NRI & Foreign Buyers
NRE vs NRO vs FCNR: The Account Decides If the Money Can Leave
Three accounts. The one you buy from determines whether you can ever take the money home — and almost nobody thinks about it until it's too late.
The short answer
NRE — for money you earn abroad. Freely repatriable. Interest is tax-free in India.
NRO — for money you earn in India (rent, sale proceeds). Repatriation capped at USD 1 million per financial year. Interest is taxable.
FCNR(B) — a fixed deposit held in foreign currency. Freely repatriable. No rupee risk.
The account you buy the property from decides how the money can come back out.
The comparison
| NRE | NRO | FCNR(B) | |
|---|---|---|---|
| Held in | Rupees | Rupees | Foreign currency — USD, GBP, EUR |
| What goes in | Foreign earnings, remitted to India | Indian income — rent, dividends, pension, sale proceeds | Foreign earnings |
| Repatriable? | FREELY. No limit. | Capped at USD 1 million per financial year | FREELY. No limit. |
| Interest taxable in India? | NO | YES | NO |
| Rupee depreciation risk | Yes — held in rupees | Yes | NO — held in foreign currency |
| Joint holder | Only with an NRI or OCI | Can be joint with a RESIDENT | Only with an NRI or OCI |
| Type | Savings or current | Savings or current | Fixed deposit only |
| Use it for | Buying property with money from abroad | Receiving rent. Receiving sale proceeds. | Parking foreign currency without rupee risk |
Why the account decides whether you can get your money out
If you bought with NRE / FCNR funds, or by inward remittance:
You may repatriate up to the amount you originally brought in, for a maximum of two residential properties. Freely, without the USD 1 million cap.
If you bought with NRO funds (your Indian income):
The proceeds go into the NRO account, and repatriation is capped at USD 1 million per financial year — aggregated across rental income and sale proceeds — requiring a CA's Form 15CB and your Form 15CA.
On a ₹5 crore flat, that cap can mean waiting years to get your own money home.
And you decide this on the day you send the down payment, not on the day you sell. By then it is fixed.
Which account for what
| What you're doing | Which account |
|---|---|
| Buying property with money earned abroad | NRE (or a direct inward remittance). Keep the SWIFT confirmations. |
| Receiving rent from your Indian flat | NRO. Rental income is Indian income. It cannot go into an NRE account. |
| Receiving sale proceeds | NRO — sale proceeds are credited here first, then repatriated from it. |
| Paying an EMI on an Indian home loan | NRE, NRO or FCNR, or by inward remittance. Not directly from your overseas bank. |
| Parking foreign currency without rupee risk | FCNR(B). It stays in USD/GBP/EUR, so a falling rupee does not erode it. |
| Holding an account jointly with a resident relative | NRO only. An NRE account cannot have a resident joint holder. |
If you hold rupees in an NRE account and the rupee depreciates against your home currency, your money is worth less when you take it home — even though the rupee number never changed.
An FCNR(B) deposit is held in foreign currency, so it does not carry that risk. Both principal and interest are freely repatriable, and the interest is not taxable in India.
For an NRI holding a large sum in India for a long period before buying, this is worth a conversation with your bank.
The joint-holder rules
- NRE: may be held jointly only with another NRI or OCI. A resident Indian cannot be a joint holder.
- NRO: may be held jointly with a resident Indian. This makes it the flexible one if a family member in India helps manage your affairs.
- FCNR: same rule as NRE — NRI/OCI joint holders only.
Talk to a CA BEFORE you send the down payment.
Not before you sell. Not when you want the money back. Before the first rupee moves.
Because the route the money takes in is what determines, permanently, how much of it can come out — and that decision, once made, cannot be re-made.
FEMA rules, tax rates and repatriation limits are amended by Budget, by RBI Master Direction, and by circular — sometimes more than once a year.
We have written this against the position as we understand it, and checked it. But we are not chartered accountants or lawyers, and this is not advice.
Before an NRI property transaction, engage a CA who does NRI work. On a transaction of this size, in a regime with a three-times penalty for getting it wrong, it is the cheapest insurance available.
Frequently asked questions
What is the difference between NRE and NRO accounts?
An NRE account holds foreign earnings remitted to India — it is freely repatriable and the interest is not taxable in India. An NRO account holds Indian income such as rent, dividends and sale proceeds — repatriation is capped at USD 1 million per financial year, and the interest is taxable.
Which account should an NRI use to buy property?
NRE, or a direct inward remittance, if the money was earned abroad — because that route allows you to repatriate up to the amount you originally brought in, for up to two residential properties, without the USD 1 million cap. If you buy with NRO funds, the proceeds are capped at USD 1 million a year on the way out.
What is an FCNR account?
A fixed deposit held in a foreign currency such as USD, GBP or EUR. Both principal and interest are freely repatriable, the interest is not taxable in India, and — crucially — it carries no rupee depreciation risk, because the money never becomes rupees.
Where should rental income from my Indian flat go?
An NRO account. Rental income is Indian income and cannot go into an NRE account. Sale proceeds are also credited to NRO first, and repatriated from there.
Can a resident Indian be a joint holder on my NRI account?
On an NRO account, yes — which makes it the flexible one if a family member in India helps manage your affairs. On an NRE or FCNR account, no: those can only be held jointly with another NRI or OCI.