion on NRO NRE Comparison

A lot of NRIs need a bank account back in India because they plan to return some day in the future or they have to maintain their family still in India. So you need something back in India – either a NRO or a NRE account.

I’ve seen the rules change in such a way for these accounts that for a long time it made sense to have a NRO account but not a NRE account, and now the situation has been reversed.

When you open an account – the bank gives you an option to choose if you want to open one or both, and you should choose both at the time so that you don’t have to go through the lengthy process of submitting documents and opening a new account in case the rules change again.

Update: Deleted the tax saving line as pointed out by Satie below.

{ 127 comments… read them below or add one }

Raja April 20, 2011 at 9:23 PM

Hi Manshu,

I don’t have much idea about the NRE & NRO stuff. But i had one question in mind(may be little foolish 🙂 ). Aren’t the people living abroad allowed to transfer this money from their NRE/NRO account into some account that may be in their name as resident’s here.

That way they can earn better interest rates, right ?

Also one more related question, can the NRI’s invest this money from abroad (lying in NRE/NRO account) into shares and mutual funds here ?

Regards
Raja

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Manshu April 21, 2011 at 6:44 AM

Hi Raja – It’s illegal for NRIs to hold resident Indian accounts and invest in stocks and mutual funds as if they were residents.

What they can do is transfer money in their parent’s name or something, but opening a NRO account is better because you need that (or any other NRI account) to buy mutual funds, shares, or if you want to buy property or something then having this will help with the bank you’re approaching for a loan.

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Raja July 9, 2012 at 8:17 PM

Hi Manshu,

I figured out few more thing’s with regard to direct equity investing for NRI’s and thought of leaving a comment here for the benefit of others.

1. For an NRI to invest directly in equities, he has to open an account called PIS (portfolio investment scheme). These are opened by only few banks like HDFC, Kotak, ICICI etc..the banks have good documentation on their site. google it, again there have 2 types here too NRE/NRO…
2. Even after opening this account, the NRI is restricted to invest only in a handful of companies because of a list which is released by RBI. So, basically RBI regulates the companies in which a NRI’s can invest directly through PIS.
3. The list is so restrictive that it doesn’t make sense for a serious investor to go through the above route.
4. One of the meaningful option for an NRI to invest in direct equities is through a trusted blood relative like mother, father, siblings . Tax rules are in favor of gifts to these blood relatives and they in turn can invest into direct equity. This route should be favorable if the NRI has plans to come back to India. He then can take the equities back into his name as a gift.
5. For investing mutual fund is a lot easier. open the NRE/NRO account, update your KYC as NRI and ready to invest into MF’s.
6. Tax rules also dictate that if you are staying in India for more than 60 days in a particular year and have been resident for more than 365 days in the past 4 years, you are still a resident for that particular year. This rule is worth checking out in more detail, if one is travelling temporarily and will fall in this category.

Hope this helps.

Regards
Raja

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Raja April 21, 2011 at 7:24 AM

Hi Manshu,

Does that mean there are different rules on how NRI’s can invest in shares & mutual funds here in India ?

Do you mind pointing me to some resource which deals with this topic in little more detail.
Basically i want to understand how do people who travel abroad for few years deal with their investments here in India.
With few more questions like:
1. Do we have to close all the resident accounts then before we travel abroad ?
2. How does one deal with the EMI payments for existing home loan accounts?
3. What’s the right way to invest the money earned abroad, here in India for future.
4. Any more things to take care, before traveling ?

Regards
Raja

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Manshu April 21, 2011 at 9:01 AM

Yes, the rules are very different. NriMatters.com is a good site that can give you a lot of information on this.

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Tejas Kalyani November 22, 2011 at 3:33 PM

hi Raja,
I possess the salary saving a/c with bank in Mumbai which is linked to Home loan and car loan a/c. I am getting transferred to Malaysia from Mumbai for 3 years after which I am planning to come back to India. My co. gives me facility to split the monthly salary (USD) into two a/c. So I am planning to offload some portion of salary to Indian bank and remaining portion in Malaysian bank. In fact I would like to convert my existing a/c into NRO a/c to get rid of managing paperwork for 2 accounts. Is it possible?

My existing bank recommends me to open the NRE a/c instead of NRO and then transfer money from NRE to existing saving a/c. Is it necessary to open an NRE a/c?

Many thanks in advance.

Regards,
Tejas

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anil February 14, 2012 at 6:19 AM

I am planning to put some money on fixed deposit to earn better interest. I want to deposit ($) but most important I want my investment back in $ hassel free. Now NRE vs NRO. I know now NRE now offers good rate of interest and it is easy to get that back in $ and its tax free. So what’s the advantage of NRO now or is it still offers higher than NRE.

Q1) If NRE is tax free, does that mean only india. What are guidelines from tax perspective to move it back in U.S. Bank?
Q2) Does opening both a/c help as far as conversion is concerened. For example, Get better NOR interest in RS and then move to NRE and convert to $, is it possible?

