NRE to NRO Fund Transfer: Ultimate Guide 2020

With the never ending doubts around the domain of fund transfers from one type of account to another, NRIs often spend their valuable time wondering whether they can transfer funds from NRE to NRO Account!? In this article, we will resolve this eternal doubt for our NRIs all over the globe once and for all.

NRE to NRO Fund Transfer: Ultimate Guide 2020
NRE to NRO Fund Transfer: Ultimate Guide 2020

Can NRIs transfer funds from NRE to NRO Account?

YES! NRIs can transfer funds from their NRE (Non Resident External) Account to their NRO (Non Resident Ordinary) Account. An NRE account allows you to transfer funds to another NRE account as well as an NRE to NRO fund transfer.

Let’s get to the crux of the NRE and NRO Account to understand about their usage and benefits in detail:

  • Non-Resident External (NRE) Account: The NRE account can be opened for the purpose of maintaining the income earned outside India with tax free interest (upto 7.95%*) on Fixed Deposits. Both the principal amount and interest earned are completely repatriable from India. 
  • Non-Resident Ordinary (NRO) Account: The NRO account can be opened for the purpose of maintaining the income earned from India such as income from rent, pension, etc. The repatriation of the money in the account can be done up to a maximum of 1 million USD per financial year. Note: 30% tax + surcharge + education cess will be deducted at the source of interest earned in India
Factors to consider Non Resident External (NRE) Account Non Resident Ordinary (NRO) Account
PurposeFor income earned outside IndiaFor income earned from India (pension, rent etc.) 
CurrencyINRINR
Joint Account HolderOnly NRIsBoth NRIs as well as Residents
Tenure of Deposits1 year to 10 years7 days to 10 years
InterestUp to 7.81%*Up to 7.30%*
Repatriation (transfer of money from Indian bank account to foreign bank account) Both Principal (money invested initially) and Interest completely repatriableUp to a maximum of 1 million USD per financial year
Tax DeductionsNo taxTax on Interest earned (not on principal amount): 30% tax + surcharge + education cess will be deducted at the source of interest earned in India

Also Watch: What is NRE Account | What is NRO Account

Benefits of NRE/NRO Account for NRIs

Non Resident External (NRE)Non Resident Ordinary (NRO)
-Park money earned abroad and earn tax-free interest up to 7.81%*
-24*7 withdrawals using International Debit Cards
Invest in opportunities such as Mutual Funds, IPOs etc.
-Link NRE Account to a PIS Account and trade in Indian stocks
-Convenient Banking Experience
-Repatriate funds abroad fully and freely
-Maintain the income generated in India from sources such as pension, rental income etc without any hassle
-Earn interest on the funds in the account up to 7.30%*
-Invest in opportunities such as Mutual Funds, IPOs etc.
-Link NRO Account to a PIS Account and trade in Indian stocks
-Convenient Banking Experience

Also Watch: Best NRI Bank Account to understand the benefits of every NRI Banking Account variant and NRE to NRO Fund Transfer.

NRE to NRO Transfer Tax

There are no taxes on NRE to NRO Transfer. You can transfer money to NRO Account without any hassle. Although, the funds lying in the NRO Account are liable for taxes. To know more about taxation on NRO Account, and get taxation advisory from experts at SBNRI, click in the button below.

Ask SBNRI Tax Expert Now

Along with understanding the fundamentals of NRE and NRO Bank Accounts, NRIs often confuse the major process and ask some questions that are repeated often but to no avail.

In the upcoming segment, we will try to address these questions put up by NRIs.

Can I transfer money to NRO Account from abroad?

Yes. NRIs can transfer money to NRO Account from abroad. To understand this part we need to explore the permissible credits in an NRO Account.

Credits refer to the money that can be deposited in an account. The permissible credits in an NRO Account are:

  • Inward Remittances from outside India
  • Interest earned on the NRO account balance
  • Gifts in INR or loans taken from any resident or NRE/NRO account holder
  • Transfers from your own or any other NRE/NRO account
  • Any income generated in India for which the taxes are not deducted at source

How to open an NRI Bank Account?

Every major bank in India has its own unique process for opening NRI Bank Accounts. To know about the account opening process of top banks in India, click here.

Open NRI Bank Account Now

How to repatriate money from NRE Account SBI?

The process of repatriation from all the major banks in India such as SBI, ICICI, HDFC etc. can be understood using the following table:

Accounts ProcessLimit
NRE1. ONLINE: 

-Internet banking for outward remittance (sending money to your overseas account from your NRE account)

2. OFFLINE: Fill these 2 forms. (You can get them at the bank branch or download them online, sign them and send them to the bank branch in India via courier in case you are abroad.)

Bank Request Form: Enter foreign currency/inr amount to be repatriated, beneficiary bank details (the beneficiary name can be same or different)

Form A2 (Form for remittance)
No Limit

Can I transfer money from NRO Account to Foreign Bank?

The process of transferring money from NRO Account to foreign bank is called Repatriation. The process for the same is as follows:

Accounts ProcessLimit
NROAll the following documents are needed to be submitted at the Bank Branch (in India). You can either submit it when you arrive here or download it online and send the signed copies to bank branch via courier:

Form 15CA (The purpose of this document is to ensure that taxes are collected on the funds before they are remitted abroad as it becomes difficult to recover taxes at a later stage) 
(Fill the form online on NSDL and print the acknowledgement)

Form 15CB (Certificate of an Accountant) (The Accountant fills the form and shares it with the account holder. The account holder then sends it to the bank via courier) 

Form A2 (Form for remittance)

Request Form from the Bank (for details to debit funds from your account)
USD 1 million

How to transfer money from NRO to NRE Account in ICICI?

To transfer money from NRO to NRE Account in ICICI or any other top bank in India such as SBI, HDFC etc. you need to provide proper documentation stating that all the taxes are paid on the funds being transferred to the NRE Account because both the principal and interest earned on NRE Deposits are fully and freely repatriable.

Transfer of funds between these accounts are subject to taxation. Only after you have paid all your taxes on the funds in NRO Account, can you transfer it to the NRE Account.

NRI Banking can invite multiple queries and doubts. We, at SBNRI aim at resolving these doubts and make the entire banking experience seamless for NRIs.

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