Why Financial Planning?

Planning is bringing the future into the present so that you can do something about it NOW.

One of the most common questions that I get from NRI is – what will happen to my NRE FD after return to India?

This question is on top of his mind because most NRIs locked their savings in long-term NRE FDs & they are giving high interest which is tax-free in India.

You can also get RNOR Guide from this post – important in the case of NRE FDs.

NRE FD after return to India


As an NRI, you can invest your money in fixed deposits in NRO, NRE and/or FCNR accounts. The interest rate on these accounts may be different from the interest rate on resident FDs. Here is a comparison of interest rates on Non-resident FDs of some banks –

Type of FD in Bank

(Sum less than  Rs. 5 crores)

Interest Rate on  NRE or NRO FDs Interest Rate on  FCNR FDs (US Dollars)
1 year FD in ICICI Bank 6.75% per annum 3.66% per annum
1 year FD in HDFC Bank 7.25% per annum 3.37% per annum
1 year FD in SBI 6.70% per annum 3.41% per annum

List – Best Mutual Funds in India for NRI  

It is good to park money in NRE or FCNR fixed deposits –

  • Interest earned on NRE FD is tax-free in India. (can be taxed in the country of residency)
  • Movement of funds is easy.
  • FCNR accounts are protected from exchange risk.
  • Many banks provide loans against FCNR deposits.
  • They can be continued in the same state till maturity whether you return to India or not during the FD tenure.
  • An NRE FD can’t be open in joint name with an Indian resident, even if that person is a direct family member.
  • There is repatriation option on investment through NRE Account.

NRO FDs are not lucrative as –

  • Interest is taxable.
  • There is no repatriation option on the principal investment or it’s tough.
  • Funds that have been originated in India or funds from an NRE account can only be used to open an NRO FD. NRE and FCNR FDs can be opened with funds received abroad as well.

As an NRI, you can make use of NRO FDs for investing money that you have earned in India and/or if you want to open a joint account with an Indian citizen.

Go for an NRE FD is you want to mainly park funds from foreign countries and want the money to be fully repatriable.

NRE FD can continue after return to India

Read – Best Investment for NRI in India

NRE FD after return to India

Let us look at the status of these fixed deposit accounts and the taxation rules related to them when an NRI returns to home base i.e. India and becomes a resident of India –

  • These deposits can remain as-is until maturity when an NRI returns to India and become a resident Indian. They need not be converted to resident accounts.
  • Withdrawals from both these accounts can be done only in Indian Rupees.
  • If we break NRE FD before maturity then interest is calculated only for the duration deposit remained with the bank.
  • Prematurely breaking of NRE FD attracts penalty which varies from bank to bank.
  • NRE and FCNR fixed deposit accounts can be converted to Resident Foreign Currency (RFC) accounts after maturity. The currencies allowed for RFC accounts are freely convertible currencies such as US dollar, Euro, British Pound and Japanese Yen.
  • NRO fixed deposit accounts have to be converted to Resident accounts.
  • The interest rate will be payable at the original rate if the deposit is held for the full term even after conversion into a resident foreign currency account.
  • Interest income from NRE A/c or FD that have been converted to RFC accounts will be exempt from tax if the status of the returning NRI is ‘Resident but not ordinarily resident’ also known as RNOR. A person is considered as an RNOR if the following conditions are satisfied –
  1. The person has stayed abroad for 9 years in the previous 10 years

  2. During the 7 financial years preceding the year the person returned to India, he/she has stayed in India for a period of 729 days or less.

    • A person usually has the RNOR status for around 2-3 years. If the status is ‘Resident’, the interest is taxable.  Interest income from NRO account is taxable in India whatever the residency status be. If the interest is taxable, then it has to be considered in the income source – ‘Income from other sources’ while filing tax returns.
    • After returning to India you become resident Indian and your global income becomes taxable in India. Of course, Double Taxation Avoidance Agreement ( DTAA) may be availed if the oversees is also getting taxed locally, so to plan your stay in India try to maintain RNOR status for the maximum possible time.
  • In such scenario except for some income, rest of your foreign income will remain exempt from tax.
  • The NRI has the responsibility to inform the bank on a change of residency status so that the bank can take the necessary steps on the accounts held by the NRI. On becoming resident the onus is on you to notify the bank of the change in the status.
  • The amount in the RFC account can be used for remittances abroad and investments abroad.
  • If you decided to go abroad again for a long term you can either remit the RFC balance abroad or transfer fund from your RFC into an NRE or FCNR account.

Immediately on return to India, NRIs should inform their bank to designate their accounts as domestic Resident accounts or transfer the balance in their NRE/FCNR accounts to Resident Foreign Currency (RFC) accounts, if so desired; FCNR accounts can be continued till the date of maturity and upon maturity, can be converted to RFC accounts. wiseNRI

Read – NRI Income Tax Rates in India

Few more points:

  • NRI after becoming resident in India can also create a separate tax profile like HUF and take separate tax exemption limit to HUF.
  • There is also NRO– Five years tax saver Fixed Deposit that will be eligible deduction under Section 80C of Income Tax Act, 1961. This also provides NRIs an opportunity to diversify their investments in addition to other investments permitted in Section 80C. The maximum amount to be invested in this should not be higher than INR 150000 in a financial year. No Overdraft or pledge allowed in the NRO – Five years tax saver Fixed Deposit.
  • In Five years NRO TaxSaver Fixed Deposit there is monthly and quarterly payout option is available but there is no partial and premature withdrawal is allowed.

Check – NRE Vs NRO Account

As an NRI, let us know your experience if you ever asked your banker – NRE FD can continue after return to India? Please share their response in the comment section. If you have any additional or updated information – must share that will really help every NRI.