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Anand Dabak February 20, 2012 at 8:39 PM

Hello Manshu,
I have a question about the NRO account. Last 2-3 years the NRO was paying good interest and hence I sent USD into NRO account (through an NRE acccount). What are the exact rules on the repatriability of the money to USA from an NRO account? I have read that the interest is repatriable, then I have read that upto USD 1 million is allowed to be repatriated, but I have also read that the principal is not repatriable. Is that correct? So if I want to repatirate my principal under the NRO account, what are my options?
Thanks
Anand

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Jitendra P.S.Solanki March 15, 2012 at 11:28 AM

Anand,

Funds from NRO account are non-repatriable.You have to first pay income tax and then you can repatriate from NRO account.The primary reason is that NRO account is mainly for income earned in India by NRIs for e.g. property selling, rental income etc.
Hence you have to first file your returns, pay the income tax and then can repatriate up to the specified limit as declared by RBI.

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Savio Abania March 13, 2012 at 2:48 PM

Dear Manshu

I currently have British citizenship and also OCI. I am confused as to what is the best account to open as I received literature stating bank FD in India offer 9.5% tax free interest. I will coming to India next month to carry out sale of ancestry land. I have been told I would need to pay capital gains on the entire sale price but am free to invest the remaining as I like. I would appreciate guidance on the issue.

Regards

Savio

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Manshu March 13, 2012 at 4:23 PM

I think a NRE account which allows you to get high interest rates but is tax free (at least in India, not sure about UK) will be a good option for you. They won’t allow you to open a regular FD since you are not a resident but a NRE account will be fine for you. Talk to the bank managers and explain to them a little bit about your situation. They may give you a better answer, but based on what you describe a NRE account sounds like it will work for you.

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Savio Abania March 14, 2012 at 8:55 PM

Thanks for the reply.. I checked and I am entitled to a NRO account but am told I will be taxed ? I am told the tax free account is only for NRI ? Can you clarify and if possible forward me the link as I will have money from the sale. Also I found more information regarding capital gains and have been told I would need to pay 20% – I explained the ancestry land was a commercial property and they weren’t sure as they said on sale of residential property – I could re-invest in another residential property. Can you please advise and how to invest as I should get 2cr and already have flats in my name in India.

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Manshu March 15, 2012 at 4:52 AM

Okay, so first you need to understand that Non Resident External (NRE) and Non Resident Ordinary (NRO) accounts are two types of accounts that Non Resident Indians (NRI) can open. I think it’s a bit confusing and you don’t have this distinction straight in your mind yet.

NRIs can open either NRO or NRE account and what they’ve told you is true in the sense that NRO account attracts tax whereas NRE doesn’t and you should open a NRE account because of that reason.

I’m not a tax expert and not current with details but as far as I know there are two ways to save tax in this manner, one is to buy 54EC bonds, and the second is to buy another residential property. I’m afraid you will have to consult a practicing CA for more precise knowledge on this. I’m simply not current on all these rules.

Also, what was the link you wanted?

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Savio Abania March 15, 2012 at 9:19 AM

Thank you Manshu – Very informative.

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pranav March 13, 2012 at 9:12 PM

I am having NRE and NRO account with SBI bank.

My problem is I can only VIEW these accounts online and not transfer money from NRE to NRO account.
I was informed otherwise while enrolling.

Any way, can you tell me whether is it possible for me to transfer money from one to another while being abroad.

Many Thanks

Pranav

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Jitendra P.S.Solanki March 15, 2012 at 10:14 AM

Pranav,

You can transfer funds from NRE to NRO account but not vice versa as fund sin nRO account are non-repatriable. An NRO account is primarily for income (like rent, dividend, pension) in India and to make local payments in Indian Rupees for genuine needs in India.I am not sure why SBI is not permitting this transfer.

Income arising in foreign currency, remittances received through proper banking channel or from NRE account and any past dues from India can be deposited in NRO account.
But money once deposited in this account can only be withdrawn for local payments including investments.

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Tushar Lal March 14, 2012 at 6:02 AM

Hi Manshu,

I had made some investments 3-4 years ago from my NRE account in a one time pension plan. I’m about to break that policy and the money will be transferred back to my NRE account.

I want to transfer most of this money to my Dads NRE account. I wanted to know if this is possible to transfer through a cheque? If yes, what is the maximum amount I can transfer through cheque as RTGS/NEFT will allow me only 5 lakhs.

Thanks and Regards,

Tushar

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Manshu March 15, 2012 at 5:30 AM

I’m sorry I don’t know about that Tushar.

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Jitendra P.S.Solanki March 15, 2012 at 11:03 AM

Tushar,

Yes, you can transfer funds from one nre to other other nre account through a cheque. I don’t think there is any limit as NRE funds are fully repatriable.

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Ranjan Rakesh August 6, 2012 at 11:38 PM

Hi Tushar.

There is no limit to transfer money from NRE to NRE account.Hence money invested through NRE account as in your case will come back to NRE account and u can transfer the same money to your DAD account without any documentation except chque.

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Ramesh March 14, 2012 at 7:17 AM

Dear Sir,

can we transfer funds from NRO a/c to NRE a/c of the same customer if needed??

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Jitendra P.S.Solanki March 15, 2012 at 11:05 AM

Ramesh,

You cannot transfer funds from NRO to NRE account.

