Your NRE fixed deposit will not pay more than an ordinary Indian FD. RBI bars a bank from pricing NRE deposits above its own comparable domestic rate. The advantage is tax, not rate. NRE interest is exempt from Indian income tax, while NRO interest is taxed at 30% before it reaches you. So the account you choose decides your return far more than the bank you choose.
| What an NRE FD rate cannot exceed | 6.45 – 8.25 % p.a. |
|---|---|
| What it means | General-citizen domestic FD rates across the 12 banks we track. An NRE rate at the same bank and tenure cannot beat its own domestic rate. The 8.25% end is a small finance bank. |
| Tax on NRE interest | Nil — Exempt under Section 10(4)(ii), while you stay non-resident |
| TDS on NRO interest | 30% — Section 195, plus surcharge and cess |
| NRO repatriation cap | USD 1 million — Per financial year, shared with your other eligible assets |
as of 2026-10-02 · Credsir FD rate table, read against RBI Master Direction on Interest Rate on Deposits
The ceiling on each bank’s NRE FD rate
| Bank | Domestic FD rate, general citizen | Ceiling on its NRE FD rate | Senior-citizen top-up on NRE? | As of |
|---|---|---|---|---|
| Bank of Baroda | 6.75% | Cannot exceed 6.75% at the same tenure | No | 2 Oct 2026 |
| Kotak Mahindra Bank | 6.65% | Cannot exceed 6.65% at the same tenure | No | 2 Oct 2026 |
| Punjab National Bank | 6.60% | Cannot exceed 6.60% at the same tenure | No | 2 Oct 2026 |
| HDFC Bank | 6.50% | Cannot exceed 6.50% at the same tenure | No | 25 Aug 2026 |
| ICICI Bank | 6.50% | Cannot exceed 6.50% at the same tenure | No | 2 Oct 2026 |
| Axis Bank | 6.50% | Cannot exceed 6.50% at the same tenure | No | 2 Oct 2026 |
| State Bank of India | 6.45% | Cannot exceed 6.45% at the same tenure | No | 2 Oct 2026 |
Domestic rates from the Credsir FD table, asOf 2 October 2026 (HDFC Bank verified against its own grid, 25 August 2026). The ceiling is not a quote: it is the limit RBI sets. Interest on NRE and NRO deposits shall not be higher than the bank’s comparable domestic rupee term deposit, and the senior-citizen and staff top-ups do not apply to NRE or NRO. Ask the bank for its NRE grid at your tenure.
NRE vs NRO, on the six things that actually decide it
| Dimension | NRE deposit | NRO deposit | Source |
|---|---|---|---|
| Tax on interest | Exempt from income tax | Taxable | RBI FAQ Q3; Income-tax Act s.10(4)(ii) |
| Tax withheld at source | None | 30% under s.195, plus surcharge and cess | Income Tax Department TDS rates |
| Repatriation | Principal and interest freely repatriable | Current income free; balances up to USD 1 million a financial year | RBI FAQ Q3 |
| Minimum tenure | One year | Seven days | RBI Master Direction, para 15(c)(i) |
| Senior-citizen extra rate | Not available | Not available | RBI Master Direction, para 15(e) |
| What you may pay in | Money remitted from abroad, and current income such as rent or pension | Any lawful Indian income, including capital receipts | RBI FAQ Q3 |
RBI FAQ “Accounts in India by Non-residents”, as on 16 January 2025. RBI Master Direction on Interest Rate on Deposits.
Is NRE FD interest taxable in India?
No. Interest on a Non-Resident (External) account is exempt from Indian income tax. The exemption sits in Section 10(4)(ii) of the Income-tax Act, 1961. RBI states the same thing plainly in its own FAQ for non-residents.
The law attaches one condition. You must be a person resident outside India under India’s foreign exchange law. The exemption is tied to that status, not to the account. Lose the status and you lose the exemption, even though the deposit has not changed.
This is the whole case for NRE. A 6.5% NRE deposit pays you 6.5%. A 6.5% NRO deposit does not, because tax is taken first.
What happens to an NRE FD when you move back to India?
Two things change, and only one is automatic. The tax exemption ends with your non-resident status. The account does not redesignate itself.
RBI requires the account to be converted. On your return to India for good, an NRE account must be redesignated as a resident account, or the funds moved to an RFC account. Banks do not always act unprompted. Write to yours.
Why NRE FD rates are never higher than normal FD rates
Because banks are not allowed to bid for your money. The RBI Master Direction on Interest Rate on Deposits sets the rule. Rates on NRE and NRO deposits shall not be higher than those on comparable domestic rupee term deposits.
So an ordinary FD table is your ceiling. On our rates as of 2 October 2026, the large banks pay 6.45% to 6.75% to general citizens. Small finance banks reach 8.25%. An NRE deposit at that bank, at that tenure, cannot go above it.
Treat any site advertising a special high NRE rate with suspicion. It is quoting a different tenure, a different bank, or a stale grid. Ask the bank for its NRE rate at your exact tenure and get it in writing.
NRE or NRO: which account should the money be in?
Ask one question. Where did the money come from?
Money earned abroad belongs in NRE. You remit it, the bank converts it to rupees, the interest is tax free, and the full balance can go back out.
Money arising in India is more subtle than most pages admit. Current income such as rent, dividend, pension or interest is a permitted credit to an NRE account. Capital receipts are not. Sale proceeds of a flat, or an inheritance, must go into NRO. If the flat is still being bought rather than sold, the rules for an NRI home loan are a separate matter again.
