Compare NRE and NRO fixed deposits: maturity, TDS on NRO interest and the tax-free NRE advantage.
NRE FD at maturity (tax-free in India)
NRO FD at maturity, after TDS
NRE interest
NRO interest before TDS
TDS on NRO interest
NRE advantage
NRIs can keep fixed deposits in two kinds of rupee accounts. NRE deposits hold money earned abroad; the interest is tax-free in India and both principal and interest can be sent back abroad. NRO deposits hold income earned in India; the interest is taxable and the bank deducts TDS before paying it. This calculator shows the difference for the same deposit.
Example
₹10 lakh for 2 years at 7% (compounded quarterly) grows to about ₹11,48,882 in an NRE FD — all of it yours, with no Indian tax.
The same deposit in an NRO FD earns about ₹1,48,882 of interest, from which the bank deducts about ₹46,451 as TDS at 31.2%, leaving about ₹11,02,431.
Things to know
TDS is not always the final tax. If your total Indian income is low, you can file a return and claim a refund of excess TDS.
Tax treaties can lower the rate. Give your bank a Tax Residency Certificate and Form 10F to get the treaty rate, often 10–15% on interest.
Coming back to India? Tell your bank. NRE accounts must be redesignated as resident accounts (or moved to an RFC account), and interest becomes taxable from then on.
Repatriation: NRE money moves abroad freely; from NRO accounts you can send up to USD 1 million a year after paying tax.
How this is calculated
A = P × (1 + r ÷ 4)4 × t (quarterly compounding, as most Indian banks do).
NRO: TDS = interest × TDS rate; amount after TDS = maturity − TDS. NRE: no Indian tax on the interest.
Assumptions
NRE interest is exempt in India only while you are a "person resident outside India" under FEMA. When you return to India for good, the NRE account must be redesignated and interest becomes taxable.
NRE accounts take only money earned abroad and are freely repatriable; NRO accounts hold income earned in India (rent, dividends, pension) and repatriation is limited to USD 1 million a year after tax.
TDS is shown on the total interest; banks deduct it as interest is credited each year. TDS may be more or less than your final tax — you can claim a refund by filing a return in India.
Your country of residence may tax the interest too.
No. NRE accounts accept only money brought in from abroad (or transfers from another NRE/FCNR account). Rent, dividends or a pension from India go into an NRO account.
Is NRE interest taxed in the UAE or the US?
The UAE has no personal income tax. Countries that tax worldwide income, such as the US or UK, may tax NRE interest even though India does not.
Is there a minimum tenure?
NRE fixed deposits must be for at least one year. NRO deposits can be shorter, like domestic FDs.
Results are estimates for information only, based on the inputs and assumptions shown. They are not financial, tax or legal advice. Banks, fund houses and the tax department may calculate actual amounts differently.