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Calany March 14, 2012 at 4:33 PM

Hi Manshu

I am a NRI living in dubai. i have purchased a huge amount property and paid through cheques from my NRI Account in India. now do i have to file return and pay taxes as i have NRI Account inIndia.

Thanking you in advance

Calany

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Manshu March 15, 2012 at 4:55 AM

I’m sorry Calany, I’m not aware of the answer to that question.

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Jitendra P.S.Solanki March 15, 2012 at 11:22 AM

Calany,

As a NOR or NR, if you sell any overseas assets and receive the sale proceeds outside India, you do not have to pay any taxes in India

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Ranjan Rakesh August 6, 2012 at 11:46 PM

Hi calany,

In case of purchase of property in India,first of all the NRI can only purchase 1 property in India not more than one.Secondly if the property purchased is done through NRE account,only those money which are invested through NRE account is repatriable and other amount(appreciated value) is transfered to NRO account whereby you need to pay tax on the sale of property.
The money is than repatriable or can be transfer to NRO account as per FEMA circular MAY edition up to 1 million USD dollar in one financial year.The documents in that case require as below
15CA,15 CB.Source of fund,Purchase deed,sale deed,statement of account (These are imp. documents),the bank can ask for other docs too.But these are the basic documents needed to transfer or repatriate the fund.

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CA DINESH HEGDE October 8, 2012 at 9:11 PM

HI CALANY,

There is no tax on buying of property. However, if you have rented your premises, then income derived cannot be transferred to your NRI Account. You will have to open an NRO Account and get your rent income transferred into the same. Tax shall be levied on your rent income from property.

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ranprakash March 19, 2012 at 10:06 PM

Hi

I was in UK for three years and returned to India for good 2 years back. I hold NRE & NRO accounts with HSBC. Last week I went to the bank to convert both these accounts to Resident Indian accounts. They asked me to fill a form (account opening form). I was told that the account numbers will remain same upon conversion but NEW debit cards and cheque books would be issued and the ones I am holding will not longer be valid. I have normal Resident Accounts with various other banks. My question is can I simply transfer all my money from NRE and NRO accounts to Resident accounts of other banks and close the NRE & NRO Accounts for good. Or I might get into IT deptt. net asking me where did the money come from. I wouldnt be able to explain if I closed NRE & NRO Accounts. Also I hold some pounds in HSPC UK Bank account. Is there any law which states that I cannot continue to hold foreign currency in foreign banks beyound certain period after returning to India. Thanks.

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Manshu March 20, 2012 at 5:51 AM

I’m afraid I don’t know the answer to this – sorry.

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Jyoti March 26, 2012 at 11:01 AM

ranprakash,

its better to close both the NRE & NRO a/c, if you have finally shifted to India. Go for a fresh a/c. I guess your banker might have suggested you the same.

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Ramprakash March 26, 2012 at 4:51 PM

Hi Jyoti,
The problem with closing the NRE/O Accounts and opening a new one is, how do you explain to the IT authorities the source of the money in this new account?

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Ranjan Rakesh August 6, 2012 at 11:51 PM

I think Jyoti is correct,as once the account is closed the bank should give a closure letter along with the closure chque saying the proceeds are through the closure of accounts.Than the amount can be deposited to resident account.It will prove that the money has come from the closure of NRE account.

Please convert your NRO account to resident account as the conversion is possible from bank side.

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Prady March 27, 2012 at 3:07 PM

Hi,

I am an NRI living in the UK and have opened an NRE account in India. I understand that I am not liable to pay any tax in India for the interest I get on the NRE FD. However, if I transfer the capital and interest back to UK (after converting to GBP), will I pay any tax in UK for it?

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Manshu March 27, 2012 at 4:28 PM

Not sure about that sorry.

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Jitendar Solanki April 7, 2012 at 11:35 AM

Prady,

It depends upon the prevailing laws in UK for NRIs staying there. In probable case you will have to pay income tax in your country as the funds you are repatriating were derived from the income you earn abroad.You will get more clarity from Tax Expert in UK.

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Manoj April 6, 2012 at 11:47 AM

Hi Manshu,

Is it possible to give donation in India via transfer by overseas bank account. please suggest me how to take forward in easy way.

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Bal April 23, 2012 at 10:08 PM

hi
I am an oci and my parents want to give me some money. what is best option for me. can they “gift” me money and will i be taxed in india. should i open nre account and they can put money in it. please help.

thanks

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sunny May 4, 2012 at 12:57 PM

Hi,

I am in USA and I have NRO account with SBI. Bank is suggesting me to apply for PAN. Is it possible for me to apply for PAN in USA? I am not understanding why I would PAN, is it needed to pay taxes from interest earned in NRO account? please advice.

Thanks!

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Jitendra P.S.Solanki May 6, 2012 at 2:27 PM

Sunny,

Funds in NRO account are primarily income earned in India and hence taxable. You can repatriate these funds only after paying required income tax. Hence, you need to apply for PAN for any transaction in India and paying Income Tax.

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Jaison May 5, 2012 at 8:40 PM

Dear Sir, I am an NRI, I have a normal bank account in India attached with my demat account and trading shares online. I did not change it to NRO. Is it illegal? is there any penalty for this? what are the docs i need to submit to my bank and to my stock broker?