NRE FD after return to India
Published on 

Hemant Beniwal

Hemant Beniwal is a CERTIFIED FINANCIAL PLANNER and his Company Ark Primary Advisors Pvt Ltd is registered as an Investment Adviser with SEBI. Hemant is also a member of the Financial Planning Association, U.S.A and registered as a life planner with Kinder Institute of Life Planning, U.S.A. He started his Financial Planning Practice in 2009 & is among the first generation of financial planners in India. He also authored Bestseller book "Financial Life Planning". 

  • My bank has said NRE FD account can continue till its maturity after that will become an normal resident deposit.

      • I have come back to India after 9 years and this year I qualify for a resident but not ordinarily resident. Next year, I’ll again go abroad and be a NRI. Do I need to convert my NRE fds (which are maturing this year)into resident foreign currency accounts or should I reinvest as NRE FD?

        • Dear Mr Riaz,

          As RNOR, you can continue to enjoy tax free status of your existing deposit held in foreign currency ( like in FCNR).

          In case you are holding the funds in INR ( like in NRE FD), your interest earning will become taxable as per individual slabs, in-spite of you being RNOR.

          Hope this clarifies.


  • Really very useful tips. I had these queries as I am planning to return to India and even our RM from banks could not provide satisfactory replies to my queries and all my queries infact answered in above post.

    Especially RFC account and RNOR status are first time information to me.

    So, I can continue to avail tax free income even after returning to India by converting NRE FD to RFC account after maturity!

    Suppose if my NRE FD matures after 3 years of my return, can I still transfer that money to RFC and avail the benefit!

    • Dear Yogesh,

      Thanks for appreciating 🙂

      Regarding your query – interest income on NRE FD will be taxfree in India till the date your status is NRI or in RNOR you can convert that to RFC.

      • Hi Hemant,
        thanks for addressing this important topic.Is NRE FD even possible once someone becomes RNOR? Or one has to convert it into RFC?

        • Hi Ashutosh,
          RNOR is a tax residency status.
          You can have a NRE FD or FCNR FD only if you are a person resident outside India under FEMA.
          A person who has returned to India for employent becomes a person resident in India under FEMA immediately on return.
          After that he can only open a RFC account that is designated in foreign currency.
          Interest on RFC is tax free..

  • Much useful info, one comment on tax bit:

    Instead of 5-year Tax saving deposit, one may choose ELSS (tax-saving mutual fund) which is locked up for only 3 years, and offers greater chances of appreciation, and increased tax efficiency. With ELSS only 10% long-term capital gain tax is to be paid; in case of bank FDs, the interest is to be shown every year in your tax papers, and tax is to be paid according to your slab. With NRO account, bank will deduct higher TDS. Even if you owe no tax, to recover your money (interest amount) more paper work (15H, or filing tax forms to get refund) needs to carried out, which is an avoidable head-ache.

  • I got this message from my Bank:

    Taxability in India is dependent on whether an individual qualifies as an Ordinary Indian Resident (ROR), Not Ordinarily Resident (NOR) or Non-Resident (NRI). An ROR is liable to tax on his global income, while a NOR and NRI is liable to tax on the income ‘earned’ in India. NRI benefits are available to a person till the time he holds the NRI status in India; a person loses his NRI status in the same year when he returns to India or within 2-3 years from the date of arrival to India, depending on the number of days of stay in India (explained below).
    Foreign exchange and overseas assets (such as bank accounts, stocks/securities, life insurance policies, loans, company deposits, debentures, bonds etc.) acquired/held/owned by NRI while he was abroad can be continued to be so held and owned even after the NRI returns to India for permanent settlement. Such foreign exchange and overseas assets can accumulate or accrue income outside India and the balances can be utilized for reinvestment or repatriated to India at any time (without attracting Wealth tax in India) within 1 year immediately preceding the date of his return or later.
    This exemption period is limited to 7 successive years which immediately follow the year in which the NRI permanently returns to India.
    Immovable property
    NRIs can continue to hold immovable properties outside India. Such properties can be rented out and rentals can be credited to overseas bank accounts. The properties can be sold and the sale proceeds credited to overseas bank accounts. Expenses relating to such properties, such as maintenance, insurance premium etc. can be paid out of the overseas balances.

      • How is that possible i.e. to continue with NRE FD ? You had said before that NRE accounts are to be converted into Resident Accounts. Bank will have to close NRE FDs in such cases in their System (GL) and open new Resident FDs with same interest rate and maturity ?

        • Hi Shekhar,
          Yes, you can hold NRE FD till maturity.
          After that, you have the option to convert in a resident account.

          • So If the maturity of NRE FD is say – 3 years – from the day I become resident Indian. Then the NRE FD will continue for another 3 years. What about the tax on interest for this 3 years- would we it be taxable?

      • Dear Hemant,

        This article is one of the great resource of information on NRI topic!

        In such case for example an NRE FD was booked for 5 years tenure. Person was NRI 1st year (staying overseas), RNOR for next 3 years (after his permanent return). He didn’t break the FD and this continued till its maturity.
        So the interest earned on these FDs for first 4 years not taxed and then from the 5th year (since when he converted his account to Resident) the interest will taxed as per the slab.
        Is this correct understanding and do banks take care of this? Or they will deduct tax on interest for whole 5 years as Resident?

        Another question : NRI returned India and became resident while continued to hold a Savings account overseas keeping fund on which tax was already paid overseas (this is not an income overseas after he became resident). In future when he remit these funds to India will that be considered taxable?


    • Hi Benoy,

      Interest Income is tax free till your residential status is NRI or in RNOR convert that to RFC.On becoming resident, interest is taxable

  • Still confused about the future of nre fd held by an nri returnee with local banks
    Need a straight answer by someone whether the interest earned is taxable if the holder have rnor status
    Why rfc or fcnr account is different from nre fd
    ? Fcnr foreign currency denominated and nre fd although it is in rupees it is repatriable means it’s backed by a foreign currency
    Banks in india deduct tax once you inform them that you are back for the nre fds.
    Therefore if anybody in this forum knows about the sections in tax law supporting the the argument
    Not to pay tax for nre fds till
    The expiry of rnor status please share it.it will be of good use to many of the returned indians.

