NRE vs NRO Accounts: What Happens to Your Indian Bank Accounts After You Move to Australia

NRE vs NRO vs FCNR at a glance

Three account types are relevant once you become a person resident outside India under FEMA. They are not interchangeable — each is defined by where the money came from, not by what you plan to use it for.

Source: Reserve Bank of India, "Accounts in India by Non-Residents" FAQ, and the Foreign Exchange Management (Deposit) Regulations, 2016 (accessed 25 July 2026).

Two different "non-resident" tests are running at once

Moving to Australia triggers two separate Indian legal questions, governed by two different laws, and they don't always change on the same day.

FEMA residential status governs which bank accounts you're allowed to hold. Under Section 2(v) of FEMA, a person is generally "resident in India" if they've been in India for more than 182 days in the preceding financial year — but the section carries an explicit carve-out for anyone who leaves India, or stays outside India, for the purpose of taking up employment, carrying on business or vocation, or for any other purpose indicating an intention to stay outside India for an uncertain period. Practitioner commentary on FEMA generally reads this carve-out as meaning such a person's FEMA status can change from the point their departure demonstrates that intent, not only after a 182-day count is completed. These commentators describe FEMA as an intention-based test, in contrast to the Income Tax Act's pure day-count approach — and the intention has to be evidenced by facts (an actual departure and actual employment or residence abroad), not merely declared.

Income-tax residential status governs which of your worldwide income India taxes, and follows its own day-count rules under Section 6 of the Income Tax Act, 1961: broadly, you're a resident if you're in India for 182 days or more in a financial year, or for 60 days or more in that year and 365 days or more across the preceding four years (the 60-day limb doesn't apply to an Indian citizen leaving India for employment abroad, who is tested only against the 182-day rule). A separate "deemed resident" rule applies only to Indian citizens with more than ₹15 lakh of India-sourced income who are not liable to tax by residence in any other country — a narrow category unlikely to affect a typical salaried migrant to Australia, which does tax its residents on worldwide income. Because the two tests differ, it's possible to be a non-resident under FEMA while still meeting the Income Tax Act's residency test for part of the same year, or vice versa — the two statuses genuinely don't move in lockstep.

This guide covers the FEMA/banking side. For the income-tax side of moving between the two countries, see our separate guide on the India–Australia double tax agreement.

What FEMA requires you to do with an existing resident account

Once you're a person resident outside India under FEMA, the RBI's own FAQ is explicit: an existing resident savings or current account "should be designated as NRO account." Continuing to operate it as an ordinary resident account is not compliant. Existing resident fixed and recurring deposits are converted the same way, running to their existing maturity date if the bank permits, after which the deposit continues only within the NRO structure.

The penalty exposure for not converting sits in FEMA's general contravention provision (Section 13): a penalty of up to three times the amount involved where that can be quantified, or up to ₹2 lakh where it can't, with a further penalty of up to ₹5,000 per day for a continuing contravention. In practice, most account-conversion oversights are resolved through the RBI's compounding process for a negotiated amount rather than the maximum penalty — but the starting position under the law is that holding an ordinary resident account while non-resident is itself the contravention, independent of whether any of the money in it did anything wrong.

Conversion is done at the bank where the resident account is held: you request re-designation to NRO, and supply updated KYC — overseas address, contact details, and passport/visa or OCI documentation, with a PAN card required. The existing balance carries over into the NRO account; it does not need to be moved or remitted first.

NRE accounts: money you earn or remit from outside India

An NRE account holds Indian Rupees but can only be funded from money earned abroad or transferred from another NRE or FCNR(B) account — it cannot be funded by depositing India-sourced income like rent or dividends. In exchange for that restriction on where the money comes from, both the principal and the interest are fully and freely repatriable, and interest is exempt from Indian income tax under Section 10(4)(ii) of the Income-tax Act while you hold non-resident status. NRE term deposits are commonly offered for tenures of one to three years.

NRO accounts: money that originates in India

An NRO account is the account for money that's already India-sourced, or that you already hold in India when your status changes: rental income from a property you still own, dividends on Indian shareholdings, a pension, or the balance transferred from your former resident savings account. Interest on an NRO account is taxable in India, and banks deduct tax at source at a flat rate — typically 30% plus applicable surcharge and health-and-education cess (around 31.2% once the 4% cess is added, before any surcharge tier applies), regardless of your total income level. A lower rate can be claimed under the India–Australia tax treaty, which caps source-country tax on interest at 15% under Article 11, provided the correct documentation is lodged with the bank. Repatriation out of an NRO account is capped, discussed below.

