International Tax
NRE Account (Non-Resident External)
Bank account in India for NRIs holding foreign earnings converted to INR — interest is tax-free.
Full Definition
An NRE (Non-Resident External) account is an Indian bank account for NRIs where foreign currency earnings are deposited after conversion to INR. Key features: interest is completely exempt from Indian income tax; funds (principal + interest) are freely repatriable abroad without limit; can be opened as savings, current, fixed or recurring deposit. NRE FDs are a popular tax-free investment for NRIs. When an NRI returns to India and becomes a resident, NRE accounts must be re-designated to resident status and interest becomes taxable.
More International Tax terms
NRI (Non-Resident Indian)
An Indian citizen residing outside India for more than 182 days in a financial year.
RNOR (Resident But Not Ordinarily Resident)
A transitional residency status for individuals who have recently returned to India after being NRIs.
DTAA (Double Taxation Avoidance Agreement)
Bilateral treaty between India and another country preventing the same income from being taxed twice.
FEMA (Foreign Exchange Management Act)
Indian law governing foreign exchange transactions, cross-border investments and NRI account operations.
LRS (Liberalised Remittance Scheme)
RBI scheme allowing resident individuals to remit up to USD 250,000 per year abroad for permitted purposes.