NRE Account (Non-Resident External Account)
Legally reviewed by Advocate Naresh Kalra -- see full credentials -- reviewer credit only, no consultation link, per platform editorial policy (see /editorial-guidelines/).
An NRE (Non-Resident External) account is an Indian bank account for holding an NRI's foreign earnings remitted into India -- both the principal and the interest earned are freely repatriable, and the interest is exempt from Indian income tax for as long as the account holder's NRI status is maintained.
An NRE account can only be funded with foreign income remitted from abroad, not with income that arises
in India (that belongs in an NRO account instead) -- mixing the two defeats the purpose of the NRE account's
free-repatriation and tax-exempt features. NRE accounts can be opened as savings or fixed-deposit accounts,
are maintained in Indian Rupees despite being funded in foreign currency, and are freely convertible back to
foreign currency and remitted abroad without RBI's USD 1 million-per-year NRO repatriation limit applying.
An ordinary resident savings account must be converted to NRE/NRO (or closed) once the account holder becomes
an NRI -- continuing to operate it as a resident account is a FEMA violation.
