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 fixed deposits & 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 fixed deposit.

NRE FD after return to India

Must Read – Why NRIs Returning to India?

NRE Fixed Deposit

As an NRI, you can invest your money in fixed deposits in NRO, Non-Resident External, 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 NRE FD Rates of some banks –

Type of FD in Bank

(Sum less than  Rs. 5 crores)

NRE Fixed deposit Rate or NRO FDs Interest Rate on  FCNR FDs (US Dollars)
1 year FD in ICICI Bank 3.75% per annum 0.50% per annum
1 year FD in HDFC Bank 3.75% per annum 0.01% per annum
1 year FD in SBI 3% per annum 0.70% per annum

Check – NRE Vs NRO Accounts – Everything You Must Know

It is good to park money in FCNR fixed deposits & NRE fixed deposit accounts –

  • Interest earned on NRE FD tax-free in India. (can be taxed in the country of residency)
  • The 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 fixed deposit can’t be open in joint name with an Indian resident, even if that person is a direct family member.
  • There is a repatriation option on investment through Non-Resident External 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 FD and FCNR FDs can be opened with funds received abroad as well.

As an NRI, you can make use of NRO FD 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 fixed deposit account if you want to mainly park funds from foreign countries and want the money to be fully repatriable.

NRE Fixed Deposit

Read – Best Investment for NRI in India

NRE FD account after return to India

Let us look at the status of these NRE 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 Fixed deposit 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.
  • Non-Resident External 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 the 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 an 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 a 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 a scenario except for some income, the 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 a 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 the long term you can either remit the RFC balance abroad or transfer the fund from your RFC into a Non-Resident External 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

Few more points:

  • NRI after becoming a resident in India can also create a separate tax profile like HUF and take a 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 Tax Saver Fixed Deposit there is monthly and quarterly payout option is available but there is no partial and premature withdrawal is allowed.

As an NRI, let us know your experience if you ever asked your banker – NRE Fixed deposit account 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.

Published on December 3, 2021

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". 

    • Hi Kuldeeo,
      Yes, NRIs can hold stocks that are gifted to them by Indian resident parents. The RBI allows NRIs to receive gifts in the form of shares and securities from Indian residents.

    • Hi Anil,

      The interest earned on funds in your NRO account is considered income in India and is subject to income tax as per the applicable income tax slab rates. If you are eligible and choose to avail of the benefits of DTAA, the tax rate might be lower based on the terms of the agreement.

  • Good morning sir,I have been working in kuwait since 2001. During Mar 2019 I came to India for the treatment of aged parents. I returned to kuwait during feb 2020 to renew my residency. I returned to India after renewing my residency in the same month. Due to the pandemic (covid 19) I couldn’t return back to Kuwait. Meantime my residency expired. Kuwait govt stopped issuing of new visa. During September 2022 I received a new visa from my company and started working.Meantime my company couldn’t get any new projects, hence they requested me to stay in India till they get a new project. Now I keep traveling to Kuwait once in 6 months to keep my residency live. I have a valid residency till Sep 2025.I have kept my earnings in NRE fixed deposit and keep renewing the same till today. My question is… Should I file the income tax return for the interests earning through my NRE FDs.Please note that I don’t have any other income in India. Please clarify sir

    • Hi Natarajan,
      You are not required to file an income tax return in India solely for the interest income earned through your NRE FDs. While the interest earned on NRE FDs is tax-free in India, you should also consider the tax laws in your country of residence.

    • Hi Natarajan,

      Interest earned on NRE FDs is generally tax-free in India. Since you don’t have any other income in India, and the interest from NRE FDs is tax-exempt for NRIs, you might not have a tax liability in India.

    • Hey Saurabh,
      You can continue to hold and maintain the NRE fixed deposits. NRE accounts are designed to provide tax-free interest income to NRIs, and this benefit is extended to returning Indians as well.

    • Hi Saurabh,

      If you are a returning Indian and your NRI status changes to Resident Indian status, The interest earned on NRE FDs will be added to your total income and taxed at the applicable income tax slab rates for resident Indians. It will be treated as a part of your regular taxable income.

  • I just got an info from toni that there is TDS on NRO FD’s. Is there any way i can avoid thst TDS because interest earned wouldnt cross exemptions limit

  • I have a FD in bank of baroda and I want to break the FD and need the funds into my Indian account or the repatriation of funds by breaking the FD into my kuwait bank account.And I cannot travel to India at this moment and I need funds into Indian bank account or here in Kuwait bank account.please help me in the process to know

    • Hi Anil,

      Interest earned on NRE Fixed Deposit is exempt from tax in India but there is TDS applicable on interest earned on NRO Fixed deposit.

  • Hi I have an fcnr certificate here in uk in pound sterling but due date has expired 29.5.18. I want to repatriate all the fund to uk and close the account. It is with bank of Baroda in Gujarat. I contact the branch in Manchester uk but they said they cannot help with what forms I need to fill. Could you advice ?

