You can transfer money from an NRE to an NRO account freely, in any amount, at any time, with no RBI approval required. The transfer itself is not a taxable event, so the principal moves across untouched. What changes is the tax treatment of the interest that money earns afterward: interest in an NRE account is exempt from Indian income tax, while interest in an NRO account is taxable and your bank will deduct TDS at source. That single shift is the real cost of the transfer, and it’s where most NRIs lose money they didn’t have to.
Is the Transfer Allowed, and Are There Limits
Yes. Under the Foreign Exchange Management Act, 1999, funds in an NRE account are classified as fully repatriable because they entered India through legitimate foreign exchange channels.1India Code. The Foreign Exchange Management Act, 1999 Moving those funds into an NRO account is treated as an internal reclassification rather than a restricted transaction. No ceiling applies. No RBI permission is needed. You can transfer five lakh or five crore, and the mechanics are the same.
The direction matters, though. Moving money back the other way, from NRO to NRE, is capped at one million USD per financial year and requires a chartered accountant’s certificate along with tax clearance documentation.2Ministry of External Affairs, Government of India. Remittance Facilities for Non-Resident Indians So think of the NRE-to-NRO transfer as a one-way valve: easy in, harder out. If there’s any chance you’ll want the funds sent abroad again, keeping them in the NRE account preserves that flexibility.
What the Transfer Costs You in Tax
The principal is not taxed. The amount you move does not become income simply because it changed account types.
What you give up is the interest exemption. Interest earned on an NRE account is entirely exempt from Indian income tax under Section 10(4)(ii) of the Income Tax Act, 1961, as long as you hold non-resident status. Once those rupees sit in an NRO account, any interest they generate becomes taxable in India. Under the Finance Act 2025, the base TDS rate on NRO interest income for non-residents is 20 percent, with a 4 percent health and education cess applied on top.
The practical effect: a sizeable NRE fixed deposit earning tax-free interest can see its net yield drop noticeably after transfer. The interest rate difference between NRE and NRO deposits is often small, so the tax exemption is what you’re really surrendering. If you only need NRO funds for a specific expense, move just that amount rather than the full NRE balance.
How to Lower the TDS Using a Tax Treaty
India has Double Taxation Avoidance Agreements with dozens of countries, and these treaties can reduce the TDS rate on NRO interest below the 20 percent domestic rate. The India-US treaty, for example, generally caps withholding on interest at 15 percent. Similar treaties cover the UK, Canada, Australia, and most other jurisdictions with large NRI populations.
To get the lower rate, submit two documents to your Indian bank before the interest is credited:
- A Tax Residency Certificate issued by the tax authority of the country where you live. US residents request this from the IRS.
- Form 10F, a self-declaration filed with the bank that includes your foreign tax identification number and confirms treaty eligibility.
Banks will not apply the treaty rate on their own. Skip the paperwork and the full 20 percent applies, leaving you to claim a refund by filing an Indian tax return, which takes months. Without a PAN, it’s worse: TDS jumps to 20 percent under Section 206AA regardless of any treaty, so having a PAN is effectively mandatory for NRIs earning NRO interest.
How to Actually Move the Money
Most banks let you initiate the transfer through their internet banking portal, usually under a section labeled “NRI Services” or “Funds Transfer.” Select the NRE account as the source, the NRO account as the destination, enter the amount, and provide a purpose code. For movements between your own accounts, banks typically use code P0000 or a similar local-payments designation to satisfy FEMA reporting. Expect a second authentication step, generally an OTP to your registered phone or email.
If both accounts sit with the same bank, the transfer is usually instantaneous. Interbank transfers via NEFT or RTGS can take 24 to 48 business hours to clear, and you’ll need the destination account’s IFSC code. After the transfer posts, save the confirmation receipt. It’s your proof of the fund source if you later use the NRO balance for a property purchase or need to document the origin during a tax assessment.
Prefer to do it offline? You can submit a transfer request form at a branch, or a representative holding a valid power of attorney can do it for you. The bank verifies signatures and balance availability before processing.
Joint Accounts With a Resident Relative
If your NRE account is held jointly with a resident Indian relative, the resident can only operate the account as a power of attorney holder during your lifetime and cannot independently initiate transfers or withdrawals.3Reserve Bank of India. Accounts in India by Non-residents The definition of “relative” follows the Companies Act, 2013. The NRI account holder needs to authorize any NRE-to-NRO transfer from a joint account; a spouse or parent in India cannot simply move the funds on their behalf without proper documentation.
If You’re Planning to Return to India Soon
Once you return permanently and your residential status changes under FEMA, you can no longer operate NRE or NRO accounts in their current form. You’ll need to convert the NRE account to a regular resident savings account or transfer the balance into a Resident Foreign Currency (RFC) account, and RBI rules require you to do this after your status changes.4Reserve Bank of India. Foreign Currency Accounts by Resident Individuals Notify your bank promptly.
This matters for the transfer decision. If you’re heading back soon, routing money through an NRO account first means losing the tax-free interest along the way. Keeping the balance in the NRE account and converting directly to a resident or RFC account when you return usually works out better. The RFC option is especially worth considering if you might move abroad again, since it holds the balance in foreign currency and allows use for any permissible current or capital account transaction.
A Note for NRIs Based in the United States
Moving money between your NRE and NRO accounts doesn’t change your US reporting obligations, because both accounts were already reportable foreign accounts under FBAR and FATCA. What does change is where the interest income shows up: NRO interest appears on Indian tax documents (Form 16A) with TDS already withheld, and you’ll claim a foreign tax credit on your US return to avoid being taxed on the same interest twice. If your combined foreign account balances have ever crossed $10,000 in a calendar year, an FBAR filing is due regardless of the transfer.5Internal Revenue Service. Report of Foreign Bank and Financial Accounts (FBAR)