TRC & Form 10F: the paperwork that unlocks treaty rates
Every NRI banking or investing in India works through one of two rupee accounts: the NRE (Non-Resident External) and the NRO (Non-Resident Ordinary). They look similar — both are rupee-denominated, both are opened with Indian banks — but they answer two different questions: where does the money come from, and how freely can it leave India.
| Aspect | NRE account | NRO account |
|---|---|---|
| What goes in | Foreign earnings remitted to India (salary abroad, overseas savings). | India-sourced income — rent, dividends, pension, sale proceeds, MF redemptions from Indian income. |
| Repatriation | Fully repatriable — principal and interest, no annual ceiling. | Up to USD 1 million per financial year (beyond current income), with Form 15CA / 15CB certification. |
| Interest tax in India | Exempt under Section 10(4)(ii) — no TDS — while you qualify as resident outside India under FEMA. | Taxable. TDS at 30% plus surcharge/cess under Section 195. A DTAA may reduce this (e.g. India–UAE interest article: 12.5%) with a TRC and Form 10F. |
| Joint holding | With another NRI/OCI; a resident close relative may be added on a former-or-survivor basis. | With another NRI/OCI or with a resident Indian. |
| Typical role | Routing foreign income into Indian investments you may want to take back out. | Collecting and spending Indian income; paying local bills, EMIs, family support. |
Why the distinction matters for investing
Mutual fund folios, PMS accounts and AIF commitments are tagged to the account they're funded from. Invest through NRE and the redemption proceeds stay on a repatriable footing — they can go back abroad without the USD 1 million ceiling. Fund the same investment through NRO and the proceeds are non-repatriable: they land back in the NRO account and leave India only within the annual limit and paperwork. Same scheme, same returns — different exit doors.
The tax treatment of the investment itself (capital gains, dividends) is the same whichever account funds it — that's covered in the DTAA tax visualizer on our NRI Resource Center, including where treaty relief may apply to mutual fund units.
When you become — or stop being — an NRI
The accounts follow your FEMA residential status, not your passport. On becoming an NRI, existing resident savings accounts must be redesignated as NRO (banks do this on request with proof of status). On returning to India for good, NRE/NRO accounts are redesignated as resident accounts, and foreign-currency balances can move to an RFC (Resident Foreign Currency) account.
Illustrative only · Not tax or legal advice. Rules indicative for FY 2025–26; rates exclude surcharge/cess where not stated. Account features vary by bank. Consult a qualified professional for your situation.