NRE vs NRO Account – Which One Do You Need for Property Transactions?

One of the most common areas of confusion for NRIs selling, buying, or renting property in India is whether to use an NRE (Non-Resident External) account or an NRO (Non-Resident Ordinary) account.

If you are an NRI dealing with property in Hyderabad, choosing the right account type is crucial for tax compliance, FEMA regulations, and smooth fund transfers abroad. Let’s break it down.

What is an NRE Account?

• An NRE account is used to park your foreign earnings in India.

• Money deposited in NRE accounts must come from abroad (not India).

• Funds are freely repatriable (you can transfer them back abroad anytime).

• Interest earned is tax-free in India.

👉 Best for: NRIs who want to bring their foreign earnings into India for investments or expenses.

What is an NRO Account?

• An NRO account is used to manage income earned in India — like rent, property sale proceeds, dividends, or pension.

• Funds deposited here are taxable in India.

• Repatriation is allowed, but only up to USD 1 million per financial year (with proper CA certification and Form 15CB/15CA).

• Interest earned is subject to 30% TDS.

👉 Best for: NRIs managing property-related income in India.

NRE vs NRO – Key Differences for Property Owners

Feature	NRE Account	NRO Account
Source of Funds	Foreign income only	Indian income (rent, property sale, etc.)
Repatriation	Fully repatriable	Limited to $1M/year
Tax on Interest	Exempt	30% TDS
Purpose	Investments, remittances	Property sale, rent, local income

Property Transactions – Which Account Should You Use?

1. Buying Property in Hyderabad:

   • Use NRE account (foreign income) OR NRO if using Indian income.

2. Selling Property in Hyderabad:

   • Funds must be deposited into an NRO account.

   • Repatriation abroad allowed after paying capital gains tax + submitting Form 15CB.

3. Rental Income:

   • Rent must be deposited into an NRO account.

   • Tax deducted at source (TDS) before credit.

Case Study – NRI in the US

Mr. Arjun, an NRI in California, sold his flat in Madhapur, Hyderabad for ₹2 crore.

• Proceeds were deposited into his NRO account.

• CA issued Form 15CB, and he filed Form 15CA.

• ₹1 crore was repatriated to his US account within FEMA limits.

FAQs – NRE vs NRO Accounts

1. Can I deposit property sale proceeds in an NRE account?No, property sale proceeds must go to an NRO account.

2. Can I transfer funds from NRO to NRE?Yes, up to USD 1 million per year after tax compliance.

3. Is rental income taxable in NRE?Rental income cannot go into NRE — it must be credited to NRO.

4. Which account is better overall?Both are required — NRE for foreign earnings, NRO for property-related income.

Why Choose Kaptain Group?

• ✅ Expert guidance on NRI property transactions & repatriation.

• ✅ Assistance with Form 15CB/15CA.

• ✅ End-to-end tax compliance and RBI approvals.

• ✅ Peace of mind for property owners in Hyderabad.

Final Thoughts

If you’re an NRI dealing with property in Hyderabad, remember:

• NRE = Foreign income.

• NRO = Indian income.

Confusing them can lead to tax problems, delays, or FEMA violations. At Kaptain Group, we make sure your transactions are compliant, smooth, and stress-free.

👉 Contact us today to know whether you need an NRE or NRO account for your Hyderabad property.