    Thank you

    • Hi Abraham,
      Interest earned in FCNR is exempt if the holder has RNOR status. (NRE FD it’s taxable.)

      The basic difference in FCNR & NRE FD –

      1. You can open NRE account as Saving account or Fixed deposit, but FCNR is always a fixed deposit account.

      2. Your money remains in Indian currency in NRE account but it remains as foreign currency in FCNR account.

      3.NRE account is always in INR but FCNR account can be in JPY, USD, CAD, AUD, SGD, JPY or CHF.

      4. The interest rate on FCNR account is lower than NRE account generally, depending upon which foreign currency you open the account.

      5. You can withdraw money from NRE account anytime, but you cannot break FCNR fixed deposit before completion or maturity.

    • Agree, I am also struggling to get a response from many expert on this and the double taxation. Bank also making it very difficult for returning NRI and mostly suggest to break the FD.

  • I have done FD in my NRE account. What will happen if I return to India. till when I can continue NRE FD? Is interest on NRE FD will be tax free after return

    • Hi PS,

      After returning to india you can hold NRE FD till maturity but that means it’s status will be same, it will be considered NRE FD.
      Taxability depends upon your residential status.If you become resident then interest would be taxable

  • Went to ICICI today. Had 3 NRE FDs with them all opened in the last 6 months. They said I have to close them and open new FD. Since none of them completed 1 year, lost all the interest till today. 🙁

  • After long 27 years working abroad I have returned back to India on 9 Feb, 2019. I have saving in NRE a d FCNR deposits. Being NRI the interest was tax free in India. I want to maintain the FCNR as it is for my children higher edication at USA. What is the most efficient way to restucture my investments.

    • If your status is now Resident Indian, then I suggest you convert your FCNR FDs AT MATURITY into RFC FDs. You will get same interest rate as for FCNR and all the funds remain Tax free AND repatriable for your kids’ education abroad. You can also keep some amount out of the FCNR Maturity as RFC savings account just in case you need to convert some funds into INR for expenses in India. But such RFC Savings account interest is almost nothing & tax free too.

      I also suggest you invest some amount from NRE FD into Mutual Funds. Now after the Indian Govt has implemented DDT (Dividend Distribution Tax) on MFs, the dividend amount you get credited into your Resident Savings account is Tax Free which you can use for your monthly expenses. You will surely get minimum 8% p.a. amount as dividends. Longer you keep the MFs the higher dividends you will get. Discuss with your Financial Advisor for advice on current best Mutual Funds.

  • Dear Sir,
    I have seen the following comment:”Will the FD in NRE be considered as domestic FD in a bank if I relinquish my NRI status?”
    Is it that the each bank will have its own rule or is there any guidelines or circular by RBI regarding NRE FD of returned NRI?

    • Hi Subramanian

      Once you become resident you have to inform the banks in India and they will change the status of the account as domestic.

  • real question is; can my NRE (INR) FDs accounts be 1. redesignated as RFC accounts (am still RNOR) so these funda are avilable for convertion later if need be for overseas use; 2. & or can the NRE a/c INR be exchanged to FCNR (say $) and or 3. continue as FD but redeposited as RFC (INR) as is, so as to enable me to utilize, if need be later, for overseas use??

    • RFC is Resident Foreign Curreny.
      So answers to your questions are as follows –
      NRE FDs which are in INR will stay as NRE FD till maturity. You will have to convert INR amount at maturity into say US$ (at prevailing Bank rate) IF you wish to keep the funds as RFC FD (same interest rates as FCNRs) or RFC Savings account (almost negligible interest rate).

  • I was NRI for past 30 years. I returned to India on 25 Dec, 2019. For A/Y 2018/19, I stayed outside India for more than 180 days. I got my dues from my foreign employer in Nov/Dec 2018 which I have invested in NRE FDs & FCNR which mature in Oct/Nov, 2019. I have small balance in NRE account. I wish to inform my Bank about my change of status. Please guide me.

    • Hi Ramesh,

      You have to inform the bank about your changing status with a reasonable time period. (exact time period is not defined)

  • In matters of tax one must ask a tax adviser to quote the relevant official publication. Indian IT Act Sec 10(15)(iv)(fa) is quoted below:

    It states that exemption for NR person or NOR person is allowed (of interest paid) on foreign currency deposits. If this is the same section under which a bank exempts NRE interest while the account holder enjoys NR status then it is reasonable to assume the phrase “foreign currency” deposits also includes “foreign exchange” deposits. Under FEMA, NRE deposits are referred to as “convertible foreign exchange”.

    (fa) by a scheduled bank to a Non-Resident or to a person who is Not Ordinarily Resident within the meaning of sub-section (6) of section 6 on deposits in foreign currency where the acceptance of such deposits by the bank is approved by the Reserve Bank of India.

    Explanation.—For the purposes of this item, the expression “scheduled bank” means the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955), a subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), or under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980), or any other bank being a bank included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934), but does not include a co-operative bank;

      • Hi Hemant,

        Sec 10(15)(iv)(fa) seems to deal only with foreign currency deposits of NR and NOR individuals. A strict interpretation of this would be FCNR deposits which are denominated in foreign currency.

        It is Sec 10(4)(ii) that deals with exemption of NRE interest of persons resident outside India

        Sec 10 (4) (ii) in the case of an individual, any income by way of interest on moneys standing to his credit in a Non-Resident (External) Account in any bank in India in accordance with the Foreign Exchange Management Act, 1999 (42 of 1999), and the rules made thereunder :
        Provided that such individual is a person resident outside India (i.e. a Non-Resident under IT Act)

        The FEMA definition of a person resident in India generally covers a person residing in India for more than 182 days during the preceding Financial Year. (understand that reference is made to the preceding FY which is the year preceding the “Previous Year” (Sec. 3) i.e. the year in which income is earned.).