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Jitendra P.S.Solanki May 6, 2012 at 2:32 PM

Jaison,

As per law an NRI cannot have a resident savings account and all investments in India are dne as an NRI. For equity trading you need to open a seperate PIS account with a bank and transact through It. Also the taxability is different and funds repatriation are permitted with permission from RBI.Hence, it will be good if you update your status with your bank and they will let you know the procedure.

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Purushottam May 10, 2012 at 12:54 AM

Hi Manshu,

I am in Oman and I don’t have a NRE or NRO Account. I want to know that is there any deduction or tax on the amount transferred to a normal saving account from abroad?

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Manshu May 10, 2012 at 7:18 PM

There won’t be any deductions apart from the regular charges that the bank or money transfer agent charges but if you are looking to stay there long term you should look to open a NRO or NRE account as NRIs aren’t supposed to hold resident accounts.

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Subhra May 27, 2012 at 2:57 PM

Can a NRI invest for purchase of shares of company which is running departmental store i.e. multi brand retail through his nro account i.e. from local income.

will this be treated as FDI or local investment and does requiring any reporting norm to RBI.

Plz advice

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Manshu May 30, 2012 at 5:17 AM

This is not FDI but then I’m not sure what you’re trying to do….you want to buy shares in a listed company right? If you have a trading account linked to the NRO account and the trade is getting executed through that then yes you can do this.

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Pranab Adhikari May 31, 2012 at 9:43 AM

Hi Manshu,

Can you please tell me that if a person holds an NRE account and his earnings are deposited on that account, if he doesnot completes his NRE period it 182days outside India then is he liable for income tax.

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Manshu June 1, 2012 at 4:26 AM

I don’t know about that Pranab.

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Subhra June 1, 2012 at 5:29 PM

Thanks Manshu for prompt Response.

In my case, NRI is incorporating a new Pvt. Limited Company with 2 Lac Capital and his contribution would be 35% i.e. INR 70,000/-. Main object would be liquor Trading ( i.e. Multi Brand Retail …i suppose which is not allowed as of now).

So my question is can he subscribe/purchase shares or Rs. 70,000 of this pvt ltd Company.
Also can he give a loan of Rs. 35 Lac to the Company from his NRE Account, i.e. money got from abroad.

Thanks in Advance…

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Manshu June 2, 2012 at 6:26 PM

Subhra – I’m sorry but I’m not familiar with the nuances of this type of transaction and won’t be able to answer your question.

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Ajay June 11, 2012 at 4:37 PM

Hi Manshu,

Just wanted to check as how secure their NRE CD accounts, I am an NRI and not happy with the CD rates we get in US.

Can you also explain how it works, to my understanding is that they convert the $ to rupee with the prevailing rate of that day and upon maturity they convert the rupee to USD whatever the rate is on that day and give it to you. Correct, we loose money if the rate of USD is up against rupee and gain more if vice versa.

Thanks for all your help on this.

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Manshu June 12, 2012 at 5:12 PM

Hi Ajay,

I wrote a whole post based on your question since others have been asking about this as well. You can find it here:

http://www.onemint.com/2012/06/12/how-do-nre-accounts-work-and-how-safe-are-they/

If you have any other questions, do leave a comment and I’ll answer them there.

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ajay verma June 12, 2012 at 5:33 PM

Thanks Manshu, very helpful. really appreciate all you do.
Ajay

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Manshu June 12, 2012 at 5:34 PM

That’s great – I appreciate your comment too!

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DALAI JAGANATH June 13, 2012 at 7:19 PM

I am having NRE account want to add NRO also. so what is the process.

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Minesh June 15, 2012 at 8:59 AM

I am an NRI living in USA. I started stock investmen with my money under my father’s name couple of years ago . And i also had him open a bank account under his name for this purpose. And now i want to transfer that investment under my name and so is bank account so that i can use that money in future. So is there any way that i can do this? Please note that i am getting dividend from my investment regularly.

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PShetty June 15, 2012 at 4:07 PM

Just wanted to leave a comment here on the interest rate – spoke to ICICI customer service today, the tax rate on the interest for NRO FD is 30.1%.

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Satie June 17, 2012 at 2:20 PM

Hi Manshu,

Could you please elaborate more about your below point?

“Even if the NRO interest is taxed at 30% – it still gives you a higher interest income than the NRE account. So if you’re primarily looking to earn interest income then NRO is the way to go for you .”

I wanted to open NRI account (NRE or NRO), i read multiple blogs and found that NRE is the better option bcoz a key benefit is, it is tax free.

Can you please help me to understand why NRO is better than NRE?

Thx, Satie

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Manshu June 17, 2012 at 9:13 PM

Hi Satie,

Thanks for your comment. That is a mistake and I’ve removed that line now. This article was written much before the NRE accounts became liberalized and at that time they had lower interest rates and even with the tax the NRO accounts used to be better.

That is no longer the case now, and NRE accounts are better as you point out. When I edited the article last time, I didn’t remove that line which I should have.

Thanks for pointing it out and I’ve made the correction now. My apologies!