    • Hello Ramesh,

      To repatriate the funds from your FCNR (Foreign Currency Non-Resident) account to the UK and close the account, you will need to follow the process outlined by Bank of Baroda. Here are the steps you can take:
      a) Contact Bank of Baroda’s FCNR department in India to initiate the repatriation process. They will guide you through the necessary steps and documentation required.
      b) You will need to fill out the Form A2, which is used for remittances abroad. This form is available on the RBI website, and you can also obtain it from Bank of Baroda.
      c) You will also need to provide a self-attested copy of your passport and FCNR certificate, along with a letter of authorization authorizing Bank of Baroda to remit the funds on your behalf.
      d) Once the documentation is complete, you will need to submit it to Bank of Baroda’s FCNR department in India, along with the FCNR certificate.
      e) Once Bank of Baroda receives the documentation and verifies the details, they will initiate the repatriation process and transfer the funds to your UK bank account. The time it takes for the funds to be credited to your account will depend on the processing times of the banks involved.

  • I am NRI and have returned to india April 22nd. Should I change all my existing NRE, NRO FD’s or can keep it for 3 years or till maturity

    • As an NRI who has returned to India, you have the option to continue holding your existing NRE, NRO and FDs until maturity or until the completion of their respective tenures.
      However, as per RBI regulations, upon your return to India, your NRE account will be re-designated as a Resident Rupee account or a RFC (Resident Foreign Currency) account. The interest earned on your NRE FDs will be taxed in India and subject to TDS at the applicable rates. Similarly, the interest earned on your NRO FDs will also be taxable in India.
      Alternatively, you may choose to prematurely withdraw your NRE and NRO FDs and reinvest them in Resident FDs or other investment options that offer better returns and tax benefits for Indian residents.

  • Hi, Do we need to issue an Authority letter attested by the Indian Mission in Canada, authorizing my brother-in-law, to submit the death claim, a Fixed Deposit, for which my husband is the nominee, the same to be transferred from Canara Bank to HDFC.Can the documents be couriered to the Banks directly?Thanks and regards

    • Hello Matlida
      Yes, if you want to authorize your brother-in-law to submit a death claim and transfer a fixed deposit from Canara Bank to HDFC on your behalf, you would need to issue an authority letter to that effect.
      for sending the documents to the banks, it is generally acceptable to courier the documents directly to the banks.

  • Being nri for over 25 years, when returning back to India, if I get indemnity from my service abroad, should invest in resident or nri account as it’s income earned out of India

    • Hello Gopi Lata
      any income earned outside India, including the indemnity from your service abroad, will be considered as income earned outside India and will be subject to taxation as per the relevant tax laws.
      Regarding investment, you can choose to invest in either a Resident or NRI account, depending on your current residential status.
      It is advisable to consult a tax expert or financial advisor to understand the tax implications and choose the investment option that best suits your financial goals and residency status.

  • To which account the fd which will be matured in future will be credited, after changing the NRE account to resident

    • Hello Uday
      If you change your NRE account to a resident account, any future maturity proceeds of your fixed deposits (FD) will be credited to your resident account.
      Once you become a resident of India, you are no longer eligible to hold an NRE account. Therefore, it is necessary to convert your NRE account to a resident account within a reasonable time after your return to India.

    • Hello Jagadeesh
      As an NRI (Non-Resident Indian), you may be required to file your tax returns in India if you have any taxable income in India or if you have earned income outside India that is subject to Indian taxation.
      It is advisable to consult a tax expert or a financial advisor for any specific queries or for a better understanding of the tax laws and procedures in India.

    • Hello kamala
      If you want to close your NRE (Non-Resident External) term deposit after maturity and convert it to a domestic term deposit, you can follow these steps:
      1.Contact your bank
      2.Provide necessary documents
      3.Fill out the necessary forms
      4.Complete the formalities
      5.Recieve proceeds
      It is advisable to consult your bank or a financial advisor for more information on the conversion process and any tax implications associated with the conversion.

    • Hi Vijay,

      Yes, an Resident but Not Ordinarily Resident (RNOR) individual can apply for a new Foreign Currency Non-Residential (FCNR) fixed deposit after their Non-Residential External (NRE) fixed deposit matures, as long as their RNOR status is still active.

    • Hi Jignesh,

      An NRI (Non-Residential Indian) can keep their foreign currency in India for future use, such as for higher education. One option for doing this is to open an NRE (Non-Residential External) account, which allows NRIs to hold foreign currency in India and earn tax-free interest. Another option is to open a Foreign Currency Non-Residential (FCNR) account, which offers a fixed deposit in foreign currency and provides a guaranteed rate of return for a specified period of time. Both NRE and FCNR accounts have different features, so it is recommended to compare and consider these options before making a decision.