        Under FEMA the definition of resident excludes a person coming to or returning to India otherwise than
        – for employment or business or profession
        – for other purpose in circumstances that suggest he intends to stay for an uncertain period (indefinite period ?)

        The above double negative implies a person coming for employment,business,profession is a resident from the very day they arrive.

        Similarly a person coming for any other purpose (e.g non OCI tourist or retired Indian) in circumstances that suggest an intent to stay in India for an uncertain (indefinite) period would also be FEMA resident assuming they have crossed the 182 day threshold.


        An IT NOR individual may not claim exemption of NRE interest under Sec 10(4)(ii) beyond one Financial year following the preceding Financial Year in which he was a FEMA NR.

        An IT NOR individual may claim exemption of FCNR interest under Sec. 10(15)(iv)(fa) for the years in which he enjoys IT NOR status

        • I am an Indian citizen. I was working outside India for 27 years and after retirement, returned to India in Jan 2018. For FY 2018-19, I filed my returns as NRI, having stayed in India for less than 182 days.

          From 01 Apr 2019, my status is RNOR. A few of my NRE FD’s are still continuing. Based on item 1 as stated under conclusion, can I (as RNOR) get exemption from income tax for the NRE A/C and NRE FDs for FY 2019-20 (one more year)? Thank you.

  • Hi Hemant,

    Could you pls clarify on one doubt as I am not sure.

    I have a NRE FD which i just made a few months back. As per the bank, no interest is paid if NRE FD is broken before a year (there’s no pro-ration based on the actual duration the FD is held).

    Now I will be returning to India in a few months. My NRE FD will not complete the tenure of 1 year. As per your article and my research, I cannot hold a NRE FD the moment i return to India permanently

    1.) After my return to India, Can I still hold the NRE FD till maturity but pay tax on the earned interest. I think I will be in RNOR status for a year. But even if I am in ROR or Resident status, I dont mind and will file taxes. But is this legal (i.e. holding NRE FD but paying taxes as per the tax filing status

    2.) OR do I need to immediately convert my NRE FD to resident FD on return. If this is the case, I would immediately convert break my NRE FD and lose a few months of interest instead of breaking it after I go to India and losing an entire year of interest

    Pls advice

    • Hi Rohan,

      Yes, No interest payable if deposit prematurely closed within 1 year

      It is your responsibility to inform the bank of your change in residential status. It is possible that some bank may inform you that you can continue NRE FD until maturity whereas others may require to close the NRE FDs.

      If you continue the NRE FD, the interest on NRE FD would become taxable from the day of your return as you are legally not allowed to maintain NRE accounts under FEMA after return to India.

  • Within what time frame should a returning NRI intimate his bank about his changed status from NRI to Resident?

  • In one part of this article you say the onus is on the NRI to inform the bank to convert his account to resident account upon his return to india.
    Elsewhere it is written that an NRI can retain NRE accounts till maturity (does that mean beyond the period he is RNRO?)

    • Hi Surya,

      You are allowed to keep these Fds till maturity but it would be treated as Resident FDs by the time you decide to reside in India, hence tax implication would be the same as resident Fds

    • You will be considered Resident but Not Ordinarily Resident in a year – if you satisfy one of the two conditions for a Resident –

      1. If you have been an NRI in 9 out of 10 financial years preceding the year.

      2. You have during the 7 financial years preceding the year been in India for a period of 729 days or less.

    • Hi Simon,
      Interest income is tax-free until your residential status is NRI or RNOR.On becoming a resident , interest is taxable.

      • Hi palak….in one of the above comments in reply to one of the queries an tax epert by name TANYA replied that RNOR status holders have to pay tax…but u r not mentioning that it’s not taxable

        Thanks…pls reply

  • Am still an NRI, I have a NRE FD, which will mature in July. My question, the full amount upon maturity along with the interest earned will be transferred to the NRE account?

  • Hi I was an NRI. Now we are in India for 1&12years.We had an NRE Fd. It got matured. My question is is the interest taxable.

  • I recently returned to India after living abroad for 15 years. I have a NRE account with NRE FDs (in INR). When I approached the bank about status change, they said that they will close the NRE account and open a new resident saving account.
    Since some of my NRE FDs are less than 1 year old, bank said that they will break the FDs without giving any interest and start new FDs with the same principal amount for the remaining duration in the new savings account.
    Can I continue my NRE account as I will be in RNOR status for 3 years? Is the bank correct on not giving interest on FDs. Looks like I am getting penalized for moving back to India.

    • Hi Manoj,
      No interest payable if deposit prematurely closed within 1 year.
      Yes, you can continue the FD till maturity but as a regular resident FD, not NRE FD.

        • Interest is taxable ONLY as a Resident Indian status. During NRI & RNOR status the interest on NRE FDs is NOT taxable.

          • Dear Dr Santosh,
            Thanks for helping other readers with your detailed replies.
            Can you share any source on this “During NRI & RNOR status the interest on NRE FDs is NOT taxable.” our understanding is it will be taxable even in the case or RNOR.

          • Dear Dr Santosh,
            Could you please provide a backup for your statement that interest on NRE FDs are non-taxable during RNOR status.

          • Please scroll up and refer to my earlier comment where I have explained that NRE is exempt only for the 1 previous year after ones FEMA status has from NR to R.

            FCNR is exempt for 2 preceding NOR years before the year when ones IT status has changed from NOR to R

          • Sir I heard only FCNR deposit will not be taxable with RNOR but NRE FD with RNOR status is taxable. CAN YOU RECONFIRM PLS.

  • I am a NRI but on 27th of April, I returned to India on my retirement after 35 years of service abroad. I have NRE saving accounts. When I have to inform to the banks and how and when the Tax will commence on my earnings as interest on the NRE FDs?

