An NRE account holds foreign income you send to India, in rupees — fully repatriable and tax-free in India. An NRO account holds income earned inside India, is taxable there, and caps repatriation at US$1 million per financial year. An FCNR account holds your money in a foreign currency such as GBP or USD — tax-free, fully repatriable, and with no rupee-conversion risk. Which one you need depends on where the money comes from and whether you want to avoid currency risk.
If you are a UK-based NRI sending money to India, this choice affects your tax, your access to the funds, and how much rupee movement you are exposed to. Here is how the three accounts differ and when each one fits.
What is an NRE account?
An NRE (Non-Resident External) account is a rupee account for money earned outside India. Funds you transfer from the UK into an NRE account are converted to rupees on arrival, and both the principal and the interest can be sent back out of India freely. The interest earned is tax-free in India.
The trade-off is currency risk: because the balance is held in rupees, its value in pounds rises and falls with the GBP/INR rate. If the rupee weakens, your balance is worth fewer pounds when you convert it back. Our GBP/INR forecast tracks that rate.
What is an NRO account?
An NRO (Non-Resident Ordinary) account is a rupee account for income earned within India — rent, dividends, a pension, or the proceeds of an Indian asset. Money sent from abroad can also be received into it, but it is designed for domestic income.
Two features set it apart. The interest is taxable in India, with tax deducted at source, and repatriation out of the account is capped at up to US$1 million per financial year, with documentation. For anyone whose main aim is to move money in and out of India easily, that cap is the key limitation.
What is an FCNR account?
An FCNR (Foreign Currency Non-Resident) account is a fixed deposit held in a foreign currency — GBP, USD, EUR and others — rather than in rupees. Because the deposit stays in the original currency, there is no rupee-conversion risk on the principal.
Like an NRE account, the interest is tax-free in India and both principal and interest are fully repatriable. FCNR deposits are term deposits, typically held for one to five years. This makes them well suited to an NRI who wants to hold savings in India, in pounds or dollars, without exposure to rupee movements.
NRE vs NRO vs FCNR: the comparison
| Feature | NRE | NRO | FCNR |
|---|---|---|---|
| Held in | Indian rupees | Indian rupees | Foreign currency (GBP, USD, etc.) |
| Source of money | Foreign income | Income earned in India | Foreign income (fixed deposit) |
| Interest taxed in India? | No — tax-free | Yes — TDS applies | No — tax-free |
| Repatriation | Fully repatriable | Up to US$1m per financial year | Fully repatriable |
| Rupee-conversion risk | Yes | Yes | No |
| Best for | Sending foreign income to India | Managing India-sourced income | Holding foreign-currency savings in India |
NRE vs NRO vs FCNR at a glance. Rules are set under FEMA by the Reserve Bank of India; individual tax circumstances vary.
Which account should receive money you send from the UK?
For money you earn in the UK and send to family or into savings in India, an NRE account is usually the simplest choice: the funds are tax-free on the interest and can be moved back out without a cap. If you specifically want to avoid rupee movement — for example, holding a lump sum in pounds while you decide what to do with it — an FCNR deposit does that job. An NRO account is mainly for money that arises inside India, and its US$1 million repatriation cap makes it less convenient for funds you may want to bring back.
The account type does not change how you move the money, only where it lands. For the transfer itself, our guide on sending money to India from the UK covers the cheapest methods and the process, and businesses paying into India can see paying Indian suppliers from the UK.
How the rupee rate affects your choice
Because NRE and NRO balances are held in rupees, the pound value of that money moves with the GBP/INR rate. On a large transfer, the rate on the day you convert can matter more than any account feature. If you are sending a significant sum, it is worth watching the pound to rupee exchange rate and considering whether to fix it in advance. An FCNR deposit sidesteps this by keeping the money in your original currency.
Frequently asked questions
What is the main difference between NRE and NRO accounts?
An NRE account is for foreign income, is tax-free in India and fully repatriable. An NRO account is for income earned in India, is taxable there, and limits repatriation to up to US$1 million per financial year. Most money sent from the UK goes into an NRE account.
Is money in an NRE account taxable in India?
No. Interest earned on an NRE account is tax-free in India, and the balance is fully repatriable. Tax may still apply in your country of residence, so a qualified tax professional should be consulted for your circumstances.
What is the advantage of an FCNR account?
An FCNR account holds your deposit in a foreign currency such as pounds or dollars, so there is no rupee-conversion risk on the principal. The interest is tax-free in India and both principal and interest are fully repatriable. It is a fixed deposit, usually held for one to five years.
Can I send money from the UK into an NRO account?
Yes, money from abroad can be received into an NRO account, but the account is designed for India-sourced income and its interest is taxable in India. For foreign income you plan to move again, an NRE account is generally more convenient.
How much money can be repatriated from an NRO account?
Up to US$1 million per financial year, with the required documentation, under FEMA rules set by the Reserve Bank of India. NRE and FCNR accounts have no such cap.
Speak to a specialist
If you are sending a large sum to India and want the transfer itself handled well — with a tight margin and the option to fix the rate — talk to a Cambridge Currencies specialist about your India transfer. Every deal is completed by phone with a dedicated dealer.
By Anthony Bull, Cambridge Currencies. Last updated 1 August 2026.
Sources: Reserve Bank of India (FEMA rules governing NRE, NRO and FCNR accounts and repatriation limits). Account rules are durable; individual tax treatment varies and is not covered here. This article provides general information, not personal financial or tax guidance. Cambridge Currencies operates under FCA-authorised partners.