  • I am uae nri. Since my only income from india was aound 2.5 to 3 lakh interest on whi h bank was cutting tds, there was no more taxable income. .i didnot file it returns sins 2017_18.now i came to know that even nil return are needed to be filed. What can i do now

    • Hi Sangita,
      It is advisable to consult a tax professional to ensure that your returns are filed timely & correctly and to avoid any errors or mistakes that could result in a penalty or interest.

  • A tax free fixed deposit was created in INR in an NRE account(axis bank) by a person staying abroad. Then the person relocated back to India and updated the linked savings bank account to resident account, but bank said the FD can continue to be NRO and therefore no tax to be paid on the accrued FD interest. One of the CAs mentioned that this is fine under section 115F/H of income tax act, but another CA is saying tax needs to be paid.

    • Hi Pari,

      It’s possible for different Chartered Accountants to have different opinions on tax laws and regulations. As per the Income Tax Act of India, Section 115F states that NRE (Non-Residential External) deposits are exempt from tax in India, while Section 115H provides for tax exemptions for non-residents on foreign income. However, the applicability of these sections depends on the individual’s tax residency status and other factors.

      In this case, it’s recommended to consult with a tax expert to understand the specific tax implications of the situation and ensure compliance with applicable tax laws. The individual should also clarify the bank’s stance on the matter, as the bank may have its own interpretation of the tax laws and regulations that apply in this situation.

  • If I return back to India Say Jan 2, 2023, Do I have to become resident from the day 1 or I have the option to become resident within six months ( I can stay six months as a resident) or after 5 months, I can go out of India for a month and become resident after I am back ?

    • Hi Dev Fol

      As per the Income Tax Act of India, an individual’s tax residency status is determined based on their physical presence in India during a financial year (April 1 to March 31). If an individual is present in India for more than 182 days in a financial year, they are considered a resident for that financial year.

      In your case, if you returned to India on January 2, 2023, you would be considered a resident for the financial year 2022-2023 if you remain in India for more than 182 days between April 1, 2022 and March 31, 2023. Whether you can go out of India for a month and still be considered a resident would depend on the specific details of your stay, including the duration and purpose of your absence from India.

      It is recommended to consult with a tax expert to understand the specific implications of your residency status for tax purposes and ensure compliance with applicable tax laws.

    • Hi Nikhil,

      There are several ways to transfer money from India to the United States:

      Bank wire transfer: You can initiate a bank wire transfer from your Indian bank account to a US bank account. This is typically a fast and secure way to transfer funds, but it may also be expensive due to fees charged by the banks.

      Online money transfer services: Companies such as Xoom, TransferWise, and Remitly offer online money transfer services that allow you to transfer money from India to the US. These services may be more cost-effective compared to bank wire transfers.

      Forex card: You can purchase a forex card in India, loaded with US dollars, and then use it to withdraw cash or make purchases in the US.

      Checks or drafts: You can send a check or draft drawn on an Indian bank to a recipient in the US, who can then deposit it in their US bank account.

      Before making a transfer, it’s important to compare the exchange rates, fees, and processing time of different options to determine which one is the most suitable for your needs. Additionally, it’s advisable to check if any government regulations or restrictions apply to your specific transfer.

    • Hi Kavish,
      As per my knowledge, there is no such penalty but According to FEMA, it is illegal to have NRI Accounts When you became Resident.

    • NRE and FCNR fixed deposit accounts can be converted to Resident Foreign Currency (RFC) accounts after maturity.
      Since the status will be RNOR interest will be tax free.

  • I am planning to return to India for good in April 2023. my NRE FD will mature only in Oct 2023. when I become RNOR can I renew my NRE FD into RNOR FD? so that I can have the tax benefits of the interest paid for the FD?

    • NRE and FCNR fixed deposit accounts can be converted to Resident Foreign Currency (RFC) accounts after maturity.
      Since the status will be RNOR interest will be tax free.

  • I have been working at Indonesia since 2010. I returned to india in April,2021 for field break and could not return to Indonesia due to carona. Mean time i turned 60 years and decided to stay in India. But my work permit is valid upto March-2022. My company send exit permit from Indonesia dated 22nd April.My question is:When i have to close my NRE a/c here.Bank manager told me that i lose full interest if FRD’s closed in middle.Whats the time frame before which i have to close my FDR and convert or cancell my NRE a/c

    • NRE and FCNR fixed deposit accounts can be converted to Resident Foreign Currency (RFC) accounts after maturity.
      Since the status will be RNOR interest will be tax free.

  • Returning nri is holding resident savings account (converted upon coming to India ) He has Nre Fd continued upon coming back to India. Interest for which is credited to resident bank savings account. Is this interest on nre fd taxable as it is received in resident savings account.