FCNR(B) accounts: foreign-currency term deposits

An FCNR(B) account holds foreign currency directly — commonly AUD, USD, GBP or EUR — so there's no rupee conversion and no exchange-rate movement on the deposit itself while it's held. Deposits run for a minimum of one year and a maximum of five years. Both principal and interest are fully repatriable, and interest is exempt from Indian income tax while NRI status is maintained. Per the RBI's own FAQ, if your status changes back to resident before an FCNR(B) deposit matures, the deposit can continue until its original maturity date at the interest rate that was contracted at the time you opened it.

What happens to specific existing holdings

PPF (Public Provident Fund). NRIs cannot open a new PPF account — the account-opening declaration under the Public Provident Fund Scheme, 2019 requires you to be a resident citizen of India, and to notify the accounts office if that changes. If you already hold an account from before your status changed, the position applied under the scheme is that you can continue contributing until the account completes its original 15-year term, but you cannot extend it in the 5-year blocks available to resident account holders: the extension form itself requires a declaration that you are still a resident citizen of India when the block begins. At the end of the term the account is closed and the proceeds are credited to an NRO account. The 2019 scheme also permits premature closure on a change in residency status (with passport/visa or tax-return evidence) once the account has run five years, at a 1% reduction in the interest credited. Interest on PPF itself remains tax-exempt in India under Section 10(11) of the Income Tax Act. Separately, the government tightened enforcement from 1 October 2024 for a specific category of accounts: PPF accounts that had been irregularly extended by NRIs because the extension form in use at the time (Form H) didn't ask about residency status. Under the Department of Economic Affairs' 2024 guidelines on regularising irregular small-savings accounts, implemented through India Post's SB Order 05/2024, those accounts earn interest only at the Post Office Savings Account (POSA) rate up to 30 September 2024, and zero interest from that date onward.

Demat accounts and mutual fund folios. Both need the same status update. You're expected to inform the depository participant of the change to NRI status; brokers and depositories don't let a resident demat account keep operating once you're non-resident, and it is converted to, or replaced by, an NRO-linked demat account. Mutual fund folios are converted to NRO folios in a similar exercise across each fund house or via a common change-of-status form; until the conversion is processed, transactions like SIPs and redemptions on the affected folios may be rejected.

Existing fixed deposits. As above, any resident FD open at the time your status changes is re-designated as an NRO FD. Banks generally let it run to its existing maturity date at the originally contracted rate — a matter of each bank's own deposit terms rather than an RBI-mandated rule — after which it rolls over under NRO terms if renewed.

Getting the money to Australia: the USD 1 million limit and Form 15CA/15CB

NRE and FCNR(B) balances carry no repatriation ceiling. NRO balances are different: the RBI permits repatriation of up to USD 1 million (or the equivalent in another freely convertible currency) per financial year, pooling every NRO remittance you make in that year — rental income, dividends, interest, inherited or sale proceeds, and anything else routed through NRO — after payment of any tax due in India. There's no need for separate RBI approval within that ceiling; approval is only required if a specific transaction would take the year's total above it.

Each outward remittance from an NRO account is accompanied by tax paperwork: Form 15CA, a declaration to the Income Tax Department that applicable tax has been accounted for, and — where the remittance is taxable and such payments exceed ₹5 lakh in the financial year — Form 15CB, a certificate from a practising Chartered Accountant confirming the tax position. Banks generally require the applicable forms before processing the transfer. If you're also moving money the other way — sending savings from Australia to India — that's governed by a different regime (India's Liberalised Remittance Scheme applies to outward remittances from India, not to money you bring in), covered in our separate guide on sending money between India and Australia.

The Australian side: once you're an Australian tax resident

Australian tax residency is a separate question from both of the Indian tests above, decided under the Australian Taxation Office's own rules — primarily the "resides" test (whether you live in Australia in the ordinary sense of the word), backed by statutory tests including a 183-day-in-the-income-year test and a domicile test. Once you meet the ATO's definition of an Australian tax resident, Australia generally taxes your worldwide income, which includes interest earned on Indian bank accounts — NRO and, notwithstanding its Indian tax exemption, NRE interest as well, since India's tax exemption on NRE interest doesn't extend to how Australia treats the same income.

Where Indian tax has actually been withheld — most relevantly, TDS on NRO interest — the India–Australia double tax agreement and Australia's own domestic rules generally allow you to claim a foreign income tax offset (FITO) against the equivalent Australian tax on that income, so the same rupee of interest isn't taxed in full twice. Because NRE interest is exempt from Indian tax, there's typically no Indian tax paid on it to offset — it may still be assessable income in Australia even though no Indian tax was withheld on it. The mechanics of claiming the offset, the treaty article numbers, and how this interacts with your overall Australian return are covered in our dedicated guide on the India–Australia double tax agreement for NRIs.

This guide describes the applicable rules as published; it isn't a recommendation to open any particular account type, and it doesn't cover every account holder's circumstances. Account conversion requirements, current interest and TDS rates, and repatriation documentation should be confirmed directly with your bank, a chartered accountant, or the RBI before you act, since rates and thresholds are revised periodically.