Can I Withdraw Money From NRE Account in India?

A Non-Resident External (NRE) account is a bank account in India specifically designed for Non-Resident Indians (NRIs) to deposit their foreign earnings. These accounts are denominated in Indian Rupees (INR), meaning any foreign currency deposited is converted to INR at the prevailing exchange rate. The primary purpose of an NRE account is to allow NRIs to manage expenses and investments in India using their overseas income, with the added benefit of full repatriability of funds.

Methods for Withdrawing Funds

NRIs can withdraw money from their NRE accounts in India using an NRE debit card at any ATM across India. Funds are debited from the NRE account’s balance, providing quick access to Indian Rupees.

For larger cash withdrawals, visiting a bank branch is an option. Account holders can request withdrawals by presenting identification documents, such as a passport, and using a cheque or withdrawal slip. Online and mobile banking platforms also facilitate transfers from an NRE account to other domestic Indian accounts. These digital transfers can be initiated to beneficiaries within India.

For transferring funds back to an overseas bank account, international wire transfers are commonly used. This process involves instructing the Indian bank to convert the INR balance into the desired foreign currency and send it to the NRI’s account in their country of residence. Many banks offer online portals for initiating such outward remittances.

Key Considerations for NRE Withdrawals

Funds held in an NRE account are fully repatriable, meaning both the principal amount and the interest earned can be transferred back to the NRI’s foreign country without any upper limit or restriction by Indian regulations. While the account is maintained in Indian Rupees, any international transfers will involve converting the funds to the desired foreign currency at the prevailing exchange rate. This conversion rate can fluctuate, impacting the final amount received in foreign currency.

While the Reserve Bank of India (RBI) does not impose specific repatriation limits for NRE accounts, individual banks may set daily ATM withdrawal limits, typically ranging from INR 10,000 to INR 100,000. For substantial cash withdrawals from branches or large international transfers, banks might require prior notice. Banks may also require specific documentation for large transactions to comply with regulatory guidelines, such as updating Know Your Customer (KYC) information.

For international remittances, banks may request forms like Form A2. While NRE funds are freely repatriable, banks might also inquire about the purpose of large remittances for their internal records or regulatory reporting requirements, though this generally does not restrict the withdrawal itself.

Taxability of Withdrawn Funds

Both the principal amount and the interest earned from an NRE account are exempt from income tax in India. This tax exemption applies specifically to the Indian tax jurisdiction.

However, while funds from an NRE account are tax-exempt in India, they may be subject to income tax or other taxes in their country of residence. For instance, if an NRI resides in the United States, interest earned on an NRE account, though tax-free in India, is taxable in the U.S. for tax residents. It is advisable to consult a local tax advisor in the country of residence to understand specific tax obligations.

Many countries, including India and the U.S., have Double Taxation Avoidance Agreements (DTAAs). These agreements aim to prevent income from being taxed twice, but they primarily apply to income earned and not necessarily to the principal amount of an NRE account being repatriated. Once funds are withdrawn from the NRE account and transferred to the NRI’s country of residence, they become subject to that country’s tax laws, particularly any interest income.