  • I returned to India in June…my NRE FDs are maturing in october 2022 and may 2023….i have been NRI for the last 10 FY….is interest earned on NRE FDs taxable…when should i inform bank(S) of change in resident status….should it be RNOR or resident

  • Can I have informative sheet on RNOR status which spells out about interest exemption on NRE term deposits, please advise, I am RNOR from this year

  • we came back to India 6 month backbut our Fd matures in 2023We have not yet informed bank about our return..whether tax is deductable

  • I am a non resident and is planning to return to India. I will be a RNOR in FY 2023-24. I have a NRE fixed deposit I made for 50Lacs in De 2018 maturing in December 2023 and maturity value will be 73lacs. Assuming I will be RNOR, what will be my tax liability if there is any? Will I be taxed on the full 23 Lacs interest or only proportion of interest from April 23 to December 23, or there wont be any tax liability at all?

  • is tds applicable on fds converted from nri to resident account in january 2022 before 3 monarths end of financial ye

  • Once NRI returns to India the NRE FD interest becomes taxable. Is it taxable for the whole previous year during RNOR status or the taxability starts from the 182nd day when you lose NRI status?

    • Hi Sridhar,
      You cannot maintain your NRE account and NRE FDs when you are an RNOR. You need to convert your NRE account to a resident account immediately upon returning to India. The interest earned from NRE FD is not taxable, however after it is converted to a Resident FD the earned interest is taxed as per your income tax slab. TDS will be deducted if applicable.

    • Hi Sreenath
      Tax applicable on NRO FD is quite high at 30% along with applicable surcharge and cess. In case the interest earned is over Rs. 10 lakhs, then an additional surcharge of 10% will be added.

  • I have Nre account in India.now I plan to go to India on maternity leave. I plan to take 1.5 years maternity leave. What will happen to my Nre account. Can I repatriate amount from same Nre account in future

    • Hi Seen,
      If you reside in India for more than 182 days in India then you will be considered as Resident Indian. Then you have to convert your nre account into a resident account.

  • If one is employed in USA and has lived in india during employment for more than 200 days then does he need to pay tax india for salary earned during this period

    • NRE FD 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. Non-Resident External and FCNR fixed deposit accounts can be converted to Resident Foreign Currency (RFC) accounts after maturity.

  • Hi,
    I hold NRE savings and FD accounts with HDFC bank, tenure of FD is 4years, at present 2 and half is completed.I want to know once my stauts is changed to Resident, whatever interest I earned on FD on maturity is taxable/only proportionate interest earned since my stauts chaged to till maturity period is taxable.
    Thank you.

  • I am UK citizen. I have Mutual Funds Investments in India.They have my PAN card number, but I am getting message that PAN has be linked to Aadhar card.What should be my response.

  • I am NRE holder for the past 7 years from July 2012 to Nov 2019. I returned India End of Nov 2019. I coudnt go back to Overseas Countries because of Covid. Iam staying in India still now. I have some NRE FD. my Interset income on term deposit is 215000 Rs Annum. Do I need to File Tax return.

  • Hi,
    I hold NRE savings and FD accounts with HDFC bank. After returning to India I visited the bank to change my NRE account to domestic.
    Bank told me that FD account also has to be closed prematurely with NRE account and no interest will be paid on FD.
    Could you advice if there any clause to defend bank to keep FD account open till maturity?
    Thank you.

    • Hii Sujit Ji
      As per my knowledge Non-Resident External and FCNR fixed deposit accounts can be converted to Resident Foreign Currency (RFC) accounts after maturity.

    • Hii Mr. Vinod
      As per my knowledge, interest income earned from your FCNR deposits shall be exempt from tax till you hold Non-resident Indian status or Resident and Not Ordinarily Resident (RNOR) status as per the provisions of Income Tax Act, 1961.
      It is suitable to take advice from a tax consultant.

      • Thanks for the reply
        Will the principal amount taxed after maturity, and in which account the principal amount will be transferred?

      • Further to your reply, after status change from NRI to Resident, interest on the NRE FD for the whole FY will be taxable or only the interest from the date of return to India will be taxed..?

  • I have NRE FD in federal bank and sbi and it was for eight to ten years with 7 to 7.5% interest and if I return to India next will I need to break the fd and convert to residents fd or it can be continued at the same interest rate till maturity

  • I have NRE FD deposits. Once I’m back to India & closing the NRE account, what happens to FD deposits. Still will it continue? if so, on maturity where the amount will be transferred? Do I have to give Indian Saving account details?

    • Hi Dinesh,
      You can continue your NRE FD till maturity and once you come back to India, you should inform your bank regarding residency status.

  • I need to know something I have been in an overseas job and was having an NRE account. Now, my job is over and I am back to India. My question is, for how long can I keep my NRE account as it is?

    • Hi Srikant

      As per law, you need to change it as soon as possible and there is no prescribed timeline attached with that.