Manshu

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thaslim June 18, 2012 at 12:33 AM

hi!! i have one question…wede it is possible to transfer funds from one nre a/c to another nre a/c through internet banking..coz im holding 2 nre a/c in different bank n i want to tranfer some from one a/c to another thru internet banking….plz reply me..thx 🙂

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Manshu June 18, 2012 at 12:35 AM

Yes you are allowed to do that.

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Ganesh Gokarn June 21, 2012 at 2:45 PM

Hi,
My son has a NRO account in India.How can he send money from US into this account?
Can he Gift money to his close relatives from this NRO account ? If so what is the limit and tax liability on receiver of gift.

Thank you

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sandeep gupta June 27, 2012 at 5:12 PM

I wish to know as my sister in law based in dubai she wish to transfer funds to india in her NRE account via money exchanger in INR can she do also is her money in NRE account is 100% repatriable

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KISHIN July 1, 2012 at 4:37 PM

i have 2-3 NRO Depoists accounts prior to increase of interest on NRE deposit, as resident in UAE NRO Deposit carry 12.5% TDS till 31-03-2012. We have now been advised that effective 01-04-2012 applicable TDS will stand at 30.12%. please advise how can I transfer my maturity proceeds of NRO deposit to NRE account or i can pre-mature NRO deposits. Is it correct that we have to opt CA certificate to do so. FYI all NRO FD are raised by debiting amount from our NRE account funds remitted from abroad. please advise.
thanks and best regards

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Manshu July 1, 2012 at 6:51 PM

To the best of my knowledge, TDS of 30.9% has remained effective for a long time now and you should have been charged that earlier as well. Can you check your statements to verify that this has happened?

Also, you can break your NRO deposit and then transfer that money to open a NRE account, I don’t think there is another way to deal with this situation.

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Melwyn July 7, 2012 at 8:57 PM

I migrated to Canada in 2009. Prior to 2009, I had purchased some shares. I am on vacation in India now. Can I sell those shares and buy foreign exchange draft with the proceeds and take it with me to Canada?
Would appreciate advice.
Thanks
Melwyn

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Nanda July 8, 2012 at 4:14 AM

Hi Manshu, I have three Questions?
1. Is there any limit on maximum deposits in NRE Accounts? I have a NRE Account with HDFC Bank and am transferring from my British Bank to HDFC Bank and later opening online Fixed Deposits? Is there any Maximum Limit for FD`s?
2. My Fixed Deposits that i created from my HDFC NRE Account no where states its a NRE Fixed Deposit. Is that OK?
3. Do i still need to file returns in India for the FD`s in HDFC NRE Account? I haven`t visited India for the last 3 years.
Thank you all the info, its been really helpful.

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Manshu July 9, 2012 at 6:33 AM

Hi Nanda,

1. I’m not familiar of a limit but then the maximum I have heard is just 2 so you can’t really take my word for this.

2. It should specify that someplace, the statements or the online account or some other place which has the description.

3. The people that I know have been filing returns in a similar situation just so when they eventually return they have everything in order and there aren’t any hassles for things like home loans etc. I do not however know if this is mandatory to do or just a good practice to follow.

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Ranjan Rakesh August 7, 2012 at 12:01 AM

Hi Nanda,

1.There is no limit of opening NRE FD,These aare taxfree deposit.
2.That is OK
3.No you dont have to file tax in india

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Aditya July 16, 2012 at 10:20 PM

Hi Manshu,

I had a resident savings account before I moved out to Singapore.I have the following questions
1) The account will be automatically converted to NRO account or do I need to close it and open a new one?
2) I have a fixed deposit. What is the minimum interest accrued to which the tax rate (30.1%) is applicable. eg: even for Re 1 the tax will be applicable or there is some limit eg: Rs 10000 till which no tax is applicable.
3) If my income in India is only via interest and it is less than the income tax slab (200,0000 INR)then do I need to pay any tax at all.

Regards,
Aditya

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Manshu July 17, 2012 at 4:27 AM

Hi Aditya,

1. It isn’t automatic, you will have to go through a very elaborate process to get the account opened.
2. NRE account is tax free so that is better and you should rather open that.
3. I don’t know.

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Baiju July 18, 2012 at 1:03 AM

Hi

Please can you advice on how to get back the taxes back which was deducted from my NRO a/c. for the fund transfered from Overseas. For info., I don’t have any incomes from any source in India.

Regards
Baiju

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raju July 19, 2012 at 1:51 AM

QUESTION: Do I need to submit my Permanent Account Number (PAN) to the Bank?

ANSWER: From April 1, 2010 Permanent Account Number (PAN) shall be mandatory for Non-Resident Indians to avail benefit of lower tax deduction under Double Taxation Avoidance Agreement (DTAA) treaty. Hence it is advisable to submit your PAN to the Bank.

Please note that it is also essential to update your PAN number with the bank for repatriating funds from NRO account as well as getting tax credit in your tax pass book for TDS deducted on your NRO accounts.

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srivishnu July 23, 2012 at 7:04 PM

Hi ,
I am working in merchant ships which means i am outside india for more than 6 months and presently i have an nre account .Now i plan to open an nro account will that be taxable even if i work abroad for more than 6 months

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Manshu July 29, 2012 at 2:04 AM

Yes, NRO is taxable.

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Shantana July 24, 2012 at 6:13 PM

Hi Manshu,

Is it MANDATORY (or optional) to show all the inward remittances to an NRE account if only FD’s are done from the money, while filing returns.

