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Short answer: an NRE account holds money that came from abroad and can be sent back out. An NRO account holds money earned or received in India, such as rent, and sending it abroad is limited to USD 1 million per financial year, with documents and tax paid. For an NRI who owns a flat in Navi Mumbai, the usual pattern is that rent and sale proceeds land in the NRO account, while money sent from abroad to pay for a flat or a loan can come through NRE. This guide explains the accounts and which one fits each property payment.
This is general information and not banking or tax advice. RBI rules and the Income-tax Act, 2025 can change, and your bank applies its own checks. Confirm the details with your bank and a chartered accountant. This guide is independent and has not been reviewed by a lawyer.
The three accounts in brief
| Account | What it is | Repatriation |
|---|---|---|
| NRE | A rupee account for NRIs and PIOs. It can be a savings, current, recurring or fixed deposit account, funded by inward remittances and transfers from other NRE or FCNR(B) accounts. | Balances can be sent abroad. |
| NRO | A rupee account for bona fide rupee transactions of a person resident outside India. It takes credits such as rent, dividend, pension and interest from India. | Not freely repatriable. Up to USD 1 million per financial year under the Remittance of Assets facility. |
| FCNR(B) | A foreign currency term deposit, held for 1 to 5 years. | Operated on conditions similar to NRE. |
These descriptions follow RBI’s FAQ on accounts in India by non-residents and the RBI circular on the Deposit Regulations. For NRO balances, the bank takes an undertaking that the money is your own legitimate receipts in India, not borrowed and not moved from another NRO account. Transfers from NRO to NRE count within the USD 1 million limit.
Which account for which property payment
| Payment | Usual account | Note |
|---|---|---|
| Rent from your flat | NRO | Rent from Indian property is normally credited to NRO. The tenant deducts tax first. See the guide to TDS on rent paid to an NRI landlord. |
| Sale proceeds of the flat | NRO, then remitted | Sending them abroad falls under the USD 1 million facility or the foreign-funded route. See the guide to sending property sale proceeds abroad. |
| Paying for a flat from abroad | NRE or FCNR(B), or money sent in from abroad | Keep the funding records. They matter if you sell later. |
| Home loan EMI | NRE or NRO | Lenders usually allow either, and joint loans can differ by lender. Confirm with the bank. See the NRI home loan guide. |
| Society maintenance and property tax | NRO or NRE | A local rupee payment. Ask the society for its bank details. |
| Inherited property income | NRO | See the NRI inheritance guide. |
Repatriation: the USD 1 million facility
RBI’s FAQ on remittance of assets says an NRI or PIO can remit up to USD 1 million per financial year out of NRO balances, sale proceeds of assets and inherited assets, with documents and subject to Indian taxes. The limit runs from 1 April to 31 March. RBI permission is needed above it. Some bank pages describe it as a calendar year, but RBI’s FAQ says financial year.
Joint accounts and change of status
- An NRE account can be held jointly with other NRIs or PIOs, or with a resident relative on a “former or survivor” basis. An NRO account can be held jointly with residents on the same basis, or with other NRIs and PIOs.
- A resident who becomes non-resident should have the resident account redesignated as NRO.
- On return to India, NRE and NRO accounts are redesignated as resident accounts. See the guide to returning to Navi Mumbai.
- A resident relative can operate an NRE account as a power of attorney holder during the NRI’s lifetime, according to RBI’s FAQ. For property work, see the NRI power of attorney guide.
Tax in outline
- Interest on an NRE account was exempt under section 10(4)(ii) of the 1961 Act, and the Income Tax Department’s help page says the 2025 Act keeps the exemption with the same conditions. The test follows the foreign exchange law, so it differs from tax residency (see the department’s page for non-residents).
- Interest on an NRO account is taxable in India. Banks typically deduct 30% plus cess, and a surcharge where it applies. Confirm the current rate with your bank.
- A lower or nil deduction certificate can be applied for, and a tax treaty may reduce the tax if you give the bank a tax residency certificate and the treaty form. Ask a chartered accountant before relying on either.
- Rent paid into an NRO account is taxed in India as rental income, and the tenant has to deduct tax. The guide to TDS on rent paid to an NRI landlord explains how.
A temporary rate change in 2026
Reports say RBI lifted the interest rate ceiling on fresh NRE deposits of three years or more, and on fresh FCNR(B) deposits of three to five years, from 17 June to 30 September 2026 (see this report). The original ceilings were reported to return from 1 October 2026 unless RBI extended the period. Ask your bank what applies on the day you deposit.
Frequently Asked Questions
What is the difference between NRE and NRO?
NRE holds money that came from abroad and can be sent back out. NRO holds money earned or received in India, such as rent, and sending it abroad is limited to USD 1 million per financial year.
Which account should receive my flat’s rent?
Rent from Indian property is normally credited to an NRO account. The tenant deducts tax before paying.
Can I pay a home loan EMI from NRE?
Lenders usually allow either NRE or NRO, but rules for joint loans vary by lender. Confirm with your bank.
Where do sale proceeds go?
Usually into NRO, and sending them abroad falls under the USD 1 million facility or the foreign-funded route. See the repatriation guide.
Is NRE interest taxed in India?
It was exempt under section 10(4)(ii) of the 1961 Act, and the Income Tax Department says the 2025 Act keeps the exemption on the same conditions.
What happens to my accounts if I return to India?
NRE and NRO accounts are redesignated as resident accounts, and RBI allows an RFC account for certain foreign exchange. Ask your bank.
Sources and a note on accuracy
| Point | Source |
|---|---|
| Account types and joint holding | RBI FAQ on accounts by non-residents and RBI circular |
| USD 1 million per financial year | RBI FAQ on remittance of assets |
| NRE interest tax exemption in the 2025 Act | Income Tax Department help page |
| 2026 rate ceiling change (reported) | Corporate law update |
Reviewed on 24 October 2026. The RBI documents were read, but RBI has issued newer directions since some of them, and the section numbers inside the Income-tax Act, 2025 were not read. Bank rules differ, so confirm the account choice with your bank and a chartered accountant.
The featured image is an AI generated illustration made for this guide, and not a photograph.
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