  • I hold senior citizen saving deposits in post office and banks.when I generated the deposit I was a resident of India. But now I had to declare myself as NRI as I am stuck in Australia because of movie for the past 15 months. Now my question is will the interest I am getting will remain the same till deposit reaches maturity date?

    • Hi Venkata

      As per my knowledge, the interest will remain the same and will continue till maturity but you can’t extend the same.

  • i have some equity share holding, which i purchased long before become nri, but after that no transaction on that demat. some small dividend comes from that. please let me know if it is required to declare in ITR?

  • I have worked in GCC for 10 years..so if i move and work in india for 2 or 3 years do my Fixed deposits in NRE ACCOUNT will be taxable? if yes then again if i move back whther the same fixed deposit can be converted back to NRE Fixed deposit eithout much cost implications?

  • i was outside India for 3 years and returned 1 month back. i have FDs in INR in NRE account. How to go about it ?

      • How to you manage the taxes to be paid on NRE FD once you return to India if you hold them till maturity?
        Do you ask bank for interest certificate and include that in your taxable income?

  • I am an OCI having NRE FDs in India. If I return to India, how long can I retain the FDs in NRE status? or do I have to convert to a Resident account? I am a foreign national having OCI status.

  • What will happen to my existing FD if I change my status to a normal from NRIWhat will happen to my existing FD if I change my status to a normal from NRI

    What will happen to my existing FD if I change my status to a normal from NRI

  • If after returning to India, he has not informed immediately, but after two years he is telling, he is in India for two years,then what Bank generally do?

  • I have 5-acre agricultural land and want to buy a path for that land at present I am an Australian citizen what I have to do.

  • Nre returns to India for good. His FCNR can be retained as FCNR for how long. is it compulsory for it to be converted to resident account on maturity.

  • I used to live in India and left India in the year 2009. I forgot to change my bank account from a resident account to a non-resident account.

      • Is there a penalty for holding on to this account for so long? And, I would like to convert the funds into US dollars. What account will help in facilitating this? Appreciate your help!

  • I was abroad from Jan 2009 to Aug 2019. Three times came to India for around 1-month duration each during this period. Recently came to India 31st Aug 2019 evening. All my income from abroad was kept in NRE A/c and NRE FD ( in INR). Kindly advise taxation on interests for NRE Ac. From which date income tax will be paid as resident Indian?

  • I was abroad from Jan 2009 to Aug 2019. Three times came to India for around 1-month duration each during this period. Recently came to India on 31st Aug, 2019 evening. All my income from abroad kept in NRE A/c and NRE FD ( in INR). Kindly advise on taxation on interests for NRE Ac. From which date income tax will be paid as resident Indian? Regards

    • Hi Debasis Das,
      As when the status changes from NRI to Resident. Income earned from the NRE Ac will be taxable.

  • Thanks a lot for your article. It is an area of great confusion with banks. I wanted to confirm if I understood it correctly – I had opened long term NRE FD’s when I was overseas. If I understood correctly all these FD’s remain tax-free till the maturity date of 5yrs/10yrs even if I have returned to India after 4yrs and am employed in India?

    • Dear NA,
      As per my knowledge,
      After the status changes NRI to RI, the FD will be taxable for the maturity value.

      • FD will be taxable for the maturity amount means ?
        That if it was 5years FD and I was overseas for 4years- they will still charge taxes on entire interest at time of maturity after 5years?
        Or only for the 5th year when I was resident Indian?

  • I returned to India last July 20 end after 5 yrs work outside. NRE FD interest will be taxable from the date of the return or for the whole FY 20-21.

  • After near 5 year job abroad, i returned to India by end July 20, for the FY 20-21(AY 21-22), my status ROR. Bank informed that my NRE FDs can continue as such till maturity, they have no such provision to designate as Resident FDs. They can close NRE FDs and rebook as resident FDs , which will cause loss of interest etc. the only option therefore is to just continue NRE FDs and pay tax on interest earned.
    1. Kindly advice whether this is permissible or not..?
    2. Please also clarify whether interest on NRE FDs for the whole FY 20-21 would be taxable or
    I need to pay tax only on interest earned from the date of return to India ie ( July end),
    Appreciate your advice

    • Hi Ramachandra,
      As per my knowledge,
      1- You can continue your FDs till maturity.
      2- Interest earned on the FDs will be taxable.

      • Hi Shreya,
        Thank you so much for the reply, truly appreciate.
        kindly also advise whether the NRE FD interest from the date of return to India or for the whole FY will be taxable.
        Best Regards

      • So it means you can hold your NRE FD till it’s maturity to get old interest rates, however the interest will be taxable from date of return to India ?
        Or will the interest be non-taxable till the FD maturity?
        Please confirm

  • I’m having NRE FD, once I return back to India ( lost NRI status). Will the FD amount ( principal amount ) taxable?

  • I am currently an NRI, holding FD. Soon will move back to India (FD will not be matured then). Will interest earned be taxable?

