NRE vs. NRO Accounts: The Money-Transfer Setup Every NRI Needs
Which account holds your US savings, which holds your India income, and how to move money tax-efficiently.
Reviewed by Deepak Middha, CA, Series 65
Updated March 20, 2026 · 2 min read
Reviewed by Deepak Middha, CA, Series 65
Deepak has experience in cross-border finance, tax-aware planning, and immigrant money decisions.
Once you're earning in dollars, you'll want to send money to India — for family, savings, or investments. Doing it cleanly starts with understanding two account types: NRE and NRO.
NRE vs NRO in one line
- NRE — money earned abroad; fully repatriable, interest tax-free in India
- NRO — income earned in India (rent, dividends); interest taxable, repatriation capped
NRE vs NRO at a glance
| NRE (Non-Resident External) | NRO (Non-Resident Ordinary) | |
|---|---|---|
| Holds | Money earned abroad | Income earned in India |
| Repatriable? | Fully, anytime | Capped (~$1M/year with paperwork) |
| Interest tax (India) | Tax-free | Taxable (~30% TDS) |
| Best for | US-earned savings you want flexible | Rent, dividends, pre-move salary |
Your US-earned savings should land in NRE if you want flexibility; India-origin income goes to NRO.
Choosing a transfer service
Banks give terrible exchange rates and bury fees in the spread, so specialist services consistently beat them on all-in cost. Compare the rate you actually receive, not the advertised fee — a "zero fee" transfer at a bad rate costs more than a small flat fee at the mid-market rate.
A clean two-account setup
- Open both an NRE and NRO account before you need them
- Route US-earned money to NRE for tax-free, repatriable savings
- Route India-origin income to NRO
- Use a low-spread transfer specialist and always check the receive amount
Sending money to India?
Compare the true cost — fee plus the exchange-rate markup banks hide — before your next transfer.
Get this scaffolding in place early and every future transfer becomes a two-minute task instead of a research project.
