NRE vs NRO FD TDS rules: Tax rate for NRIs, PAN rules, DTAA benefit and repatriation limit

Non-Resident External (NRE) and Non-Resident Ordinary (NRO) are popular fixed deposit (FD) options for Non-Resident Indians (NRIs) looking for stable returns from their investments. However, the tax treatment is different for NRE and NRO fixed deposits.

While interest earned on an NRE fixed deposit is exempt from tax in India, interest earned on an NRO fixed deposit is taxable and banks deduct Tax Deducted at Source (TDS). NRIs can, however, claim a lower TDS rate under the Double Taxation Avoidance Agreement (DTAA), if they meet the required conditions.