  • If somebody acquires RNOR status his NRE .will be converted to domestic but whether NRE FDs will continue as NRE FDs till maturity?

  • I become RNOR from 1 st April 2020 till 31 st march 2022
    When my NRE deposit mature within RNOR period , can i renew it as NRE deposit , becuase i still have tax benefit until 31 st march 2022

  • Hello,
    I need some guidance.
    I returned to India in December 2017. I have and NRE account with NRE FD valid till 2024. I receive interest on a monthly basis. Till now my income was much below the tax limit so I did not pay much attention however this FY 2020-2021 I made a lot of profit in stocks and crypto and I will be paying tax. Now I am wondering if I have to pay any tax on my NRE FD interest or I can let it continue till 2024. Kindly help me out with this please. Thank you.

    • Hi Abhinav

      If you are holding RNOR status you can hold it till maturity. Also you have to convert your account to RFC account then your NRE FD will be tax free.

  • I and my wife are Canadian citizens with OCI cards. At present we are stuck in India due to Covid 19. We will go back to Canada after the Covid situation is stabilized. After some time we are planning to return to India and spend only a few months in Canada each year. As we may stay over 180 days in India we have to pay tax here and we will pay as per Indian Tax rules for the interest earned on our NRE FDs. Please advise , What will be the status of our NRE deposits/Accounts after our return as a foreign Citizen with OCI card holder and staying over 180 days in India?

  • In your NRE FD article it was stated that “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 “As the Rupees interest rate on FD is usually more than RFC FD rates, does it mean that even after conversion to RFC one will get NRE rupees FD rate?

  • After NRI Returns and becomes RNOR whether interest on NRE deposits is exempt or not? as per SBI format, only FCNR and RFC are mentioned.

  • I have US Dollar deposits which I deposited in SBI when I was working in the Gulf. Now that I have returned to India about 6 years ago and retired and If I want to continue the hold the deposits in US Dollars – is it allowed?

  • Hemant
    Thanks for the very informative article.
    I propose to return to India, either in 2021 or 22; we are still evaluating.
    I have been asking my RM from different banks & while they say that the NRE deposits can continue till matui=rity, they have not been able to convincingly clarify whether it will be taxable or not while I am RNOR. I gather from your article that NRE & FCNR deposits will be non taxable. Which is the section(s) that cover this?
    PS: Ranandeb Sarkar’s reply below seems to contradict your article (if i have not mis-understood) Could you clarify?

  • Please tell me If I Have an Account in Union bank and make some FD for one year but unfortunately I need that money before one year. Can I break the FD or not?

  • Hello, would like to check if one of the friends after retirement has to return to India, they have sent their gratuity funds to NRE account, can they do fix deposits for what time period, kindly advise.

  • Sir, I have returned to India after 20years work in Gulf. I understand I am considered as RNOR for 3 years. How to proceed to RNOR category sir?

  • My and wife are NRIs from the UK. We are UK citizens with OCI Status. Spend 6 months each year in Bangalore. Have NRI accounts but no income in India. Should we have to file ITR?

  • I have nre fd with bank. Now i am resident indian. Bank says your nre fd will be converted to resident fd and tds will be deducted. Is it correct ?

    • Hi Meena,

      As per my Knowledge, you need not to convert your FD to resident FD, you can continue it till it’s maturity however the interest earned on it would be taxable.

  • I have an NRE joint account with my daughter. If I return to India, and my daughter continues to be NRI, will the account still be NRE?

    • Hi Ancy,

      If you are the first holder of account and you return to india then you have to convert this NRE account to Resident.

  • Is there any change in RBI rules regarding the continuity of NRE FDs after becoming a resident till the deposits gets matured? Because, today my bank (City Union Bank) said that the deposits can not continue after 15th November 2020. Please clarify.

    • Hi Ramakrishna,

      As per my Knowledge, there have no changes as such, a person can continue the FD till it’s maturity however when the person becomes resident the interest is taxable on that FD.

  • I stayed in US from April 2017 and returned to India only this year in Feb 18 2020, my questions are :1. What is my residential status for AY 2020-2021(FY 2019-2020) 2. What part of the interest from my NRE fixed deposit is taxable? I.e., do I need to pay tax for the interest earned between 1-apr-2019 to 31-mar-2020 or only the part of the interest earned after my return?

    • Hi Lalith,

      for the FY 2019-2020 you will be considered NRI. And you can hold your NRE FD till maturity.you don’t need to pay tax on this.

  • Hai sir

    Can u please clarify the below query?