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obulesu July 29, 2012 at 2:46 PM

Dear sir,
I have a one quation, this NRE or NRO accounts in depasit only faren curency or including India curency.

Please clarify my requist sir..

Thank you
Obulesu

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Manshu July 29, 2012 at 8:36 PM

You have to deposit money either from another NRI account, a foreign account or deposit cash in person. As far as I know you can’t deposit from a domestic account to a NRE or NRO account.

Can anyone else confirm this please?

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Ranjan Rakesh August 15, 2012 at 8:21 AM

Hi Manshu,

NRI is the status.A person is a NRI when he has gone abroad for the indefinite period of time such as Education or Employment or vocation or deputation.It is nothing to do with 182 days as per income tax law.

Hence if you are abroad for such indefinite period either you need to change the status of the account as Resident to NRO or close the account.

For such cases you cannot hold resident account.Hence money cannot be deposited to your NRO account vide cheque from your Resident account.Money can be deposited from others resident account to your NRO account.but yes there is a tax liability on interest earned out of the money deposited which is called as withholding interest which is 30.9%

Secondly money can be transfer from NRE to NRE,NRE to NRO,NRO to NRO.NRO to others resident account(not self as you cannot hold resident account)

Money van be also transfer from NRO to NRE now.Please refer RBI circular which was issued on May 07,2012.

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Sunil August 3, 2012 at 9:53 PM

My Army pension now gets deposited every month in my NRE (rupee) a/c every month as per the RBI circular dated 07 May’12. This has been possible after I did lot of correspondence with them.

But what do I need to do to get my pension from my NRE A/c to my US bank in USD?

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Rahul August 5, 2012 at 2:02 AM

I have an account in India before I came to US. Now I have been in US over 5yrs. And transferring money to India account (money2india). Do I have to change my Indian account to NRE or NRO account?

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Rohit August 8, 2012 at 11:58 AM

One more difference between NRE and NRO accountis that you can deposit INR into NRO account but not on NRE, which makes NRO better option for keeping rental income.

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RA August 15, 2012 at 2:00 AM

Hi,
I have both NRE and NRO accounts. I wrote a Rupee check for buying a property in India. But a few months later I cancelled the deal. The builder has refunded the funds in a rupee check.

I need to understand, WHERE WILL THIS CHECK GO? NRE or NRO account.
a) Can I deposit Rupee check back to my NRE (the original source of funds)
b)Do I need any spl permission?

Please advise.
Thanks
RA

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Ranjan Rakesh August 15, 2012 at 8:12 AM

Hi RA,

What is the source of fund.cheque issued through which account-NRE or NRO account?

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RA August 15, 2012 at 10:02 AM

Hi Ranjan,

I issued the check from my NRE (NRE Rupee account funded by dollar transfers from USA) account to a builder. After 3 months we changed our mind and asked for the refund. The builder has provided us the refund in Rupee Check.

Ideally, it should go back to NRE since that is where the money was pulled. But since this is a rupee check, will there be any problem or additional paperwork?

Thanks
RA

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sreedhar m August 17, 2012 at 12:03 PM

hi
i got transferred US dollars from USA to a domestic account a few months back. i am need of money, how can i get back the amount that i transferred to the domestic account, i now hold a NRE account, can i ask the bank to deposit the amount converting into US dollars to my NRE account from my domestic account, what is the procedure to be adopted to get the money back in US dollars.
if amounts are deposited in NRE accounts, how the balance is recknowed i.e if suppose hundred US dollars are deposited, will it be rupees equivalent to hundred US dollars, which means if i deposit hundred US dollars into NRE account and if i withdraw again subsequently will i be getting hundred US dollars without any deductions.please clarify

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harish September 9, 2012 at 11:14 AM

Is NRO account free from currency conversion risk?

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Manshu September 9, 2012 at 8:34 PM

No it is not, you face currency conversion risk in both NRO and NRE accounts.

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Anirban September 20, 2012 at 5:37 PM

I have NRE account in India . Is it possible to transfer INR from any other NRE account? If yes ,do I need to provide my PAN details to them ( from where the fund is remitting ).

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libe September 26, 2012 at 5:05 PM

hi
nro & nre means..

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S Das October 6, 2012 at 7:47 AM

Hi Manshu,
I am currently employed in India and have a normal local savings account(salary account). I have a running home loan that was taken to buy a property in India. My home loan is linked with the salary account. Now I am going abroad on an assignment and might be staying there for sometime. I wish to open a new NRE /NRO account with the same bank. My questions :
1) Would future EMIs be deducted from my current salary account or the new NRE / NRO account?
2) Should I go for NRO or NRE account, please suggest.
3) Do I need to open a dollar account with a foreign bank there because company is going to pay me in dollar? And then transfer the fund to my current salary account by XOOM or something similar? Is this as an option advisable.
4) My basic / biggest concern is how to pay in INR the future EMIs when I will be earning in dollars and won’t be available in India.
Your inputs would help me immensely.
Thanks & Regards

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Manshu October 7, 2012 at 6:17 AM

Hi There!

