If you earned the money abroad, send it to an NRE account, not an NRO account. The RBI is explicit on the difference. An NRE balance is repatriable and the income earned in it is exempt from income tax. An NRO balance is taxable, and taking it back out is capped at USD 1 million per financial year.
That one choice decides more than the exchange rate you shop for. Money that lands in the wrong account does not move back easily.
NRE or NRO: which account should the money go into?
This table is from the RBI’s own FAQ, “Accounts in India by Non-residents”, as on 16 January 2025.
| Feature | NRE account | NRO account | FCNR(B) account |
|---|---|---|---|
| Who can open it | NRIs and PIOs | Any person resident outside India, for bonafide transactions in rupees | NRIs and PIOs |
| Currency held | Indian rupees | Indian rupees | Any freely convertible foreign currency |
| Account types | Savings, current, recurring, fixed deposit | Savings, current, recurring, fixed deposit | Term deposit only, 1 to 5 years |
| What may be credited | Inward remittance from outside India, interest, transfers from other NRE or FCNR(B) accounts, maturity proceeds of investments made from it | Inward remittances, legitimate dues in India, transfers from other NRO accounts | Inward remittance and transfers from NRE or FCNR(B) |
| Repatriable? | Yes | Not repatriable, except all current income. Up to USD 1 million per financial year for NRIs and PIOs. | Yes |
| Tax on income earned in the account | Exempt from income tax | Taxable | Exempt from income tax |
Source: Reserve Bank of India, Accounts in India by Non-residents FAQ, as on 16 January 2025. The USD 1 million facility runs on the financial year, April to March. It sits under the Foreign Exchange Management (Remittance of Assets) Regulations, 2016.
One thing to ignore in that FAQ
It says NRE balances are exempt from wealth tax. Wealth tax was abolished in 2015. The line is stale, not wrong in effect. Even a regulator’s page carries old text. Read the date on any source you rely on.
Why does money in an NRO account get stuck?
Because the RBI treats it as rupee money that has already come home. Current income such as rent, dividends or pension can be sent out freely. Anything beyond that needs the USD 1 million route. That route has paperwork and a bank certification step. Its annual ceiling is shared with your other Indian assets.
Say a family member abroad wires savings into your NRO account. They have just turned repatriable money into restricted money. If the money may need to travel back, it belongs in an NRE account. If it is meant to be spent in India, an NRO account is the correct home for it. Our page on NRE and NRO accounts covers opening and joint-holding rules in more detail.
Who is sending the money, and does that change the rules?
Yes, and this is the part people get wrong in the other direction.
A non-resident sending their own foreign earnings home is making an inward remittance. It may be credited to an NRE account. If a resident in India sends money to an NRI, that is an outward remittance under the Liberalised Remittance Scheme. The RBI FAQ is specific here. A rupee gift or loan from a resident to an NRI or PIO relative, within the LRS limits, may be credited to that relative’s NRO account. Not the NRE account. See LRS and TCS rules before a resident sends anything.
What will the transfer actually cost?
Two charges, and the smaller one gets all the attention.
The visible fee is what the provider quotes. The invisible cost is the exchange rate margin. The mid-market rate is the rate banks trade with each other; it is not a rate you can transact at. As of 26 August 2026 the European Central Bank reference rate was about ₹95.42 to the US dollar. Every provider quotes you something below that on an inbound transfer, and the gap is their real revenue.
Compare on the rupees that land, not on the fee. Take a zero-fee transfer at a 2% margin. Above roughly ₹25,000 it costs more than a ₹500 fee at a 0.4% margin. Check the live level on USD to INR and compare providers on remittance services.
Is money sent to India taxed?
The remittance itself is not income, so it is not taxed as income on arrival. What is taxed is what the money then earns. Interest in an NRE or FCNR(B) account is exempt from income tax under the RBI’s own summary. Interest in an NRO account is taxable, and the bank deducts tax at source before it reaches you.
Gifts are a separate question from remittance. A gift from a relative is treated differently from a gift from anyone else. The rules turn on the relationship. They do not turn on the country the money came from. Read NRI taxation for residency status and the filing question. Your status for tax is decided by day counts, not by which account you hold.
Frequently asked questions
Can I send money to my parents’ savings account in India?
Yes. An ordinary resident savings account can receive an inward remittance. The money is then your parents’ to use, and it is outside your control. If you want the funds to stay yours and stay repatriable, send them to your own NRE account instead. The choice is about ownership, not about tax on the transfer.
How much money can I send to India in a year?
There is no RBI cap on money coming into India from a non-resident. The cap sits on the way out. An NRO balance is remittable up to USD 1 million per financial year for NRIs and PIOs. That ceiling is shared with their other eligible assets. It sits under the Remittance of Assets Regulations, 2016.
Is NRE interest really tax-free?
The RBI’s FAQ states that income earned in an NRE account is exempt from income tax. The exemption depends on you being a person resident outside India. When you return to India for good, that status changes and the treatment changes with it. Convert the account rather than leaving it running, and see NRE and NRO FD rates before you renew a deposit.
Which is faster, a bank wire or a money transfer app?
Apps are usually faster and cheaper on small amounts, because they net transfers rather than moving money through correspondent banks. A bank wire is better for large sums, where the margin outweighs the fee. It also gives a clear audit trail for a property purchase or a tax filing. Ask for the all-in rupee amount before you confirm either.
Can a person of Pakistani or Bangladeshi nationality open these accounts?
For NRE and NRO accounts, individuals and entities of Pakistan and Bangladesh need prior approval from the Reserve Bank of India. The RBI FAQ sets out a narrow exception. It covers citizens of those countries from specified minority communities. They must be residing in India on a long-term visa. Such a person may open one NRO account.
Sources
- Reserve Bank of India, Accounts in India by Non-residents, FAQ as on 16 January 2025: rbi.org.in
- Foreign Exchange Management (Remittance of Assets) Regulations, 2016, cited in the same FAQ for the USD 1 million facility.
- USD to INR reference rate of about ₹95.42, European Central Bank reference rates, as of 26 August 2026.
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