    • Hi Raj,
      You have to inform bank within a reasonable period of time ( the time is not defined but we assume up to 3 months)

    • Dear Raj,

      I am also in same situation , i returned 8 months ago after nearly 20 years and i have my money in NRE SB accounts. If you got the procedures can you please let me know also.

  • I have stayed in India for more than 180 days in FY 18-19 and have income from nre deposits .I was an nri since 1992 till I returned in 2018.Do I have to pay tax on the interest on nre Fds If yes can I pay on annual accrual basis on deposits that mature after 5 or 10 years.Thanks Shiva Prasad.

    • Hi Shiva,
      Interest income is tax-free until your residential status is NRI – On becoming a resident , interest is taxable.

  • I understand that an NRE is a person who has gone out of India (a) for or taking up employment outside India or (b)for a business or vocation outside India or (c) for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period.
    My background is:-
    1. I have been living in the Gulf region for more than 15 years and visited India less than 50 days on annual leave every year, in the past.
    2. I am retiring and going back to India on 25.07.2019. ( Thus, in FY 2019-20, I will be an NRE for 115 days and RNOR for 250 days). I will be RNOR in FY2020-21 also but not thereafter. All my NRE deposits will be taxable from FY2021-22 onwards
    These are my questions:- (1) Can I extend my NRE status in 2019-20 by visiting a nearby country for 250 days by taking advantage of the NRE status provision “for any other purpose with an uncertain period of stay”
    2. Also, Can I take advantage of the same provision and retain my NRE status in the subsequent years by visiting Canada for 183 days, every year.( I have a visit visa for Canada valid for 5 years. 6 month’s duration for each entry)

    • All you need to maintain NRI status is to be OUTSIDE INDIA for more than 183 days. You could be ANYWHERE.
      Only issue will be your Bank asking for Residence address. So give your relative or friend address in Canada since you won’t be having valid Residence Visa stamped on your passport while exiting your Gulf Country.

    • Hi Ravi

      The article covered almost all the points related to NRE FD, if you still have any specific one, you are free to ask here.

    • Hi Anup,
      Interest income is tax-free until your residential status is NRI.On becoming a resident , interest is taxable.

  • I am an nri for 15 years, but now living in india since from 15 dec 18. Not sure what is my nri status now. I am planning to go back abroad again this year or next year. Till then how wll be my nri fds in the bank will be treated?

  • Kindly let me know income tax implication on a 5 year NRE FD, if Residential status of the depositor changes from NRE to Resident Indian even before maturity of the FD

    • Hi Baptist,
      Interest income is tax-free until your residential status is NRI.On becoming a resident , interest is taxable.

  • Regarding my fixed depoist in nre account.. after returning from abroad this fixed deposit interest is taxable,?

  • Asked our bank if our NRE and NRO fd s can continue without breaking till maturiry if we become residents? We already pay taxes on NRO fd s. And we are ready to start paying taxes on NRE fd s when we return to India. We just do not want to break our FD s for conversion. But bank said we have to break them, pay penalty for premature breaking and make fresh FDs at lower interest rate. Can you help?

  • I was NRI since jan1989. Return to India in ur 2013/14 then NRI sept2015till may 2016 again I HV assignment in sept2019. Should I report my bank asset in foreign ac

  • I returned from abroad as NRI, for good on Jan 15, 2017. Now, up to which date, my NRE FD interests can be considered as non-taxable? Thanks

  • i returned to india in april 2018 and keeping my account in nre account, interest from these accounts are taxable in f y 18-19

  • Hi,
    My question is how the taxable interest will be calculated. Because if It is FD then i will receive all Interest at the end of the tenure. Let say, at the time of Resident Status my FD gets matured after 10 years. Do I need to pay tax on whole 10 years interest or only interest accrued in that year?

    Thank you.

  • I am going to settle in India. My some of nre fixed deposits are going to mature n 2022 and some of.in 2027. Is interest receive from such FDRs are taxable?

  • i am relocating to india and i have NRE deposits.. do i have to pay tax for the interest earned for the NRE deposits

  • I will be returning to India in Oct 2019. I have few FDs (tax free) which have different maturity periods. If I convert them into Resident FDs i have to pay 30% tax on them, right ? In this scenario, please let me know which is the best option to save maximum tax on interests earned ? Any other stable investment ideas which can compensate the tax loss ??? Thanks in advance for your kind advice.

  • It is not clear, one side you are saying Nri can keep NRE fds till matuarity in Nre account even if return to India and later you are saying NRI upon return must convert Nre fd to Resident fds….?
    Also pls advise my Nre fds will be taxable if I return to India and do not earn RNOR STATUS.

    • Hi Amit,
      Sorry if I confused you.. You can continue NRE FDs (so assuming you locked higher interest rates a few years back – you can get that till maturity) but their status should be converted to Resident. Hope this clarify your first question.
      Even if your status is RNOR interest will be taxed from the day you arrived in India.

      • Hemant sir… Can u pls clarify one more thing along with this…. My income will b taxable from day i arrived in India OR after completing 182 days in a financial year…. Pls clarify this … Thanks n regards

  • Dear Mr. Hemant,

    I have stayed in India continuously one year as of Sept 2019 after more than twenty years worked abroad. Now I have decided to continue to stay in India in future. I have NRE SB account in union bank of india, which has my life time entire saving. Kindly please advise me the necessary steps , so that I can protect my money in NRE SB account.
    Is there any chances of loosing any money.

    Kind regards,

  • The SBI interest certificate provides me interest paid and accrued both.my ca say as I in between my status changed my nrefds should be converted to normal fd. As I know I can continue till maturity. And ca say my interest income is taxable including both paid and accrued . But as they are nre fds y interest certificate shown paid includes accrued also .please clarify me

    • Hi Naresh,

      Your NRE FD will be taxable from the day you arrived in India.

