In banking parlance, NRE stands for Non-Residential External and NRO means Non-Resident Ordinary. An NRE account is a bank account opened in India by an NRI in his own name to deposit the money he has earned from outside India. An NRO account is an account that is opened by an NRI to deposit the money he has earned in India through rents, dividends, pension etc. NRO welcomes funds to be deposited in both foreign and Indian currencies.
It is possible to transfer money from an NRE account to an NRO account without facing any difficulties or restrictions by making a request for transferring funds online as an NRE account is a repatriable account. It is also possible for an NRI to transfer money from one NRE account to another NRE account.
As soon as the money is transferred from an NRE account to an NRO account it becomes conditionally repatriable and subject to applicable taxes. To transfer money from NRE to an NRO account, the submission of proper documents, stating that all the taxes paid of the funds are transferred to the NRE accounts as the principal amount and interest earned on deposits from an NRE account are fully and freely repatriable.
To transfer money from an NRE to an NRO account is basically straightforward. These days all the banks provide online services, so it is easy for NRIs to manage their NRE and NRO accounts. There is no limit set for the amount to be transferred from an NRE account to an NRO account. The money in the NRE account is fully repatriable as it is not earned in India. Transferring from an NRE account to an NRO account is beneficial as better currency rates are applicable. NRE account provides preferential rates on remittance whether you want to send money to India or repatriate funds earned abroad from the DBS.
NRIs can transfer the money from an NRO account to an NRE account as well. As soon as all the taxes on an NRO account are paid, the desired amount can be transferred to the NRE account. The RBI has allowed the transfer of funds up to 1 million in one year from an NRO account to an NRE account. Few documents are mandatory to initiate the transfer, such as:
A signed check stating the transfer from an NRO to an NRE account
FEMA declaration
Documentary evidence of source of funds
Form 15CA
Form 15CB
Various reasons can be taken into consideration for the transfer of funds from an NRO to an NRE account. If an NRI intends to transfer his income into Indian currency and withdraw the same to carry out all the expenses, in the currency of the country an NRI is staying in. It allows the flexibility of full repatriation when the funds are needed, collected in an NRO account but to manage all of it through an NRE account.
The process of transferring money between NRE and NRO accounts has been made easy and precise by the Government of India for the benefit of the NRIs. It has become feasible for the NRIs to receive and send the money between these two accounts to avoid difficulties with regard to money earned in India or outside India.
