Since the significant announcement by the Reserve Bank of India on May 7, 2012 many NRIs have expressed interest in transferring funds from the Non-Resident Ordinary Account (NRO) to Non-Resident External Account (NRE).

The Reserve Bank of India (RBI) permitted NRO to NRE fund transfer subject to payment of applicable taxes within the overall ceiling of $ 1 million in a financial year.

Transfer of Funds from NRO to NRE: Before 2012…

Prior to 2012, the transfer of funds from NRO to NRE account was not permitted by RBI. The only way to transfer the amount into NRE accounts was through release from abroad or another NRE account.

Transfer of Funds from NRO to NRE: After 2012…

The proclamation by the Reserve Bank of India is plainly good news for NRIs looking forward to transfer their money to NRE accounts, which are repatriable in foreign currencies. This change has helped NRIs to save transaction cost. However, there are certain conditions that have to be met before transferring the amount.

What is NRO and NRE Account?

1. The NRO account is mainly for depositing Indian incomes like dividends, rent or incomes through any investment or sale of property. In case of NRO account both non-resident and resident can become joint account holders.

2. The NRE account is mainly for depositing income from abroad. In case of NRE account, only NRIs can become joint account holders.

Lack of Awareness about transfer of funds from NRO to NRE

A lot of NRIs are using this privilege; still a few NRIs are facing difficulties transferring their funds. This is mainly due to lack of awareness about the process/intricacies. Below are a few conditions every NRI must know about transfer of funds from NRO to NRE.

For Your Knowledge…

  • An NRI can transfer funds from NRO to NRE account only if the amount is within USD 1 million in a financial year. The amount/limit is the maximum.
  •  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
  • The source of funds in the NRO account should be transferable/ repatriable

Document Requirements for Transfer of Funds from NRO to NRE

For transfer of funds from NRO to NRE account, NRIs need to submit Form 15CA (online application form) and form 15CB (Chartered Accountant Application) to the bank branch.

RBI’s 2011 change….

A decreasing value of rupee incited RBI to exempt interest rate on NRE deposits in December 2011. This change has propelled NRIs to save their funds in NRE deposits, as they are tax free and freely repatriable. Here, reparation means you are free to move your money to your overseas account.

Benefits of reparation

It is beneficial for NRIs to repatriate money, since at the time of excess motion (constructively) in the currency you can make money by transferring the amounts to your overseas financial account.

A little on ‘Taxation’ side…

Do you know the difference in the tax treatment for interest earned on an NRE and NRO account? Yes! Both the accounts have different rules. Read on:

  • The interest earned on the NRO account is subject to taxation. The tax percent or amount is subject to holder’s tax bracket
  • The interest earned on the NRE account is free from taxation. The credit balance in the account is free from wealth tax. Also, a gift given to relative does not attract gift tax.


It is now possible for NRIs to transfer funds from NRO to NRE account subject to certain conditions and guidelines mentioned above. In order to avoid financial ambiguities, one must get in touch with a financial expert to clear all the doubts.  Read and understand the conditions carefully before transferring your funds.

(The author is Ramalingam.K an MBA (Finance) and certified financial planner. He is the Director & Chief Financial Planner of holistic investment planners ( a firm that offers Financial Planning and Wealth Management. He Can be reached at

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  1. Arvind says:

    1. How is it established that the fund being transferred from NRO to NRE is Tax paid?.
    2. Who is required to submit For 15 CA & 15 CB? Is 15 CB required to be submitted on paper unlike 15 CA which is ‘on line’?

  2. A L Chaudhary says:

    Changes in the requirement of filling the forms effective from 1st April 2016
     No Form 15CA and 15CB will be required to be furnished by an individual for remittance which do not require RBI approval under its Liberalized Remmittace Scheme (LRS).
     The list of payments of specified nature under Rule 37 BB where submission of Forms 15CA and 15CB is not required has been expanded from 28 to 33.

    In spite of this banks invariably ask for 15CA /15CB . In such situation how to deal with banks.


    Can I transfer the fund from NRO a/c to NRE a/c without CA certificate and on my own declaration and attestation for the maturity amounts of PPP instruments like PPF, Life Insurance etc under RBI guide lines ?

  4. Dr. Som Majumdar says:

    The article is thought-provoking and contains a wealth of information. May I ask a question please/ u/s 90(2) of the Indian Income Tax Act, an NRI can have the option of choosing to be governed either by the provisions of particular DTAA or those of Indian Income Tax Act, whichever is beneficial to NRI. I am an Australian and my country’s tax rules as compared to those of India in respect of my taxable Income is more beneficial. Hence if I choose to be governed by Aust Tax rules, I can transfer my fund from NRO to Australia by giving the undertaking that I will follow Australian Tax rules after the transfer is effected. Thus I can overrule the provisions of submitting documents as stated in the article. Am I correct to understand please/

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