1. In the near term your EMIs will continue to be deducted from the existing account but as your status changes to NRI you will have to get in touch with your bank (the one that gave you the home loan) and redirect them to another account.

2. NRE fixed deposits are better right now because the interest from them is tax free.

3. Yes, that’s how it’s done. Your employer will assist in that. But you definitely need a Dollar account. Ask anyone in your company who’s already there. Yes, you will need to use a money transfer service.

4. You will need to transfer money to Indian account. This is a fairly simple process, and you don’t have to be overly concerned with it. Just talk to someone who is already present wherever you’re going and they will tell you.

Which country are you going to?

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S Das October 7, 2012 at 10:41 AM

USA

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Manshu October 7, 2012 at 7:32 PM

Okay, then you will have to open an account to get your salary with a local bank like Citibank, Bank of America, Chase etc. and then give those details to your employer in what’s known as a direct deposit form. Your employer will automatically credit your account every pay cycle, which is usually 15 days in USA and then you are free to transfer money from that bank account to your Indian account using a money transfer service like Money2India or XOOM or whatever. It’s a very simple process.

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S Das October 7, 2012 at 11:55 PM

Thanks, Manshu!!

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VIJAYANAND PAULRAJ October 13, 2012 at 8:20 PM

1) kindly inform wheather NRO or NRE account is worth for applying housing or car loan 2) I have an NRO account if NRE account is worth applying for any of these loan please help me 2 change my account 2 NRE account

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Saji Thomas November 3, 2012 at 11:27 PM

Hi Manshu, Should I know the procedure to send approx. 100000 US $ to USA from NRE RS account. Purpose of the transfer is, one Indian who works in US wants to sell his property and asked the money by US $ in his US Account. We fixed the property value in RS and he wants same amount by dollar conversion and to be in his US Account. I have promised him that i can give him NRE Cheque and later he can transfer it to his account.. But he wants it in his US Account, And I contacted my bank & they have not given any clear answer. Is there any transfer limit or tax related issues in India or USA.. Thank you..

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Akhil November 12, 2012 at 7:45 AM

Can you please add thrw some light on

1. Can we withdraw money in India from NRE account? If yes, what will the how will the currency conversion handled?
2. Can we transfer money from NRE account to (say) a friend in India?

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Vijay December 7, 2012 at 12:17 PM

Hi, I have a NRE Savings account & also a resident savings account (that i had opened in the past prior to going overseas. I should have ideally converted in into NRO Savings account but i didnt do it then). What i wish to know is, am i allowed to transfer funds from my resident savings account into my NRE savings account & repatriate the funds..? I am not a Indian citizen anymore. Thanks much if you can answer my query.

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Manshu December 8, 2012 at 10:58 PM

To the best of my knowledge, if you’re not an Indian citizen then you shouldn’t even have a NRE or NRO account. You need to check this with a CA or lawyer who is an expert in this area to get an accurate answer.

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Venkat March 20, 2013 at 8:05 AM

My understanding is that Person of Indian origin (PIO) can still open NRE/NRO accounts.

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Srinivas January 30, 2013 at 7:26 AM

I have NRO and NRE accounts. I want to buy a property in India. Can I issue NRO accountd for doing the same…

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Yeshwanth Kota February 5, 2013 at 1:22 AM

Hi,
I am a citizen of India and I recently came to US on work visa. I will be working here for about an year. I want to transfer money to India to support my family. Can I transfer the money to my personal/salary account in India using any of the e-transfer sites such as a Xoom.com ? Is it against the law ?

Thanking in advance for your response.

Regards,
Yeshwanth

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Akhil February 5, 2013 at 6:51 AM

Hi Yeshwanth:

I did some home work and spoke to a CA this time when I went o India for vacation. This is the information I gathered:

Qucik answer: It is not illegal .. based on the info I got, disclaimer 🙂

NRI account:
1. Money will be in your name.
2. Easy to get money back to USA if required.
3. Advantage over taxing funds in account with respect to your relative/friend account in India.
4. Not advise to keep more than $10,000 as there are some new IRS rules.

Relative/friend Account:
1. That relative/friend has to worry abt “gift tax”.
2. Tough to get the money back to USA. More parer work, not exactly tough but time consuming.
3. I think you can send max $13,000 per year. Limit is more/infinite to NRE acc I guess.
4. Hope your relative/friend returns the money to you 🙂

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Akhil February 5, 2013 at 7:16 AM

Also, once you become nri you should not transfer money to your savings account in India. You can send it to your friend or relative

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sundararajan February 20, 2013 at 1:09 AM

Hi,
I have a question, kind of know the answer. But still would like to confirm. I have NRE account and we opened a regular FD on my wife’s name by issuing a check from NRE account. Is there a way to get back the money to NRE account by any chance? OR once the money is gone from NRE can’t be put it back ? Please let me know. Thanks,

Regards,
Sundar.

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Manshu February 20, 2013 at 1:17 AM

I haven’t encountered this situation but the rule is that you can fund the NRE account with money that’s repatriable in nature, so somehow you have to prove that the funds in your wife’s FD are repatriable. I don’t know how you could do that. I wish I had a more concrete answer but I don’t know much more beyond this.

