NRE/NRO Interest & TDS
Not professional advice
This page provides general information only, for the US-India NRI corridor, and is not professional tax, legal, or financial advice. It does not account for your individual circumstances. Rules referenced here can change, and outcomes depend on facts specific to you. Please consult a qualified tax advisor, chartered accountant, or attorney licensed in the relevant jurisdiction before making any decision.
How interest on NRE and NRO accounts is taxed, and how TDS is withheld and can be reclaimed or credited.
The three tools below apply general, well-established rates and thresholds. Each one flags what it does not model — review those notes, and the disclaimer above, before relying on a result.
India's Income-tax Act, 2025 came into force on 1 April 2026, replacing the Income Tax Act, 1961, for tax years from FY 2026-27 onward. The rates and thresholds below (30% NRO interest withholding + cess, the NRE-interest exemption, the ₹5 lakh Form 15CA/15CB threshold) are corroborated by current public tax-reference sources and believed to carry over substantively, but the specific 1961-Act section numbers referenced in this page's explanations (e.g. Section 195, renumbered to Section 393(2) of the Income-tax Act, 2025, effective 1 April 2026) have now been individually re-verified against the new Act's renumbered sections. Please confirm current section references with a qualified advisor or incometax.gov.in before citing any of them in a filing.
NRE vs. NRO: which account do you need?
A quick decision aid based on FEMA's basic distinction between the two account types. It does not check your actual FEMA residency status or account-opening eligibility — confirm both with your bank.
- An NRE account is for funds you earned outside India and remit in. Interest is exempt from Indian income tax, and both principal and interest are freely repatriable.
- The exemption depends on you genuinely qualifying as a person resident outside India under FEMA — don't route India-sourced income (rent, dividends, pension) through an NRE account.
How this is calculated
NRE accounts hold funds earned outside India and remitted in: interest is exempt from Indian income tax, and both principal and interest are freely repatriable. NRO accounts hold India-sourced income (rent, dividends, pension, sale proceeds): interest is taxable with TDS withheld, and repatriation is capped at USD 1 million per financial year with CA certification above a threshold — see the TDS and Form 15CA/15CB tools below.
Not modeled: FCNR/RFC accounts, the FEMA "person resident outside India" test itself (assumed true when you check the first box), and account-opening KYC requirements.
Sources: RBI Master Direction: Deposits and Accounts, Income Tax Dept.: NRE account interest exemption
TDS on NRO account interest
Estimates the tax deducted at source on your NRO interest at the statutory flat rate plus cess. Does not include surcharge, which depends on your total income slab.
Does not model surcharge (income-slab-dependent, with marginal relief) or refunds of excess TDS via ITR filing when your actual tax liability is lower than the amount withheld. If you enter a lower rate, it is only valid once your bank has the paperwork on file — this tool does not check that for you.
How this is calculated
TDS = interest × rate. Without a certified lower rate, the rate used is the statutory flat non-resident withholding rate of 30% on interest, plus a 4% health & education cess on that amount (31.2% effective) — historically Section 195 of the Income Tax Act, 1961.
Not modeled: surcharge, ITR-filed refunds of excess TDS, and whether your paperwork for a lower rate is actually valid.
Sources: Income Tax Dept.: TDS on payments to non-residents, IRS: Foreign Tax Credit
Form 15CA/15CB checker
Checks which part of Form 15CA applies to a single foreign remittance, and whether a CA-certified Form 15CB is also required, based on the Rs 5 lakh aggregate-per-year threshold.
Does not check your remittance against the full Rule 37BB exempt list itself, does not aggregate multiple remittances across the year for you (enter your own running total), and does not cover Form 15CA Part D (used by banks, not the remitter).
How this is calculated
If the remittance is on the RBI/CBDT specified exempt list, no form is needed. Otherwise, if you already hold an Assessing Officer certificate/order under section 195(2)/195(3)/197, only Form 15CA Part B applies. Otherwise: aggregate remittances of ₹5 lakh or less this financial year need only Form 15CA Part A; above that, Form 15CA Part C plus a CA-certified Form 15CB are both required.
Not modeled: the specified list itself, cross-remittance aggregation, and Form 15CA Part D.
Sources: Income Tax Dept.: Form 15CA
Related reading
NRE vs. NRO Accounts: Which One Do You Actually Need?
The NRE/NRO choice isn't about which bank offers a better rate — it's about where the money came from, and what FEMA lets you do with it afterward.
How TDS on NRO Interest Works (and How to Reduce It)
The TDS rate on your NRO interest statement is usually higher than the tax you'd actually owe on it. Here's why, and how the gap gets closed.
Form 15CA/15CB Explained: When Do You Need Them?
Form 15CA and 15CB exist so India's tax department can see cross-border remittances before they happen. Here's which one (if either) applies to your transfer.
FCNR Deposits: The NRI Account That Sidesteps Rupee Risk
Every NRE/NRO comparison skips a third option. FCNR deposits hold your money in dollars (or another foreign currency) the whole way through — no rupee exposure at all.