NRE vs NRO — which account's interest does India tax?

The two accounts carry different tax personalities. Interest on NRE and FCNR deposits is generally exempt in India for as long as you hold qualifying non-resident status under exchange-control rules. Interest on an NRO account — the home for your Indian earnings like rent, dividends or local interest — is taxable, with tax deducted at source at non-resident rates.

Routing matters: foreign remittances belong in NRE, where the interest stays clean and the funds remain freely repatriable; India-sourced income belongs in NRO, with its own annual repatriation allowance under the prescribed procedure. Treaty relief can soften the tax on NRO interest in your country of residence.

Many NRIs leave money in the wrong account out of habit and quietly overpay. A one-time tidy-up of account routing — plus a return that claims the credits and treaty benefits you're entitled to — is some of the most satisfying low-effort planning we do.