Yes, Transfer Money form NRO to NRE Saving Account, FCNR is Allowed

Not many NRIs (Non-resident Indians) knows that, from May 2012, NRI can transfer fund from the NRO account to NRE account in India. Earlier this was not the case though you can transfer funds from NRE to an NRO account, the reverse was not allowed. The only way to fund your NRE saving account was through your offshore income earned in foreign currency. Things have changed, The Reserve Bank now allows non-resident Indians (NRIs) to transfer funds from non-resident ordinary (NRO) account to Non-Resident External (NRE) account subject to a ceiling of $1 million in a financial year. This move is encouraging as now NRI can make maximum use of their funds and can transfer to overseas, when they needed or when they feel it's a better investment opportunity.

As I have said before, an NRE saving account is for depositing income from abroad, while an NRO saving account is mainly for putting Indian incomes. There are also a few more important differences between them e.g. In the case of NRE account, only NRIs can become joint account holders but for NRO accounts both residents and non-residents can become joint account holders, you can see my post 5 difference between NRE and NRO accounts for more detail.

Btw, If you are looking to send money abroad consider TransferWise. It’s a great tool for sending and receiving money internationally with low fees — much cheaper than using your local bank. You can also get your own local bank account details in Europe, the UK, the US, Australia, and New Zealand with the TransferWise Borderless account





What kind of fund you can transfer from NRO to an NRE account

Actually, I thought to write this article, when one of my friends asked me, Can I transfer funds from the NRO saving account to the NRE account? he was under the impression that it's not allowed. As I said, it's allowed but there are some restrictions on what kind of fund you can transfer from NRO to an NRE saving account

The key point is the source of the fund should be repatriable i.e. can be freely transferred to an overseas bank account.  here are some key things to note, while doing fund transfers from NRO saving accounts to NRE accounts.

1. An NRI can only transfer funds from NRO to an NRE account if the total amount is within USD 1 million in a financial year. This is the maximum limit of funds, which can be transferred from an ordinary to an external account.


2. You can transfer interest earned on NRO accounts to your Non-resident external(NRE) and your Foreign Currency Non Resident Indian account. It means you can not open FCNR fixed deposit from all your NRO fund until you have interest earned which is more than the minimum amount required in a particular currency e.g. most of the banks including, ICICI, YES Bank, DBS, HDFC put a minimum threshold of 1000 USD


3. Transfer of funds from NRO to NRE account is subject to payment of applicable taxes. Only if the taxes are clear you can move funds, which means you need to inform your bank in advance for documents, which can show that you have paid the tax. We will see about those documents in the next section.

4. You can transfer almost all the funds from an NRO account if the source of funds in the NRO account is transferable/ repatriable e.g. if the fund was initially transferred from an NRE account or deposited as a foreign currency traveler's cheque, or they are the result of an NRE fixed deposit or bond getting matured, initially opened using money from Non Resident External, NRE account.




Document Requirements for Transfer of Funds from NRO to NRE

Since interest earned on NRO accounts attract tax, while interest earned on the NRE account is tax-free, it's important to pay tax before moving funds from NRO to the NRE account, you need to submit certain documents. 

In order to transfer funds from NRO to NRE account, Non-resident Indians or NRI need to submit Form 15CA (online application form) and Form 15CB (Chartered Accountant Application) to the bank branch.

It's good to know that now it's possible for NRIs to transfer funds from NRO to NRE account subject to certain restrictions, as mentioned above. You can use this facility at your convenience, I would suggest reading and understanding your bank's policy or giving a call to your relationship manager to understand it better, especially if you are thinking to transfer a large amount from NRO to the NRE account. 

Can I transfer money from NRO to NRE, FCNR accounts


By the way, it's always best to keep your foreign income on the NRE account only, as it doesn't attract tax and is fully repatriable.

Other Articles about NRE accounts you may find useful:
How to reduce the tax on NRO fixed deposits using DTAA?
How to open an NRE account online from abroad?
What is the difference between NRE and NRI bank accounts?
How to send money Overseas from the NRE bank account?
10 ways to fund your NRI banking account?
10 benefits of NRE bank account and fixed deposits
Can you deposit INR on the NRE bank account?
Is it mandatory to declare your foreign bank assets while filing income tax returns in India

Thanks for reading this article so far. If you like this article then please share this post with your friends and colleagues. If you have any questions or feedback then please drop a note.

P. S. - If you are looking to send money abroad consider TransferWise. It’s a great tool for sending and receiving money internationally with low fees — much cheaper than using your local bank. You can also get your own local bank account details in Europe, the UK, the US, Australia, and New Zealand with the TransferWise Borderless account

23 comments:

  1. To my friends sending money to HDFC a/c in India, don’t miss this news… Xoom now has INSTANT Deposits to HDFC Bank accounts in India. That’s great yaar, my mother usually has to wait for 4/5 days. I am thrilled with this news. Not only that.....Now Xoom is giving $50 Amazon.com Gift Card, when you send a transfer of $150 or more to India with Xoom. I would say register today and make the best of it. It’s probably a limited time offer.
    http://xoom.io/in-slick-50

    I also found the press release but it does not mention the offer.

    http://ir.xoom.com/releasedetail.cfm?ReleaseID=836399

    ReplyDelete
    Replies
    1. I recently started using Xoom and it has worked great for me, super quick and easy. Also, thank you for sharing this offer, I tried it and it worked :)

      Delete
  2. I have NRO account where my savings earned in India are held. Now I have moved abroad and would like to transfer all the funds to foreign accounts (less than 1M dollar). Is it allowed since the source of this NRO funds was not NRE/FCNR or foreign exchange. It was actually earned in INR.