      And interest income earned from deposits maintained in an FCNR account is exempt from tax up to such period you are a non-resident or RNOR in India

  • I have some NRE FDs which are tax exempted. Now returned to India…can I continue availing tax exemption till the maturity of FDs?

  • I have some FD’s in my NRE account and i dont have any income in India. They deduct approx 31% tax from the interest earned. Can i get a refund if i file ITR at the year end. I am Canadian.

  • I was an nri for 37 years and i have some FD which will nature in 2023. Also what will happen the money remaining in my nre account

    • Hi Purushu,
      Its depend on your residential status, if you returning in India, the interest will be taxed from day one otherwise it is exempt.

  • after being an NRI for 14 years, I returned back to India 2 months ago. I am now signing up for a new financial service and I would like to know what should I declare as my resident status since I have only been in India for 90 days. Also, Do I need to update mu KYC status?

  • i have an nre account in which i have been remitting money while i was employed in the foreign country. but now I am not employed and now I am in my husbands visa but with residential status. so what has to be done to my nre account and fds

  • Hello Hemant.
    Thanks for the information you shared here.
    I am an OCI card holder and citizen of Australia.
    If I wish to come to India say for 5 years when do I become a Indian resident for tax purpose ?

  • NRE FD, on return to India : The advice given to me by several accountants / auditors is:
    1. The NRE account should be converted to Resident account within a “reasonable time” (no body is able to clarify how much is “reasonable” 1 month?, 2 months? 3 months?…)
    2. The NRE FD should be converted to “Resident” FD and can be done at the at the contracted interest rate and the maturity date.
    3. The interest on the said FD will be taxable when the tax status of the individual for the financial year in question changes from NRI to RNOR / Resident.

    This aspect of income tax on interests from NRE FD’s on individual’s return to India:
    1. Banks are not aware / you don’t get a clear response / it is not their look out.
    2. They let you continue the NRE FD as NRE FD till maturity, after which they expect you to notify them of your change in Tax Status.
    3. Several accountants / auditors are of the view that the said interest on the FD’s continues to be free of income tax (like for FCNR’s) till the maturity of the (NRE)FD.

  • Hi Hemant,

    I had a doubt, as an example if I have several NRE FDs, prior to returning to India, if I break all of them and convert them to a single 10 year NRE FD and then return to India, I would be a RNOR for 2 – 3 years and after that a Resident. What will be the tax status of interest earned on these NRE FDs?

    If I understand right, existing NRE FD need not be broken/withdrawn/converted until maturity, so this could be a solution for retiring NRIs to save tax for atleast 10 years?


  • I am working in foreign ship. For last 15 years I have been maintaining my NRI status by working abroad for 185 days in each year. Is there any benefit if I not maintain my NRI status particularly this financial year 2019-2020 due to some domestic requirements.

  • i am nre holder have deposits it will get matured in 2023 now i am retired in this my deposits status will remain nre till maturity

    • Hi,Chandrakant

      If your intentions to stay in India for good, then the status of NRE fds will be converted into residential fds, and continued till maturity.

  • After living 8 years and six month in abroad I just came back to India. Please guide me how I will approach to bank for my nre account and nre fixed deposit account

    • Hi, Anarendra

      You must contact senior management of a particular bank, give details of yours fds you want to continue as NRE Fds till maturity

  • An NRI for 25 years returning to India having USD FCNrs/NRE Rs Deposits and NRE bank account.1 What should be done with NRE InRs FD’s? Can they be retained til maturity? Is interest taxable of tax-free for 2-3 years?

  • Hi sir… My query is that I had opened an nri account wit 3 people in it as either or anyone of the survivor mode of operation
    The first holder being my dad(he has expired), second my mom n thirdly myself

    The bank people are saying tat since am already in India for more than 182 days in this financial year I have to transfer that nri AC to residential savings account…so tat my fds need not be withdrew prematurely… But the issue is tat since the primarily holder was my dad…they are telling tat I will have to close the account n fds also n transfer to our residents savings account
    Doing so I will have to go through lots of losses due to premature closures(2017-2021 are the due dates of all fds)

    Pls advice

  • I have a query regarding RNOR, I am an NRI for more thanpast 10 years and have been in India for about 100 days in past 7 years, If I return back to India on 30 Nov 2019, I will be an NRI for AY 2020-21. I will be in India for 365 days in FY 2020-21 and also FY 2021- 22. How is my Status be for these 2 AY years – RNOR or no. Please give reasons

  • I am NRI since last 25 Years and now i m coming back to India where my status will be resident.What will be the status of interest earned on my FCNR account and NRE FD which i already have with me

    • Hi. Raju,

      FCNR and NRE deposits need to be converted into RFC deposits and you can earn interest on them until maturity but that interest would be taxable.

  • NRIs returning India after RNOR status of 2 to 3 years, what will be the status of the principal amount in RFC accounts or FDs? Is the principal FD amount is taxable?

  • I have operated a resident savings bank account as NRI. Now I realise it was a mistake. What’s way forward? Do I inform the RBI or IT about it and how do I transfer money from the account to NRO account? Is this fema violation and do I have to go to RBI for compounding of contravention.

  • Can an NRI after becoming resident gift to NRI relatives by depositing in their NRE account in India? . How about Fixed Deposits of NRI which opened before becoming resident ,is it still trated as non taxable and be given to NRI relatives by remitting to their NRE account maintained in India?

  • Can you answer in simple terms. If one bcomes RNOR (2-3 years), will interest on NRE FD in Indian Rs. is taxable and if so, then only he has to convert to RFC?

    • Hi. Sandy,

      You can earn taxfree interest until you attain RNOR status.
      Once you attain RNOR status then you have to convert the NRE deposit in RFC and you can continue till its maturity with taxable returns.

