An NRE account holds money for people who live outside India but have income or assets there

NRE stands for Non-Resident External. It is a bank account designed for people who are Indian citizens or people of Indian origin living abroad. The account lets you deposit money earned outside India — such as salary from a job overseas, rental income from abroad, or money from selling property outside India — without paying Indian income tax on those funds.

The key feature is that money in an NRE account is considered "external" income. This means it is not subject to Indian tax as long as it stays in the account. You can keep the account open as long as you remain a non-resident, and you can pass it to your heirs when you die.

NRE accounts are different from NRO accounts (Non-Resident Ordinary), which are for money earned inside India. Understanding which account you need depends on where your money comes from, not where you live.

Key Takeaways

  • An NRE account is for money you earn outside India — such as foreign salary, overseas rental income, or proceeds from selling property abroad.
  • Money in an NRE account is not taxed in India as long as it remains in the account and is not brought into India.
  • You must be a non-resident to open and hold an NRE account; if you return to live in India permanently, the account converts to a regular resident account.
  • You can withdraw money from an NRE account and bring it into India, but once it enters India, Indian tax rules explore to it.
  • NRE accounts are offered by most major Indian banks and can be opened online from abroad or in person at a branch.

Who can open an NRE account

You can open an NRE account if you are an Indian citizen or a person of Indian origin living outside India. "Non-resident" has a specific meaning in Indian tax law: generally, you are a non-resident if you have not been in India for more than 182 days in the financial year (April to March), or if you have been out of India for more than 9 years.

Your bank will ask for proof of your non-resident status. This usually means a valid passport showing your current address outside India, a visa for the country where you live, or a work permit. Some banks also accept a letter from your employer confirming your overseas posting.

If you return to India and become a resident again — meaning you spend more than 182 days in India in a financial year — your NRE account will automatically convert to a regular resident savings account. You do not have to close it; the bank handles the conversion.

What money can go into an NRE account

An NRE account is meant for money earned outside India. This includes salary from a job overseas, income from a business you run abroad, rental income from property you own outside India, dividends from foreign investments, and money from selling property or assets abroad.

You cannot deposit money into an NRE account if it was earned in India, even if you are a non-resident. Money earned in India — such as rental income from an Indian property, pension from an Indian employer, or interest from an Indian bank account — must go into an NRO account instead.

You can transfer money into your NRE account from abroad using a wire transfer, or you can deposit foreign currency notes at the bank if you are visiting India. The bank will convert foreign currency to Indian rupees at the current exchange rate.

Tax treatment of NRE account money

Money sitting in an NRE account is not taxed in India. This is the main reason people open these accounts. If you earn $50,000 abroad and deposit it into an NRE account, you do not owe Indian income tax on that $50,000 as long as it stays in the account.

However, once you withdraw money from the NRE account and bring it into India, Indian tax rules explore. If you withdraw $10,000 and use it to buy property in India or to pay expenses in India, that money is now subject to Indian tax. You may owe tax depending on your total income and the source of the funds.

Interest earned on money in an NRE account is also tax-free in India. If your account earns 5% interest per year, you do not owe Indian tax on that interest. This is different from an NRO account, where interest is taxable.

How to open an NRE account

Most major Indian banks offer NRE accounts. You can open one online from abroad, or you can open one in person at a branch if you are visiting India. The process is similar to opening a regular bank account, but you will need to provide proof of your non-resident status.

To open an account online, you will need a valid passport, proof of your current address outside India (such as a utility bill or rental agreement), and proof of your income or source of funds. Some banks ask for a video call to verify your identity. The process usually takes 3 to 7 days.

If you open the account in person at a branch, bring your passport, a visa or work permit for the country where you live, and a completed account opening form. The bank will verify your documents on the spot, and you can start using the account the same day.

Withdrawals and transfers from an NRE account

You can withdraw money from an NRE account and bring it into India without any limit. There is no cap on how much you can transfer. However, large transfers may trigger reporting requirements. If you transfer more than $10,000 (or the equivalent in other currencies) in a single transaction, the bank must report it to India's financial intelligence unit.

You can also transfer money from your NRE account to another NRE account you own at a different bank, or to an NRO account if you need to mix foreign and Indian-earned income. You cannot transfer from an NRE account directly to a regular resident account; the money must first be withdrawn and brought into India.

If you want to send money from your NRE account to someone outside India, you can do that as well. The bank will process an outward remittance and convert the rupees back to foreign currency. This is useful if you want to send money to family members abroad or pay bills in another country.

What happens to an NRE account if you move back to India

If you return to India and become a resident again, your NRE account does not close automatically, but it converts to a regular resident account. The bank will notify you of the conversion, usually within 30 days of your return. All the money in the account stays there; nothing is lost.

Once the account converts, the tax-free status ends. Any interest you earn on the account after the conversion date will be taxable in India. However, money that was already in the account before the conversion remains tax-free — only new interest is taxed.

If you think you might return to India in the future but are not sure, you can keep your NRE account open. There is no penalty for holding an account while you are a non-resident, and you can reactivate it if you leave India again later.

Frequently Asked Questions

Can I open an NRE account if I have a green card or permanent residency in another country?

Yes. Permanent residency in another country does not affect your ability to open an NRE account as long as you are still an Indian citizen or person of Indian origin and meet the non-resident test (not in India for more than 182 days in a financial year). Your status as a non-resident is based on where you spend your time, not on your immigration status in another country.

What is the difference between an NRE account and an NRO account?

An NRE account is for money earned outside India and is tax-free. An NRO account is for money earned inside India and is taxable. If you have both foreign income and Indian income, you would use both accounts — NRE for foreign earnings and NRO for Indian earnings.

Can I use an NRE account to send money to family in India?

Yes. You can withdraw money from your NRE account and transfer it to a family member's account in India. There is no limit on how much you can send. The money will be converted from rupees to your family member's account in rupees, and they can use it when ready.

Do I have to pay tax in my home country on money in an NRE account?

That depends on the tax laws of the country where you live. India does not tax NRE account money, but your home country may. For example, the United States taxes its citizens on worldwide income, including money in Indian bank accounts. You should speak with a tax professional in your country to understand your obligations.

Can I close an NRE account and reopen it later if I move back to India and then leave again?

Yes. If your account converts to a resident account when you return to India, you can ask the bank to convert it back to an NRE account if you leave India again and become a non-resident. You do not have to open a new account; the bank can reactivate your existing one.