NRI Finance Glossary

This glossary explains the most common banking, tax, and remittance terms used by non-resident Indians (NRIs). From NRE and NRO accounts to FEMA regulations and DTAA tax treaties, each definition is written in plain English for everyday use.

Banking Terms

NRE Account (Non-Resident External) — A rupee-denominated bank account held in India by an NRI, funded with foreign currency. Interest is tax-free in India and balances are fully repatriable.

NRO Account (Non-Resident Ordinary) — A rupee account for managing income earned in India (rent, dividends, pension). Interest is taxable in India at 30% TDS. Repatriation is subject to a USD 1 million annual limit.

FCNR Account (Foreign Currency Non-Resident) — A term deposit held in a foreign currency (USD, GBP, EUR etc.) in an Indian bank. Protects against rupee depreciation and interest is tax-free in India.

Tax Terms

TDS (Tax Deducted at Source) — Tax withheld automatically by Indian banks or payers before crediting interest or income. NRO account interest attracts 30% TDS plus surcharge.

DTAA (Double Taxation Avoidance Agreement) — A treaty between India and another country that prevents the same income from being taxed twice. NRIs can claim DTAA benefits to reduce or eliminate Indian TDS on certain income types.

FEMA (Foreign Exchange Management Act) — Indian law that governs all foreign exchange transactions, NRI account types, property purchase rules, and repatriation of funds.

Remittance Terms

Mid-Market Rate — The midpoint between the buy and sell price in currency markets. This is the real exchange rate. Banks and remittance providers add a margin on top when exchanging money for customers.

Spread — The difference between the mid-market rate and the rate offered to customers. A 1.5% spread on a $10,000 transfer costs $150 in hidden fees.