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dirty boy March 22, 2013 at 12:23 PM

dear one this is query wee bit out of the topic,
how is money parked in safe havens across india such as cayman islands and swiss bank accounts.

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Manshu March 26, 2013 at 6:11 AM

Sorry I’m not familiar with how this is done.

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Amit May 14, 2013 at 11:11 PM

Hi
I am employed abroad for two years. Can I open NRE account and take out the money from the bank in INR in India.

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Rashmi May 17, 2013 at 12:40 AM

Hi,

My husband is an NRI residing in USA for the past one year. He has not opened any NRO or NRE account. He transfers money to India from his US account to his Indian account. Is t in anyway illegal or wrong? Please suggest.

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ranjith November 30, 2013 at 8:46 PM

HI RASHMI,

no problem but you have to explain the purpose of each remittance to the bank and rbi.
the amount in saving account is taxable.
so better open one NRE account and save your all income from USA. It is completely free from tax in india and you can get the same amount to USA in to Dollars.

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Ranjan August 7, 2014 at 6:56 AM

Why is everyone raving about NRE being tax free. No matter NRE or NRO you need to pay tax on interest (earned anywhere globally) in US right? For example if you are taxed 40% in US and India withheld 30% on your NRO interest you end up paying catch up tax of 10% in US. Or you end up paying entire 40% tax on interest earned in NRE account in US. What are we saying in NRE? Am I missing something?

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Birendra January 11, 2015 at 9:52 AM

Check tax rate on income from interest and securities, this is much lower/different from tax rate from other income. so the above logic does not work.

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Himanshu May 18, 2013 at 11:29 PM

Thanks for sharing.. please do share such topocs of economics and banking sectors.. Thanks

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Satyendra nath June 6, 2014 at 2:38 PM

I have NRO & NRI desposits in India and would like to purchase US$ in India. Is it possible. Please advise.

T&R

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Satya June 15, 2014 at 4:18 PM

I have Saving Account in India and I wanted to covert it into NRO Account. My queries are,
1) I have RD running in my account from last 3 years and it is going to finish in next year. After maturity, do I need to pay tax as per NRO tax regulation?
2) I have few MF SIPs connected to my account. Will they be connected after converting to NRO account.

Thanks

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Umesh Kumar June 27, 2014 at 12:47 AM

Hi There,

Can you please throw some light on my below questions:-

Suppose I transferred $1000 to NRE account say today, first time it will be converted to INR as per exchange rate & it will be credited to my NRE account. After 6 months, suppose i need money in INR, will that time currency conversion rate will come into picture again?

2. Can we withdraw money in India from NRE account? If yes, what will the how will the currency conversion handled?
3. Can we transfer money from NRE account to (say) a friend in India? or to my other self account? Please confirm.

Thanks.

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nitesh July 23, 2014 at 10:27 AM

hi manshu,

I have earned interest from my nro account and bank deducted tds from that interest amount. can i get back refund by filing ITR ,though i have not income more than basic exemption limit in india. i have only interest income which is from nro account and which is less than basic exemption limit.

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Suresh Agravat October 30, 2014 at 1:44 PM

I have both NRE and NRO account in India .I want to deposit FD name with my daughters. what is beneficial which Iget

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xyz November 7, 2014 at 8:38 PM

I would like to buy a property in india and would like to pay the property value by cheque i have both NRE and NRO account. What difference will it make for me if i pay the property price by cheque ,when i pay through NRE and NRO account. Which one will be beneficial for me, such as to avoid any kind of tax or any other charges. Also let me know if there is any advantage and disadvantage in long term.

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ranjith from kotak bank November 14, 2014 at 9:22 PM

dear all,

pls contact me if you want to open NRE /NRO account . i will help you to open account online from any country.

it is completely free and easy to open account.

pls contact :
ranjith.rayabarapu@kotak.com
8886713883

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Prasha February 11, 2015 at 4:14 AM

I hold large number of shares in my Indian Demat account, I am now a Canadian citizen, I dont want to sell the shares instead transfer them over to a PIS account

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chetan April 24, 2015 at 11:05 PM

Anyone can contact me for their queries. 9654055551

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GOVIND PATEL May 2, 2015 at 2:14 AM

Hi
I have PR in New Zealand. I wanted to know that if I open NRO account in India ,can I transfer fund from NZ$ to INR -INR to NZ$ ?
2)I have joint saving account with my wife in BOB in India. We both have PR of NZ. We are residing in NZ. My wife is earning some interest from investments in India . The interest is directly deposit in our joint saving account.Can we transfer/deposit cash this in form of INR to my NRO account?
Thanks & Regards

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saju viswanathan August 23, 2015 at 2:02 AM

I am in Kuwait now. I have opened a new NRE account in particular bank. But already i have an account in the same bank.and I don’t know whether its working or not, I am not using that old account and I don’t know what happened to that old one– they said they will link with my old one .is it possible what they said and is it safe doing that? ? Kindly give me an information on this… thank you so much

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saju viswanathan August 23, 2015 at 2:04 AM

Old one is not a NRI or NRE, NRO-q it was just a savings account

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Lukkuman hakkim November 19, 2015 at 6:23 PM

Now I am working in kuwait and i am need to open NRI account in madurai Tamilnadu ,india. Tell me the procedure

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