NRE (Non-Resident External) FDs hold foreign earnings converted to INR — fully repatriable and tax-free in India. NRO (Non-Resident Ordinary) FDs hold Indian-source income — interest is taxed in India (TDS 30% + cess). Same rate, very different post-tax outcome.
NRE FD (tax-free)
Net maturity
₹0
Gross interest₹0
Tax in India₹0
Effective yield0%
RepatriableYes (full)
NRO FD (taxed)
Net maturity
₹0
Gross interest₹0
TDS deducted₹0
Effective yield0%
Repatriable$1M / yr cap
Key differences
Source of funds: NRE = foreign earnings; NRO = Indian-source income (rent, dividend, pension etc.).
Tax in India: NRE interest fully exempt; NRO interest taxed at 30% + cess (TDS at source).
Tax abroad: Both may still be taxable in your country of residence — claim TDS credit under DTAA.
Repatriation: NRE — both principal and interest fully repatriable. NRO — up to USD 1M / financial year after CA Form 15CB.
DTAA: If your country has a DTAA with India, NRO TDS can drop to 10–15% on submission of Tax Residency Certificate.