  • I have about 10 nre FD accounts in India and in case I return back to India from abroad( i was in UAE for 10 years), can I still enjoy tax-free status on these

  • Once I return back and become RNOR (2 0 3years), will interest earned on NRE FD IN INDIAN RS. is taxable If yes, then only I can convert to RFC account

  • I am Prabhakar, still, I doubt on the nre fd, can those be in the same status, until maturity even after SB nre is concerted into ordinarily account, some fds are for 10 years. I am a senior citizen now

  • I moved to India an year back from US. Now I want to transfer my funds to Indian bank in INR. I don’t have NRE account. In this case, can I just transfer it to my savings account in India

  • I just returned to a India after spending more then 10 yrs as a nri. I am going to change my residency status to bank and what will happen to my NRE fd which is less then 1 yr old

  • Stayed outside India for years & Income earned outside India was brought & invested in MF & FD in HDFC Bank in India & status was NRI so No taxable. Now next year stay in India is > 180 days so residential status is Resident, so whether old invested amount of MF & FD interest will be taxable in next year

  • I was NRI for 10 out of 10 previous years and did not more than 729 days in the previous 7 years. But from last year 2018-19 I am RNOR status for 3 years. I am still keeping my savings abroad. I like to keep it there. How long can I keep there and do repatriation to india?I was NRI for 10 out of 10 previous years and did not more than 729 days in the previous 7 years. But from last year 2018-19 I am RNOR status for 3 years. I am still keeping my savings abroad. I like to keep it there. How long can I keep there and do repatriation to india?

    • Hello Sunil, the amount in your nre account won’t be taxable if you hold an RNOR status and if you do not hold an RNOR status then the amount would be taxable.

  • If an NRI invested in a 10 year NRE FD with an Indian Bank in 2015 and expected to mature in 2025, and has permanently returned to India in 2018, can he legal. hold his NRI Saving Bank account till 2025 so that the maturity amount could be transferred into that account

  • I am working in UAE for the last 23 years and had been to india for short vacations wanted to know when i return back for good how long can i keep my NRI status and enjoy the tax free benefits

    • after coming back to India you cannot continue your NRI status however you will be considered as an RNOR which also has some tax benefits

    • after coming back to India as per FEMA you will have to inform your bank about your residency status and your nre FD will be redesignated as resident account

  • i came to india mid 2016 and opened an nre account to which i repatriated some money. I have since been mainly resident in india but am still an irish citizen and hold an oci card when do i have to start paying tax on my nre fds

    • since you will receive interest on the cash certificates Compound interest will help in increasing the amount of the deposit by the power of compounding

  • I have an nre account and am using fed mobile for my transaction. My question is, there is an option to deposit my money as FD. So if I select the category option for nre- cash certificate -compound interest. What does it mean?

  • If in Resident foreign currency account, a NRE FD matures then can it be reinvested as NRE FD till the RNOR status is maintained?

  • I am posted in the Democratic Republic of Congo for a year on United Nations Mission, I have an NRE account in India, I will complete my tenure in September 2020…what happens to my FD after that…will it remain tax-free

    • when you come back your status will be considered as an RNOR and since you have stayed abroad for 12 years you can continue your RNOR status for 2-3 years.

  • Hi Hemant,
    I am returning to India in March 2020,after a long stay of 27 years abroad. I have read a lot about RNOR in your articles & some other articles also. I am still not clear about INR NRE FDRs, can I keep my FDRs as it is & avail tax exemption like NRI or I have to break these & convert them to USD or Pound Sterling to put them in RFC to avail tax exemption under RNOR. Please clarify.

    • you can keep your FD as it is but the interest won’t be tax-free, to avail tax exemption you will have to convert them to RFC FD and you can keep them till your status remains as RNOR.

  • I am returning NRI and want to intimate my bank about my change of status. I have FCNR maturing end Jan and Feb.Will these are converted to INR on maturity and liable for tax?

  • I am an Irish citizen of Indian origin holding an OCI but have been resident in India for the last 3 years I opened an NRE and NRO accounts what happens to my FDs opened in my NRE account 3years ago

  • My wife was also working in foreign and we had one bank account in foreign as joint account with my name being first one. Both her income and mine were deposited here into this one account.
    In the same periods we had NRE account in Indian banks also as a joint account. We made FDR also as a joint names.
    Now the FDR made in India is from income of both of us earned in foreign. When we eventually return back to India, how will interest income be treated.
    1. will be treated fully as my income, even though it has contribution from my wife also?
    2. can I convert few FDR into wife name after we return to India – will it be allowed and not viewed as gift or clubbing
    3. ideally I would like to be viewed me and my wife as separate entity and want to file 2 returns with few income from interest shared between us – is it possible

    • Hi Ganesh,
      It will be treated as a separate income. You should make sure that you keep information handy related to foreign income or bank transactions – if required by IT department in the future.
      Coming to your specific questions:
      1. No – it’s your wife’s income.
      2. Yes, you can convert few FDR into your wife’s name.
      3. Yes – you should file 2 separate ITRs.

  • what is the taxability of NRE deposit both principle and interest NRE FD NRE RD NRE Saving? is there any exemption period or will it be immediately taxed.

  • Hello,

    One of my friend is planning to go back to India. He is planning to go for long term NRE FDs while he is an existing NRI. Let’s say, he is planning to go back to India in 2021, and thus he is planning to invest funds as NRE FDs for 10 years (Longest Possible Tenure) in 2020. In this way, the interest earned from 2021 until 2030 will be tax free for him, even if he is staying in India from 2021. Logic he has that he will create these FDs while he is a NRI.

    Can I know if his plan is correct? When he is an Indian Resident (from 2021 onwards), the interests earned from the FDs (10 years) he created in 2020 will still be non taxable?

    Kindly looking forward towards your feedback. Thanks!

    – Abhishek.

  • I was NRI till 31st March 2019 since Aug 2016 and from this year as on 31st March 2020, I will be Resident Indian but still working for an overseas company and getting earnings from there. I have NRE and NRO both accounts. How to proceed further now from this financial year.

