Archive · 19 Jul 2026
Tax Treatment of NRE Deposits for NRIs
A parent in India gave ₹5 lakh to their NRI child.
This gift is not taxed for either the parent or the child.
The child moved the money to an NRE account and invested it in a fixed deposit.
The interest earned in the NRE account is tax-free for the child.
However, any interest earned before the money is moved from the NRO account to the NRE account is taxable.
The parent can gift up to $250,000 per year under the Liberalized Remittance Scheme, and the child can remit up to $1 million per year from their NRO account.
Money in the NRE account can be freely sent overseas.
Gifts from parents to children are tax-exempt under Indian tax laws.
Interest earned in an NRE account is tax-free for non-residents under FEMA.
Interest earned in an NRO account is taxable under applicable provisions.
Parents can gift up to $250,000 per financial year under the Liberalized Remittance Scheme.
Non-residents can remit up to $1 million per fiscal year from their NRO account.
- Who
- A resident parent gifting money to an NRI child
- What
- Tax treatment of NRE deposits and gift transactions
- When
- At the time of gifting and earning interest
- Where
- India, involving NRO and NRE accounts
- Why
- To understand tax implications and repatriation rules
- Gift Amount
- ₹ 5 lakh
- Gift Tax Liability
- Exempt for both giver and receiver
- NRE Account Interest Taxability
- Exempt for non-residents under FEMA
- NRO Account Interest Taxability
- Taxable under applicable provisions
- Liberalized Remittance Scheme Limit
- $250,000 per financial year for residents
- Annual Remittance Limit for Non-Residents
- $1 million per fiscal year
- NRE Account Repatriability
- Fully repatriable without restrictions