    A) From Jan 2009 to 2019 April 9th I was abroad in a No Tax country.
    B) Last 07 years (2011-2019) I was approx 300 days in India on holidays in total.
    C) I came back to India for a short assignment on April 9, 2019, to join a job in the Indian company and worked till Nov 2019. ( IT was deducted on salary paid to me)
    D) I returned back abroad on Jan 1st, 2020 in the same financial year. (267 days stay in India in 2019)
    I have some NRE FD in Banks with Monthly Interest payout option,( interest was credited into NRE account only)

    Some FD have matured during the stay in India and the amount was credited into the NRE account
    1) Will I have to pay tax on interest earned on FD which matured during my stay in India.
    2) What about the tax to be paid for the same period of 267 days for FD which are not matured and still continuing with monthly interest payout.
    3) Will the 07 years (point B) give me tax exemption for all the interest earned on FD?
    4) All my NRE accounts are not converted as Banks advised not to if I am returning abroad in the same Financial year.(point D)

    Thanks in advance and appreciate the support

    • Hi Priya,

      as per my knowledge, it cannot be done, you will have to close the NRO FD and start a new NRE FD from an NRE account.

  • What will be the status of NRE FD if one loses a job and gets back to India and what will be the tax-free amount. Also, I m NRI for the last 22years.

  • My daughter returned to India and just now joined the yoga program for seven months.Is it necessary to redesignate her NRE account immediately or can we do it after seven months

    • Hi Shyam,
      As per my knowledge you are supposed to inform the bank about the change of residency status as soon as you return back to India.

  • I am an NRE currently…if I make an FD NRE today for 10 years on return to India permanently say after 5 years. What will be the staus of the NRE FD?

  • I am NRI since past 18 years working in the Middle East. Due to the Pandemic my company have given me a 5-6 months break to return to India and join back when situation improves. I have NRE fixed deposits with SBI. My overseas visa is valid until 2022. Do I need to change my NRI status for these 6 months and transfer NRE fds to ordinary taxable fds?

    • Hi Mohanan,

      As per my knowledge, After return to India NRE FD interest is not taxable till you are holding RNOR status. If you are having RNOR status then interest is not taxable till the time you can hold this status.

  • I am a RNOR, (Australian citizen), I have an NRE account jointly with my daughter living in London,hers is the first name with me and wife as joint account holder, is she liable to pay tax on interest earned?

  • Last year i cam to india Sep’2019 but due to covid i unable to return, I am searching jobs now in ME. How my investment here will be treated.

    • Hi Akashay,

      In my opinion, you need to inform the respective bank regarding your change of residential status after returning to India.

  • Hi,

    I am NRI living in Sweden since July 2015. My question is:

    In case I return back to India (permanently) anytime between April 2021 to Sept 2021, then my stay in India will be more than 182days for FY 21-22. In this case, should I be paying taxes in India for the earnings I made in Sweden between 1st April 2021 to the date I landed in India?

  • Hi,
    Is there a difference in taxation if i create 5 year NRI FD with quarterly payout or cumulative payout on maturity? Specially let’s say if I come back to India after 3 years. In case of quarterly the interest paid to me will be in past financial years but for cumulative I’ll be paid total amount at the end. So do i have to pay tax on whole 5 years interest in case of cumulative FD if my status is resident at that time?

  • I an an indian citizen returned back from uae 1 year ago. I have deposits in US dollars. Upon maturity how can i bring the money into India?

  • I am in UAE. I am planning to return to India next year October. I will be returning in October 2021 so that I will be less than 182 days in FY2021-22. I have NRE RD which will mature in 2024 September. When will I become resident? Is it required to premature break my NRE FD when I become resident?

  • Require Clarifications:
    After working abroad have retired and have no other plans to work further. But I have US B1 visa and plans to tour different parts of the world. My questions,
    1. Can I continue to maintain NRI status based on the prevailing definition of staying away for more than 182 days.
    2. Based on above my existing NRI bank accounts can be continued as NRI. If so, how can I submit my KYC documentation

    • Dear Hareesh,
      NRI definition of FEMA is different from Income Tax. We are not CA but my understanding is for your bank account & investment you will be NRI – for the tax you have to check your taxable income in India & 120 days may also apply.
      My suggestion is you should have a word with CA.

  • Hello Mr. Beniwal, I have recently asked my bank to change my status from NRI to Resident up on my return to India. I have few NRE FD’s in the bank which were opened @9.25%. I was promised by the bank employees that all the FD’s will remain as it is including the rate of interest. Most of the FD’s have been converted to same rate however, four of my FD’s with original rate of interest of 9.25 have been converted to 8.5%. Please let me know how can I get it sorted out?

  • Hi, Please let me know upon which Act/RBI/FEMA guideline you had come a conclusion that a NRE FD can continue till its maturity ? As per my understanding an NRI has to intimate his residential change to the banker, and the banker has to convert his NRE FDs to normal FDs. Please clarify with supporting regulation.

  • I am NRI and have fd of 3 years in my nri account. Should i create fd which pay quarterly interest in my savings account or cumulative? I want to know tax implications if i become resident indian before fd matuarity in both cases?

