For an NRI running or investing in an Indian business, the three account types – NRE, NRO and FCNR(B) – are the plumbing every rupee flows through. Choose the right account for each flow and money moves freely; choose wrong and you create tax leaks, blocked funds and FEMA questions. This guide maps the accounts, which business income goes where, the USD 1 million repatriation scheme, and what happens to it all when you move back to India.
The three accounts side by side
| Feature | NRE | NRO | FCNR(B) |
|---|---|---|---|
| Currency | INR | INR | Foreign currency (term deposit, 1–5 years) |
| What goes in | Foreign remittances only + income on repatriable investments | All Indian income – rent, dividends, director fees, LLP profit share, sale proceeds, plus remittances | Foreign-source funds / NRE transfers |
| Interest taxed in India? | No – exempt while you are non-resident under FEMA | Yes – TDS at 30%+ (treaty can cut to 10–15% with TRC) | No – exempt for NR/RNOR |
| Repatriation | Free and unlimited | USD 1 million per financial year (capital); current income remits beyond the cap post-tax | Free and unlimited |
| Currency risk | You carry INR risk | You carry INR risk | None – deposit stays in USD/GBP/EUR etc. |
| Joint holding | With other NRIs freely; with a resident relative on former-or-survivor basis | ||
Which business flow goes into which account
| Flow | Account | Why |
|---|---|---|
| Dividend on shares held on repatriation basis | NRE (or remit directly) | Repatriable income – keeps its free-exit character |
| Dividend on non-repat (Schedule IV) shares | NRO | Deemed-domestic investment – income is Indian-source, exits via the USD 1M window |
| Director sitting fees / remuneration | NRO | Indian income (TDS applies) |
| LLP profit share (non-repat capital) | NRO | Same logic; tax-free in partner’s hands but Indian-source |
| Rent from Indian property | NRO | Then remittable as current income post-tax with 15CA/CB |
| Sale proceeds of repatriable shares (post-tax, FC-TRS done) | Remit / NRE | No cap |
| Fresh capital you plan to invest in India | NRE or FCNR | Preserves repatriability of the investment it funds |
The USD 1 million scheme – getting NRO money out
- Up to USD 1 million per financial year per person from NRO balances/asset sale proceeds – over and above current income (rent, dividend, interest), which remits without limit post-tax;
- Paperwork: Form 15CA/15CB (CA certificate for taxable remittances) + Form A2 at the bank – tax must be settled first;
- The cap is per person – spouses each get their own USD 1 million;
- Larger one-time needs (big property sale) either phase across financial years or seek RBI approval.
Returning to India – the endgame
| Account | On return |
|---|---|
| NRE | Redesignate to resident account, or move to an RFC (Resident Foreign Currency) account – keeps funds in forex, still usable abroad |
| NRO | Redesignate to an ordinary resident account |
| FCNR(B) | Can run to maturity at the contracted rate, then convert to resident/RFC |
Structuring your India money flows?
We map every income stream to the right account, handle the 15CA/CB remittance paperwork, and plan the return-to-India transition around the RNOR window.
Talk to My Cloud AccountantFrequently asked questions
Is NRE account interest really tax-free?
Yes – exempt in India while you qualify as a person resident outside India under FEMA. It generally becomes taxable once you return and the account is redesignated. Your country of residence may tax it – check both sides.
How much can I repatriate from an NRO account?
USD 1 million per financial year per person from capital balances, plus current income (rent, dividends, interest) without limit – all post-tax, with Form 15CA/15CB and Form A2 through your bank.
Where should my Indian company credit my director fees?
To your NRO account – director remuneration is Indian-source income with TDS. It then counts as current income for remittance purposes once taxes are settled.
Can I keep my FCNR deposit after returning to India?
Yes – FCNR(B) deposits may run to maturity at the contracted rate even after you become resident, after which the proceeds move to an RFC or resident account.
Based on the FEM (Deposit) Regulations 2016, RBI FAQs on non-resident accounts (January 2025) and the Income-tax Act provisions on NRE/FCNR interest. Last reviewed: July 2026.