Three account types exist under the Foreign Exchange Management (Deposit) Regulations, 2016, and each answers a different question.
| Account | Holds | Currency | Repatriable | Interest taxed in India |
|---|---|---|---|---|
| NRE | Money earned abroad | Rupees | Fully | No |
| NRO | Income arising in India — rent, dividend, pension, sale proceeds | Rupees | Within limits | Yes |
| FCNR(B) | Money earned abroad, kept as a term deposit | Foreign currency | Fully | No |
The longer read: pick by where the money came from, not by the rate
The practical difference is exchange risk. An NRE deposit converts your foreign currency into rupees on day one; if the rupee weakens, your money in dollar terms shrinks. An FCNR(B) deposit stays in the currency you sent, for one to five years, and returns the same currency at maturity.
Which of the two actually lands more depends on where the rupee ends up, so it cannot be answered in the abstract — but it can be turned into one number. Put the two rates your bank has quoted into the tool below and it works out how far the rupee would have to fall before the FCNR(B) deposit comes out ahead.
FCNR(B) or NRE — how far the rupee has to fall
The NRO account is not optional. Rent from a flat in Pune, a dividend, a pension, or the proceeds of a property sale must land in an NRO account — they are Indian income and cannot be credited to NRE.
Choosing the account is one thing; getting the money into it as the right kind of money is another. An FCNR(B) deposit in particular has to arrive in the deposit currency and never touch rupees, and a remittance that is converted on the way cannot fund one at all.
Remitting money to India: channels and paperwork
Which account is one question. Whose name may be on it is another, and the answer differs between the three.
Joint holding rules for NRI accounts
- Interest on NRE and FCNR(B) deposits is exempt from Indian income tax while you remain a non-resident.
- NRO interest is taxable, and tax is deducted at source.
- On returning to India for good, these accounts must be redesignated as resident accounts.
Source: Reserve Bank of India, FAQ Accounts in India by Non-residents, as on 16 January 2025 — read alongside the Foreign Exchange Management (Deposit) Regulations, 2016 and the Master Direction on Deposits and Accounts. The exemption on NRE and FCNR(B) interest sits in the Income-tax Act, which the Income-tax Act, 2025 renumbers with effect from 1 April 2026 — check the new numbering before quoting a section. Checked 20 September 2026.