NRE and NRO accounts explained: what changes when you move to the UAE

NRE and NRO compared

The two accounts side by side: [1][2][3][4]

FCNR(B) is a fixed deposit held in a foreign currency rather than rupees, open to NRIs and PIOs. It follows the same deposit and withdrawal rules as NRE. [1]

Should I keep money in NRO or NRE?

They hold different money, and the rules decide which goes where:

• Money you earn abroad, such as UAE salary, belongs in NRE. It stays freely sendable abroad, and its interest is tax-free in India.
• Money that arises in India, such as rent from an Indian property, Indian dividends or a pension, is normally paid into NRO. It can also be credited to NRE once the tax on it has been paid, if your bank is satisfied that it is current income.

Since June 2026, the RBI rules state that money can be moved from NRO to NRE within the same USD 1 million yearly limit. [1]

Tax on interest

• NRE interest is exempt from Indian income tax. The exemption depends on being a "person resident outside India" under Indian foreign exchange law (FEMA), not on tax residence. [3][4]
• NRO interest is taxable in India, and tax is deducted before it's paid, at the rates set each year by the Finance Act. For a non-resident Indian, the Finance Act 2026 as passed sets 20% on "investment income" (income from certain Indian assets bought with foreign currency) and 30% on other income, plus surcharge and cess. [4][5]
• The India–UAE tax treaty caps Indian tax on interest paid to a UAE resident at 12.5%. To claim it, you need a UAE tax residency certificate and India's Form 41 (formerly Form 10F). [6][7][8]

Sending money from NRO to the UAE

You can send up to USD 1 million each financial year (April to March) from NRO balances, once the tax is paid. Transfers from NRO to NRE count towards the same limit. Your bank will ask for the remitter's form and, in some cases, an accountant's certificate. Under the Income-tax Rules 2026, these are Forms 145 and 146 (formerly 15CA and 15CB). [1][2][8]

When accounts must change

• When you move abroad: tell your bank. Your resident account must be redesignated as an NRO account. [1][2]
• When you return to India to live: NRE accounts must be redesignated as resident accounts, or moved to a resident foreign currency account, on your return. NRO accounts are redesignated when you return to stay. [1][2]
• Once you are resident and ordinarily resident again, your UAE bank accounts and other foreign assets must be reported in Schedule FA of your Indian tax return. [9]

FEMA residence is a separate test from tax residence. Someone who leaves India to take up a job or run a business abroad is non-resident under FEMA from the time they leave, without waiting for the 182-day count. [10] Your Indian tax status after moving →

How Marlborough Gulf helps

What we do:

• We plan the UAE side of your move: residency, the UAE company where you need one, and the UAE tax residency certificate behind treaty claims.
• We coordinate it with your Indian position.

What others do:

• Your Indian bank handles account redesignation.
• An Indian chartered accountant advises on your Indian tax.

Questions people ask

What does NRE account mean?

A non-resident external account: a rupee account for money earned outside India. It can be sent back abroad freely, and its interest is tax-free in India. [1][3]

Can I withdraw money from an NRE account?

Yes. Balances can be used in India or sent abroad. NRE balances are fully repatriable, so the USD 1 million yearly limit for NRO does not apply. [1][2]

Should I transfer to NRO or NRE?

Income earned in India is normally paid to NRO. Money earned abroad belongs in NRE. Since June 2026, transfers from NRO to NRE are allowed within the USD 1 million limit. [1]

How much can I send abroad from an NRO account?

Up to USD 1 million per financial year from the balance, after tax, with the forms your bank requires. [1][2][8]

This guide is general information about Indian rules, not advice on your position. Take advice from a qualified Indian chartered accountant.

Related guides

• Your Indian tax status after moving to the UAE
• Moving money from India: FEMA and the LRS limit
• Relocating to the Gulf

Sources

1. RBI, Master Direction – Deposits and Accounts (FED MD No. 14/2015-16), updated 2 Sep 2026, paras 4.1–4.12, 5, 6.1–6.14 (the NRO to NRE transfer was inserted by Notification FEMA 5(R)(6)/2026-RB, 18 Jun 2026). https://www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=10198
2. RBI, Accounts in India by Non-residents (FAQ), 16 Jan 2025. https://www.rbi.org.in/commonman/english/scripts/FAQs.aspx?Id=3
3. Income Tax Department, Non Resident FAQs, Q23–Q24, updated 28 Oct 2026. https://www.incometax.gov.in/iec/foportal/help/all-topics/e-filing-services/non%20resident%20-faq
4. Income-tax Act 2025, Schedule IV item 1, s.212 and s.393(2) Table row 17, Gazette of India, 21 Aug 2025. https://egazette.gov.in/WriteReadData/2025/265620.pdf
5. The Finance Act, 2026 (No. 4 of 2026), as passed, section 3(7) and 3(16) and First Schedule Part II, item 1(b)(i)(A) and (O), Gazette of India, 30 Mar 2026. https://egazette.gov.in/WriteReadData/2026/271439.pdf
6. India–UAE tax treaty, synthesised text, Article 11, Income Tax Department. https://www.incometaxindia.gov.in/w/uae-synthesised-text-1
7. Income-tax Rules 2026, Rule 75 (Form 41), Income Tax Department. https://www.incometaxindia.gov.in/w/rule-75-3
8. Income Tax Department, FAQs and Guidance Notes on Forms as per Income-tax Rules, 2026 (table of new and old form numbers: 41 was 10F, 145 was 15CA, 146 was 15CB), updated 26 Oct 2026. https://www.incometaxindia.gov.in/w/faqs-on-forms-as-per-income-tax-rules-2026-1
9. Income Tax Department, "Step-by-Step Guide to Fill FSI, TR, and FA Schedule in ITR", March 2026. https://www.incometax.gov.in/iec/foportal/sites/default/files/2026-03/Step%20by%20Step%20Guide%20FA%20FSI.pdf
10. RBI, Liberalised Remittance Scheme FAQ, footnote 1 (FEMA s.2(v), "person resident in India"), updated 6 Apr 2023. https://rbi.org.in/Scripts/FAQView.aspx?Id=115