So the honest rule is narrower than “Indian income means NRO”. It is: capital arising in India means NRO. Get that wrong and the bank reverses the credit, or the money loses its repatriable character.
How much of an NRO deposit can you send abroad?
Up to USD 1 million per financial year, which runs April to March. That cap is not per account. It covers your other eligible assets in the same year, so a property sale can use it up on its own.
Current income is treated apart from the cap. Rent, dividends, pension and interest are remittable as current income. Only balances beyond that draw on the million.
An NRE balance has no cap at all. Principal and interest are freely repatriable. Where you have a lawful choice between the two accounts, this is the second reason to pick NRE.
What an NRE FD costs you that the rate card never shows
You carry the rupee. An NRE deposit is held in rupees, and you funded it in dollars or dirhams. If the rupee weakens across the term, you get back less in your own currency. Tax-free 6.5% in rupees is not 6.5% in dollars, and the USD to INR rate on the day you repatriate decides how much of that return survives the trip. An FCNR(B) deposit stays in the foreign currency instead. RBI permits terms of one to five years.
You do not get the senior citizen rate. RBI is explicit. The extra interest for senior citizens and bank staff does not apply to NRE or NRO deposits. A 70-year-old NRI earns the general rate. The senior top-up on the domestic grid is simply not on offer.
You are locked in for a year. RBI sets the minimum tenure of an NRE term deposit at one year, against seven days for NRO. Break it before the minimum period and no interest is paid at all. Taking a loan against the deposit also removes the premature withdrawal option.
Insurance stops at ₹5 lakh. DICGC covers principal plus interest up to ₹5 lakh per depositor per bank. All branches of one bank are added together. Its exclusion list covers money due on deposits received outside India, not rupee deposits booked in India. Split a large corpus across banks — the FD calculator will show what each tranche matures to.
Frequently asked questions
Is NRE FD interest taxable in India?
No. Interest on an NRE account is exempt under Section 10(4)(ii) of the Income-tax Act, 1961. RBI states the same in its FAQ for non-residents. The exemption is conditional on you being a person resident outside India under the foreign exchange law. It says nothing about tax in the country you live in, which may still tax the interest.
What is the difference between an NRE and an NRO fixed deposit?
NRE holds money you remit from abroad. Its interest is exempt from Indian income tax and the whole balance is freely repatriable. NRO holds income and capital arising in India. Its interest is taxable and tax is withheld at source. Remittance abroad is capped at USD 1 million a financial year. Both are rupee deposits, so both carry currency risk.
Are NRE FD rates higher than normal FD rates?
No, and they cannot be. The RBI Master Direction sets the rule. Rates on NRE and NRO deposits shall not be higher than the bank’s own comparable domestic rupee term deposit. The NRE advantage is entirely the tax exemption. If a comparison site shows an NRE rate above that bank’s domestic rate, the figure is wrong or the tenure differs.
How much tax is deducted on NRO fixed deposit interest?
Interest paid to a non-resident falls under Section 195. The Income Tax Department’s rate table sets 30% for any other income. It adds that the rate rises by applicable surcharge and cess. Surcharge starts only once income crosses ₹50 lakh. This is withholding, not your final bill. If your actual liability is lower, you claim the difference back by filing a return.
Can I reduce NRO TDS using a tax treaty?
Often yes. Section 90(2) applies the Act only where it is better for you than the treaty. So a lower treaty rate on interest wins. The bank will not apply it by default. You must give it your tax residency certificate and the prescribed declaration before the interest is paid. Check your country’s treaty rate on the interest article.
How much money can I repatriate from my NRO account?
Balances are remittable up to USD 1 million per financial year, April to March. The cap is shared with your other eligible assets. Current income such as rent, dividend, pension and interest sits outside that cap. NRE balances have no cap: principal and interest are freely repatriable.
What is the minimum tenure of an NRE fixed deposit?
One year. RBI sets it at para 15(c)(i) of the Master Direction on Interest Rate on Deposits, against seven days for NRO. RBI’s FAQ describes the usual NRE band as one to three years. Banks may accept longer deposits. Withdraw before the minimum period and no interest is paid.
Do NRIs get the senior citizen FD rate?
Not on NRE or NRO deposits. The RBI Master Direction is explicit. The extra interest for senior citizens and bank staff does not apply to either. Age makes no difference to your rate on either account, whatever the domestic grid shows.
Sources
- Income Tax Department, Government of India — Income-tax Act, 1961 — Section 10(4)(ii): interest on a Non-Resident (External) Account (primary source)
- Reserve Bank of India — FAQ — Accounts in India by Non-residents (NRE, NRO and FCNR(B)): tenure, repatriability, taxability (primary source) — as of 2025-01-16
- Reserve Bank of India — Master Direction — Interest Rate on Deposits, paras 15(c), 15(d) and 15(e) (primary source)
- Income Tax Department, Government of India — TDS Rates — Section 195, payment of any other sum to a non-resident (primary source)
- Income Tax Department, Government of India — Income-tax Act, 1961 — Section 90(2): treaty relief where more beneficial (primary source)
- Income Tax Department, Government of India — Non-Resident Individual, AY 2026-27 — surcharge thresholds (primary source)
- Deposit Insurance and Credit Guarantee Corporation — FAQs — ₹5 lakh cover on principal plus interest, per depositor per bank (primary source)
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