Updated for FY 2026-27 · Tax-free NRE vs taxable NRO
NRE vs NRO FD Calculator: Which Earns You More After Tax?
Enter your deposit, tenure and rate. Because NRE and NRO pay the same interest, the only difference is tax — and this shows exactly how much more your tax-free NRE FD keeps, plus the NRO TDS you can reclaim.
NRE keeps you more — tax-free
₹2.59 L more
Same 7% rate, same ₹8.3 L of interest — but NRO loses ₹2,58,822 to 30% TDS while your NRE FD keeps every rupee. Over 5 years, NRE hands you ₹2,58,822 more.
NRE FD
Tax-freeMaturity
₹28.3 L
Tax
₹0
You keep
₹28.3 L
NRO FD
TaxedMaturity
₹28.3 L
Less 30% TDS (+cess)
− ₹2.59 L
You keep
₹25.71 L
Estimate for FY 2026-27. Assumes quarterly compounding (standard for Indian bank FDs) and NRO interest taxed on accrual each year. For tenures of a year or more most banks quote the same rate for NRE and NRO; if yours differs, enter the two rates separately. NRO TDS shown at 30% + 4% cess (31.2%); surcharge applies only on very high incomes and DTAA may reduce the rate. NRE interest is exempt under Sec 10(4) for confirmed non-residents. Bank rates and the USD 1M repatriation limit are indicative — confirm with your bank and a CA.
Same rate, so the whole game is tax
Here is the fact that settles the NRE-vs-NRO debate in one line: for a one-year-plus deposit, banks almost always pay the same interest rate on NRE and NRO. A 7% NRE FD and a 7% NRO FD earn the identical amount of interest. The only thing that differs is what the taxman takes — and that gap is the entire reason to prefer one over the other. NRE interest is fully tax-free under Section 10(4); NRO interest is taxed, with 30% TDS deducted up front. So on the same deposit, the NRE version quietly hands you tens of thousands — sometimes lakhs — more.
When you can actually choose (and when you can't)
The reason NRO accounts exist at all is that the choice isn't always free. An NRE account can only hold money you earn abroad and remit to India — and that money stays fully repatriable, no questions asked. Income that arises in India — rent from a flat, dividends, an Indian consulting fee — legally has to sit in an NRO account, and you can send only up to USD 1 million a year back out (with Form 15CA/15CB). So the practical rule is simple: park foreign earnings in NRE, keep Indian income in NRO, and never volunteer Indian rupees into NRO when they could have gone to NRE.
The NRO refund almost everyone leaves on the table
Here is where NRO holders lose money twice over. The bank deducts 30% TDS on your NRO interest no matter how small your total income is. But 30% is just the withholding rate — your actualtax is computed at your slab. NRIs get the normal slab structure (the first ₹4 lakh is tax-free under the new regime), they just don't get the Section 87A rebate. So an NRI whose main Indian income is an NRO FD often owes a few thousand rupees in real tax while ₹50,000 or more was deducted as TDS. That difference is yours to reclaim — but only if you file a return. The tool above puts a number on your refund; the NRI Income Tax Calculator works out the full picture.
Where FCNR fits in
There is a third option for foreign money: an FCNRdeposit, held in the original foreign currency. Like NRE, its interest is tax-free in India — and because it never converts to rupees, it carries no risk of the rupee weakening against your home currency. The cost is a lower interest rate, since FCNR rates track global currency rates rather than India's higher rupee rates. If you're certain you'll spend the money abroad, FCNR removes currency risk; if you want the bigger return and don't mind holding rupees, NRE wins.
Worked example: ₹50 lakh, 7%, five years
Setup: Meera, an NRI in Singapore, has ₹50,00,000 to lock into a 5-year FD at 7% p.a. (compounded quarterly). The rate is the same whether she picks NRE or NRO — so the only question is tax.
The maturity: both deposits grow to about ₹70.74 lakh, an interest of roughly ₹20.74 lakh. In the NRE FD that entire ₹20.74 lakh is tax-free — she keeps it all. In the NRO FD, 30% TDS plus cess (31.2%) strips out about ₹6.47 lakh, leaving her with ₹64.27 lakh. So NRE is worth roughly ₹6.47 lakh more on the very same deposit.
The twist: if that FD were Meera's only Indian income, her real tax on ~₹4.15 lakh of interest a year — taxed at slab, no 87A rebate — would be only about ₹770 a year, under ₹4,000 across the five years. Against the ₹6.47 lakh of TDS deducted, she could reclaim almost all of it by filing a return. Most NRO holders never do, and simply gift that money to the system.
The lesson:route foreign money into NRE and it's tax-free by design. If money is already in NRO, don't treat the 30% TDS as final — file, and claim back what was over-deducted.
Frequently asked questions
Is NRE FD interest taxable in India?
No. Interest on an NRE (Non-Resident External) fixed deposit is fully exempt from Indian income tax under Section 10(4), and no TDS is deducted — you receive every rupee of interest. This exemption holds as long as you qualify as a non-resident. It is the single biggest reason NRE FDs beat NRO FDs: at the same interest rate, the NRE version is simply tax-free.
How much TDS is deducted on an NRO FD, and can I get it back?
NRO (Non-Resident Ordinary) FD interest is fully taxable, and banks deduct TDS at 30% plus 4% cess (about 31.2%) under Section 195 — regardless of your actual tax slab. But 30% is only the TDS, not your final tax. Your real liability is at your slab rate (NRIs get the slab structure but no Section 87A rebate), which is often far lower. If the FD is your main Indian income, most of that TDS comes back as a refund when you file an ITR. The calculator above estimates exactly how much.
NRE vs NRO FD — which is better?
If you have the choice, NRE wins every time. Banks pay the same interest rate on NRE and NRO deposits, so the only difference is tax: NRE interest is tax-free, NRO interest is taxed. The catch is that the choice isn't always yours — NRE can only hold money you bring from abroad, while income earned in India (rent, dividends, Indian salary) must sit in an NRO account. Use NRE for foreign funds, NRO for Indian income.
Can I move money from my NRO account to NRE?
Yes, but within limits. You can repatriate up to USD 1 million per financial year from your NRO account (including to NRE), after paying any applicable tax and submitting Form 15CA and a CA-certified Form 15CB. NRE and FCNR funds, by contrast, are fully and freely repatriable with no annual cap. This is why NRIs prefer to keep fresh foreign earnings in NRE rather than routing them through NRO.
What about an FCNR deposit — is it better than NRE?
An FCNR (Foreign Currency Non-Resident) deposit is held in a foreign currency such as USD or GBP, so its interest is also tax-free in India and it carries no rupee-depreciation risk — useful if you plan to take the money back abroad. The trade-off is that FCNR rates are tied to lower global currency rates, so the headline interest is usually well below an NRE rupee FD. Choose FCNR to avoid currency risk, NRE to chase the higher rupee rate.
Do NRE and NRO fixed deposits pay different interest rates?
For tenures of one year or more, most banks quote the same rate on NRE and NRO deposits, so in practice the rate is usually identical — a few banks differ by a small margin, and NRO additionally offers very short tenures (under a year) that NRE doesn't. This is the key point most comparisons miss: when the rate is the same, the entire difference in what you keep comes down to tax, and NRE's tax-free status makes it the better deposit whenever you're free to choose. If your bank quotes different rates, the calculator lets you enter both.
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