    ReplyDelete
    Replies
    1. Yes this is very much possible.
      You can mail me on omesh.dwivedi@kotak.com
      Or call me at 9620513733

      Delete
  3. My Father passed away have a flat Value $60.00 Lakhs and we are 3 brothers 2in India, I am USA Citizen
    Question : My share of RS20.00 Lakhs will be deposited in NRO account per my brother.
    Question : What is procedure to Transfer funds to NRE account ? or Wire Transfer to USA New York account ?

    ReplyDelete
    Replies
    1. Hell @Anonymous, you can check my post about online repatriation from NRE account in India for exact steps.

      Though, you need to first pay taxes after that only you can transfer funds from NRO account.

      Delete
  4. When I came to US , I didnt open NRE/NRO account for 1.5 Years, For my Friend marriage I transferred many for him from my Savings account, Now I opened NRE/NRO account , If he transfer to my NRO will that considered as a new income?Because the original source was earned in onsite.

    ReplyDelete
    Replies
    1. Hello @Anonymous, yes, when your friend will transfer money then it would be considered as gift, but gift from friends are taxable unlike relatives e.g. parents or spouse.

      Delete
  5. I have indian rupees as a resident and i am canadian/us citizen can i transfer this money into NRE rupees account. Presently I am filling incometax return for this money

    ReplyDelete
  6. As per CBDT notification, NO 93/2015 dated 16th December 2015 effective from 01.04.2016 FORM 15CA and or 15CB is not required for specified 33 purposes in the CBDT notification. However, some banks are asking for FORM 15CA and 15CB due to having improper knowledge.

    ReplyDelete
    Replies
    1. As per rule 37 BB, NO NEED TO SUBMIT FORM 15CA AND 15CB UNDER THE LIBERILISED REMITTANCE SCHEME. RBI NEVER PRESCRIBE ANY STANDING INSTRUCTIONS TO THE AUTHORISED BANKS. BANK HAS THE RIGHT TO VERIFY THE VERACITY OF THE CUSTOMER CREDIDIBILITY.

      Delete
  7. hi, i have around 30 lacs inr in nro deposit and all money came from nre account, now i wanted to convert back to nre is is possible ?

    rakesh

    ReplyDelete
    Replies
    1. Possible, as you can transfer from NRO to NRE account, but you need to pay taxes on that, even though it initially came from NRE account. That's why it's better to use NRE when your source of income is overseas.

      Delete
  8. my hdfc bank told me open NRO account and NRE account. now the NRE account has only 10000rs NRO account has 1600000rs. i sold my house i am getting over 90lakhs witch account i should put it to transfer to USA. because i live in USA past 50 years .this house is given by my mother.

    ReplyDelete
  9. Hello @Unknonwn, you need to transfer that money from NRO, pay the tax and then you can transfer to your USA account. NRO Accounts allows upto 1 million USD per financial year transfer to overseas.

    ReplyDelete
  10. My HDFC bank converted my current account which has money earned in India into NRO account. The money I earned in the account was my salary earned in India and I already paid taxes for the same before I moved to USA .
    Now I have both NRE and NRO account and I want to transfer the money from NRO account to NRE. Do I still need to pay taxes again?

    ReplyDelete
    Replies
    1. If you can show the proof then I don't think you need to pay tax again. What does your bank says? they will ask for some form of proof definitely.

      Delete
    2. Do I need to show proof for the money I earned after paying income tax as it was my salary account when i worked for the company in India. Do you know what kind of Proof I will have to show? I have IT return of the last 3 year before I left India .

      Delete
  11. i think as per the notification no issued by CBDT in Dec 2015 , Form 15 CA and Form 15 CB
    will not be required for transfer of funds from NRO S B account to NRE S B account when
    the nature of payment fall under family maintenance ,savings etc and this will be
    wef April 1, 2016. Please confirm.

    ReplyDelete
  12. Hi Javin, I have NRE account in India. For a small consultancy work abroad, a client is willing to pay me in euros. Are there source of fund implication for this money received into my NRE account as its not taxed abroad?

    ReplyDelete
    Replies
    1. Since you are an Indian citizen, your global income will be taxed in India. This income will add into your total income for this financial year.

      Delete
  13. Hi,

    I was working in India earlier and held my savings account and did investments in shares and mutual funds through my demat account linked with it. Now have moved out of India and have opened an NRE account to send my savings - as my main purpose is to repatriate funds out of India again when I need it. However how do I access my funds lying in domestic account and demat account for repatriation when needed? Am yet to convert my domestic account to NRO account. Can anyone help me on this please?

    ReplyDelete
    Replies
    1. Hello Mini, first convert your resident account to NRO account, you also need to open another Demat account and then liquidate your shares, money will go to the NRO Account and then you can repatriate after paying taxes

      Delete