    • Hey Anil
      You must inform your bank about the changes in your residential status. Whatever account you have that must be re-designated as a resident rupee account.

  • Was an NRI till 25th Jan….now retired and have returned to India…have FDs that mature early 2021….can I open a savings account or should I break all the FDs prematurely and then open a savings account.

    • you can break your FD but then you might have to pay penalty for it the interest will also go down by some percent.
      You can also open a savings account as well, you have both the options.

    • Hey shrey,
      You must re-designate your NRE bank account to an RFC account. Interest on NRE and FCNR accounts is Exempt in the hands of NRI. However once the individual becomes a ROR, interest on the RFC accounts taxable.

  • I came back to India from abroad permanently. I made some NRE deposits for 5 years. Since I back do I have to break my fds or I can continue it till maturity. What will be tax implications?

  • Hello Experts
    I am NRI stayed for about 30 years outside (in UAE mainly) and will be retiring in April-May 2020 sometime forever to India.

    What i studied is for retiring we need monthly fixed income and for that following options are better or NRE FD keeping for 5 years is better ?

    1. SCSS – upto 15 lacs (senior citizen saving scheme)
    2. POMIS upto 9.5 Lacs (with spouse)
    3. Government Bond Saving – 10 years Interest is 7.75

    above all are taxable incomes.

    With FDs rates going down is it worth keeping NRE FD more or the above options ?

    Once i return my NRE FD which gives quarterly interest so this tax will be taxable ? if yes then why is it called NRE FD ? if not then if i keep money just before entering india for 10 years will these interests will be tax free ?

  • Hi . I have NRI account and FD’s on same account and interests earned on Those Fds are More than 2.5 Lakhs , do I need to File IT return.

  • Hello
    I plan to return India now in May 2020 and worked abroad for about 28 years. Now can i keep NRE FD now for 3 years and get the tax free interests? I will be retiring so do not plan to take up any employment again. (Bank was pushing that put the NRE FD before coming here so you get the tax free interest till its maturity !! so is this correct?

    • Hey Amarnath,
      In this regard, you are required to undergo for the re-KYC and submit relevant documents for the same.

    • Hi Bhupesh,
      Even on returning to India, if his/her residential status is NRI for a particular financial year, the interest income on NRI-FD is taxfree.

  • Can an NRE FD started in “x” bank be transferred as an NRE FD in another “y” bank. Just to diversify the asset as don’t want to park all asset in one bank and the bank suddenly goes kaput like the PNB / YES bank

  • After I lose my NRI status, what should I do with my NRE INR account balance? Is the balance eligible for interest exemption under RNOR status even after redesign action as a resident account?

    • Hey Abdul,
      You can continue your FD till maturity and your NRE saving account will be re-designated as a resident rupee account.

  • Sir, your posts are very much useful. Thank you!
    if I have no intention to go back to abroad and no other foreign income is there, will it be helpful to convert NRE FD’s to RFC account?
    RNOR qualification: will it counted the days visited to india as vacation in between in calculations.
    Note: 30days before I came to India

    • Hey Ganesan,
      As per my knowledge its good if you continue your NRE FD’s till maturity.
      No it will not countable in calculation.

  • i returned back to india on 20 feb.2020 for good. I have money in the bank maturing in september 2023. upon maturity how can I transefer this money into my indian account.

  • I am a Canadian citizen and trying to settle back in India. I landed on March 10, 2020, and don’t intend to return unless required. I want to understand the process of navigating the NRI status and it’s redesignation which may not be beneficial at this point. All I have is nre account savings and no fd yet.

  • I had NRE FD in a bank and changed my status from NRE to a resident in July 2019. Am I required to tax on the interest earned from NRE fd for 2019 – 20?

  • Assuming for an NRI returning back to India, If the NRE deposit matures in less than a year from arrival in India, will the interest be taxable for a person who returns back in say June 2020? Let’s assume that the NRE deposits are maturing during October 2020 till March 2021. So for AY 2020-2021, will the assessee be liable to pay tax on the interest accrued on deposits maturing after June 2020?

  • If an NRI returns back to India, he will become RNOR initially if the criteria of 7 PY is applied. However, after one year, he will not qualify for RNOR status. Is that correct?

    • Hi Sathyanandan,
      As per my knowledge the minimum interest rate on NRE account is 3.50%.And it differs from bank to bank.

  • I intend to transfer money from my NRE account to my son’s account who also holds an NRE account in Nationalised Bank. Are there any restrictions on maximum amount. Are there any tax involved

  • Both me and my son (adult) are NRIs and we have separate NRE accounts in Nationalised Banks in India. I want to transfer money from my account to my son’s account. Is there an upper limit for such transaction? Whether any taxes are involved in such transaction?

    • Hi Mani,
      There is no limit on the amount you transfer. But the interest earned from that will be taxable outside the India.

  • If I put some cash for FD in my NRE account, then after the maturity period that interest and cash will come to my same NRE account or to the NRO account on the same bank.

    • Hey Basil,
      No, it will not automatically converted you will have to inform your bank about your resident status once the FD Mature.

  • I am an NRI and have few NRI fixed deposits in India. Now I am planning to resign and settle in India permanently. For how many months these deposits will continue NRI status so that I do not need to pay any income tax on their interest.

  • I become an Australian citizen 5 years ago, moved to India with OCI permanently, what will be my status, nre or nro What happened to my new FD?

    • Please do not confuse citizenship status with tax residene status.

      Every tax resident in India, regardless of citizenship, is taxable on their global income as well as Indian income.

      As a resident OCI your Indian income will be taxed like any other resident.

    • You can continue your deposit and there is no need for premature closure.

      To understand how the interest will be taxed scroll up to my previous commentary

  • Dear Mr. Hemant
    I am nri with more than 25 years, now planning to come and settle in mumbai for good. Please advise if I should contact financial adviser or CA for my future planning on tax savings. If you could also give me their charges