What is the difference between FCNR and NRE?

FCNR stands for foreign currency non-resident, and it is a type of bank account in which an NRI (Non-Resident Indian) can open in an authorized Indian bank. FCNR account funds are freely accessible, and the interest income of this account is not taxable in India.

This account has the capability of power of attorney, and these holders can manage the account in India. NRE stands for Non -Resident External. Funds add interest earned on this account are freely forwarded out of India without permission of the RBI. Funds in this account are preserved in Indian rupees.

Source funds for this account should be earned from local resources; they cannot be credited to this account. Funds in this account can be transferred to any currency. FCNR, funds are permitted to move within any extra cost, and no interest is paid for less than six months.

FCNR or Foreign Currency Non-Resident and NRE or Non-Resident External are two types of bank accounts for non-resident Indians. FCNR accounts allow users to save their foreign funds without any limit. FCNR account can also hold 50 percent of the local amount of such earnings. NRE, on the other hand, cannot be used to save local funds. It means an NRE account will not be credited if someone transfers local earnings into it. All earnings coming into your NRE account must be from abroad. There is no tax on all interests you are getting on your FCNR account. Also, you can repatriate the funds to your FCNR account. The funds in your NRE account can be changed to any currency. In contrast, you can only change the funds in your FCNR account to some selected currencies such as Japanese yen, US Dollar, Euro, Pounds Sterling. However, the interest earned on the two accounts is not taxable in India.

FNCR is known as a Foreign Currency Account. This will allow you to open term deposits. Take note that these are accounts that you can open in India. The FNCR account is something that will protect you from forex rate risks. When you earn some interest in the use of your FNCR account, you can expect that this will be exempted from the usual income tax. An NRO is another account that you can open in India but remember that this is taxable. You will be getting the interest after the taxes are already done. Some people will have both accounts especially those who would need to have a foreign account.