  • i have NRI deposit for 10 years and getting maturity by 2 years. But I am moving to india from GCC in September. Can I continue as NRE deposits?

      • Thanks. But the question is

        1. Will the FD continue as NRI deposit till the maturity even though I am not NRI

        2. Do I have to pay tax on Interest income earned for remaining per period.


  • i am planning to resign and come back to india by december. my leave salary and retirement money may credit to my indian account by february only. is that amount is taxable?

  • I want to know if i invest in FCNR account as fixed deposit for three years period with Indusind Bank will it be safe?

  • Suppose a NRI goes back to India and he has some fixed deposits which are going to be matured after 10 years. If the total interest earned from those deposits are subject to tax ? If yes then from which year onwards the income becomes taxable ?

    • Hi Sandeep,

      As per my knowledge, interest income will be exempt until the time you will be RNOR after that it will be taxed. RNOR status can be hold for 2-3 years.

    • Hi Sally,

      As per my knowledge, If you have any Indian income then you need to pay tax immediately after returning to India but for some foreign income, you may get relaxation till the time you hold RNOR status.

  • Hi Saeed here staying in Saudi Arabia I have opened account in HDFC NRE/NRO both with out Adhaar & PAN card now I am getting mails to provide it.., need your valued advice can I will be able to withdraw my money with out this both cards.. Regards

  • My Bank manager says” NRE FCNR FD will continue, but NRE Rupee FD will get converted as resident FD when you convert your NR account to resident account”

  • If a nri who has stayed abroad for 25+ years, returns to india but has FCNR deposit maturing 2 years hence. Then is the interest on FCNR deposit taxable ?

    • Dear Mr Deepak,

      He file as RNOR & can continue to enjoy tax free status of his FCNR for 3 financial year or maturity, whichever is earlier.

      Hope this clarifies.


  • sir,
    i want to know one lady age 70 had dual citizen india & USA now last two or two&half years she is in india she can do NRE tax free fix deposit in india .

  • if nri having saving & fixed deposit a/c in the capacity of resident, only interest income is only below Rs.50,000/- filling ITR regularly as resident status. what to do in future filling for the A.Y.2020-21,Please reply.

  • I returned in India from UAE last year in June and still havent converted NRE FD into either RFC a/c or normal resident FD, as per the thought process i feel its better to withdraw NRE FD and invest in safe options and then notify the Bank to convert NRE savings a/c to a normal resident a/c…what do you suggest

    • Hi,
      Ideally, You are supposed to Inform your bank about your change of status immediately. I would suggest you do the same to avoid any penalties.

  • Hii I want to ask that if Indian person working in Dubai for the last 8 years and have nri account .. and that money he wants to do as a fixed deposit what will be the terms and conditions. That fd amount and interest earned is taxable? After maturity? If a person returns back to India.

    • Hey Dipika,
      Interest income will be tax-exempt in India if you qualify as a person resident outside India. You can continue them as it until maturity when you return in India.

  • I have US Dollars FD and I have returned to India 4 years ago. I want to maintain the FD in US Dollars. How can I do it? Please advice.

  • I have been an NRI for the past 20 years. I came back last March, ie March 2020. I have various NRE FDs and FCNR deposits. Do I have to convert the status of these FDs to RFC accounts? Will I be exempt from tax on the interest earned in these accounts during the next 2 years?

  • The Interest rates mentioned for FCNR USD accounts are that accurate? it is mentioned ICIC pays 3.66/annum on FCNR USD accounts

    • Hi Bala,
      I think you will get relevant information from the bank regarding this. As per my knowledge, a person who lives more than 180 days in India is not considered as an NRI.

  • Hello Hemant,
    I will return back to India after 15 years working in the gulf. Due to Covid I might return in October. As a NRI status I’ve fixed deposits in NRE account bank which gets matured next year or in 2022. Do i need to inform the bank immediately to change the status. Will my NRE account continue till 2022. Will I get Interest free on the deposits. Do i have to file for Income Tax next year. Or Do I have to change to any other status to save the taxes. Thanks in advance!

  • I am kumar .nre.singapore. i have sbi nre account. Nextmonth cancel my nre after i get some amount. Ex..500k.just transfer to account. After in india can i change to nre fd ? If cannot .any tax for 500k amount?

    • Hey Samuthiram,
      As you returned in India you are required to designate the NRE account as resident and the interest income earned on the same will be taxable in India.

  • If my visa cancelled after staying in a foreign country for 14 years, what should I do my NRE account in India. How to convert as RNOR account and avail tax exempt of interest earned from NRE account?

  • How long can we wait to inform the bank of your NRI status as it could be I might go back to a foreign country?

  • 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

    • Hi Michael,
      It depends on your requirement if taxation is the only issue CA is the right person. If you are looking for complete financial solution – you can consult a financial planner.

    • 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

  • 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.

  • 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.

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

  • 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.