Is NRE FD tax-free in India?

Yes. Section 10(4)(ii) of the Income Tax Act fully exempts interest earned on NRE FDs from Indian income tax, provided the depositor qualifies as a non-resident under FEMA. No TDS is deducted. The interest is, however, taxable in the NRI's country of residence per local rules (some countries like UAE, Saudi Arabia, Bahrain levy no personal income tax at all).

What is the TDS on NRO FD interest?

Under Section 195, NRO FD interest is subject to 30% TDS (effectively ~31.2% including 4% Health & Education Cess) for non-residents. If the NRI's country has a DTAA with India, the lower treaty rate applies — typically 15% for US, UK, Singapore, Canada and Australia; 12.5% for UAE; 7.5% for Mauritius. To claim the DTAA rate, you must furnish Form 10F plus a Tax Residency Certificate (TRC) from your home tax authority to the deductor.

Can I repatriate NRO FD maturity abroad?

Yes, but with a cap. Under FEMA, you can repatriate up to INR 1 million per Financial Year from your NRO balance (covering FD maturity, sale of property, inheritance, etc.). Each repatriation requires Form 15CA submitted on the income-tax portal plus Form 15CB certified by a Chartered Accountant. NRE FDs, in contrast, are 100% repatriable with no annual limit and no CA paperwork.

Does DTAA help on NRO FD TDS?

Yes — substantially. India has DTAAs with around 90 countries. The DTAA TDS rate on interest is typically 10–15%, which is half of the 30% domestic rate. After paying TDS in India at the DTAA rate, you can claim Foreign Tax Credit (FTC) in your resident country by filing Form 67 in India and the corresponding FTC schedule in your home-country return. The net effect: NRO is much less punitive for NRIs from DTAA countries than the headline 30% suggests.

NRE vs NRO FD Calculator — NRI Fixed Deposit Comparison

NRE vs NRO FD

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NRE vs NRO FD Comparison Calculator

Compare NRE FD (tax-free + fully repatriable) vs NRO FD (TDS 30% + partially repatriable up to $1M/yr) for NRIs. Shows post-tax maturity, exchange-risk implications, and which suits each repatriation use-case.

Reviewed by the CalculatorKosh Editorial TeamUpdated June 2026Free · No sign-up

Deposit details

Deposit amount

₹

₹10 K₹100 Cr

Annual interest rate

1%12%

Typical NRI FD rate is 6.5–7.5% in 2026

Tenure

years

1 yr10 yrs

NRE minimum is 1 year (RBI rule); NRO from 7 days

Tax inputs

Resident country tax rate

0%50%

0% for UAE, Saudi, Bahrain, Kuwait, Oman, Qatar

DTAA TDS rate (if applicable)

0%29%

0 = no DTAA → 30% NRO TDS. US/UK/SG/CA/AU = 15%; UAE = 12.5%

Drag sliders to explore different scenarios

Interest Rate7.25%

1%12%

DTAA TDS0%

0%29%

What-If Net Comparison

NRE wins by ₹6,48,391

Recommended: NRE FD

₹71,61,303

Differential of ₹6,48,391 in post-tax returns vs the alternative

NRE Maturity

₹71.6 L

NRO Maturity

₹71.6 L

NRE Post-tax

₹71.6 L

NRO Post-tax

₹65.1 L

Side-by-side comparison

Feature	NRE FD	NRO FD
Maturity	₹71,61,303	₹71,61,303
TDS in India	0 (tax-free)	30% (₹6,48,391)
Tax in resident country	Per country rules	Credit possible via DTAA / FTC
Net post-tax	₹71,61,303	₹65,12,912
Repatriable	Yes (fully)	Up to INR 1M / FY (limited)
Exchange risk	Yes (INR settled)	No (INR throughout)
Eligible funds	Foreign income only	Indian + foreign income

Rationale

NRE FD wins by ₹6,48,391 in post-tax returns. NRE interest is fully exempt under Sec 10(4)(ii) of the Income Tax Act and has no TDS. If your funds are sourced from foreign earnings, NRE is the better choice — plus you get full repatriation rights with zero paperwork at maturity.

DTAA helps NRO

If your country has a DTAA with India (US/UK/UAE/Singapore/Canada/Australia and 90+ others), NRO TDS drops from 30% to 10–15%. You'll also get foreign tax credit in your resident country for the TDS paid in India — claim it via Form 67 in India and the FTC schedule of your home-country return.

When to use which

NRE FD: For foreign earnings · you want full repatriation · you don't mind some INR exchange risk on the way out.
NRO FD: For Indian-source income (rent, dividends from Indian shares, pension) · you need an account to receive these · can stay within INR 1M/FY repatriation cap.

Looking at the third NRI deposit option? FCNR-B deposits are held in foreign currency (INR/GBP/EUR/JPY/AUD/CAD) at Indian banks — currency-risk-free and also tax-free in India under Sec 10(15)(iv)(fa). Use the FD Calculator to model FCNR-B returns (use the foreign-currency rate; tenure 1–5 years).

Maturity vs Post-tax — NRE and NRO compared

Pre-tax maturityPost-tax returns

Drag sliders to explore different scenarios

Interest Rate7.25%

1%12%

DTAA TDS0%

0%29%

What-If Net Comparison

NRE wins by ₹6,48,391

How It Works

NRIs have two main FD options at Indian banks: an NRE FD (Non-Resident External, funded from foreign earnings) and an NRO FD (Non-Resident Ordinary, funded from Indian-source income). Both compound quarterly at bank-standard FD rates, but the tax treatment and repatriation rights are very different.

FD compounding formula (both NRE and NRO)

A = P × (1 + r/4)^{4 × t}

Where P is the deposit, r is the annual rate as a decimal, and t is the tenure in years. Indian banks compound FDs quarterly by default.

Tax: where NRE and NRO diverge

NRE FD interest is fully exempt from Indian income tax under Section 10(4)(ii) — there is no TDS. The interest may still be taxable in the NRI's country of residence per local rules. NRO FD interest is taxed at 30% TDS under Section 195 (effectively ~31.2% with 4% Health & Education Cess), unless a lower DTAA rate applies — typically 15% for US/UK/Singapore/Canada/Australia, 12.5% for UAE, 7.5% for Mauritius. To claim the DTAA rate, the NRI must furnish Form 10F plus a Tax Residency Certificate.

Repatriation: where the FEMA cap matters

NRE FDs are fully repatriable with no annual limit and no paperwork at maturity. NRO repatriation is capped at INR 1 million per Financial Year under FEMA and requires Form 15CA (income-tax portal) plus Form 15CB certified by a Chartered Accountant for each remittance.

Which to choose

If your funds came from foreign earnings, NRE is almost always better — zero Indian tax, full repatriation. NRO is the only option for INR income earned in India (rent, dividends, pension, sale proceeds). Many NRIs maintain both accounts in parallel.

Frequently Asked Questions

An NRE (Non-Resident External) FD is funded from foreign earnings, denominated in INR, fully exempt from Indian income tax under Sec 10(4)(ii), and fully repatriable abroad. An NRO (Non-Resident Ordinary) FD holds INR income earned in India (rent, dividends, pension), is taxed at 30% TDS (or lower DTAA rate), and is repatriable only up to INR 1 million per Financial Year. Both compound quarterly at bank-standard FD rates and offer the same interest rate band; the tax and repatriation rules are the real difference.