NRE vs NRO Accounts for Indians Moving to Canada

Key takeaways

Under FEMA, you usually stop being resident in India when you leave for a job abroad or to stay for an uncertain period
RBI says your resident savings account should then be designated as an NRO account
NRE: for money earned abroad; fully repatriable; interest exempt from Indian income tax under RBI's direction
NRO: for Indian income and old savings; repatriation up to USD 1 million per financial year after Indian tax
Canada taxes your world income once you are resident, including NRE interest; report foreign property over $100,000 on T1135

When do you become a non-resident under Indian rules?

India's Foreign Exchange Management Act (FEMA) defines a "person resident in India" in section 2(v). It starts with a person who lived in India for more than 182 days in the previous financial year. But it excludes a person who has gone out of India:

to take up employment outside India; or
for any other purpose, in circumstances that show an intention to stay outside India for an uncertain period.

A new permanent resident of Canada usually fits the second case from the day they leave. Someone moving for a job fits the first. Your bank will ask for proof, such as your COPR, PR card or work permit.

FEMA residence is not the same as residence for Indian income tax. The Income-tax Act has its own day-count tests. You can be non-resident under one law and resident under the other in your year of moving. A chartered accountant in India can check your tax status.

NRE, NRO and FCNR(B) compared

These rules are from the Reserve Bank of India (RBI) Master Direction on Deposits and Accounts, updated September 2, 2026.

	NRE (Non-Resident External)	NRO (Non-Resident Ordinary)	FCNR(B)
Currency	Indian rupees	Indian rupees	Foreign currency
What goes in	Money sent from abroad, interest, transfers from other NRE or FCNR(B) accounts	Money from India: old savings, rent, pension, sale proceeds, plus money from abroad	Money sent from abroad
Moving money out of India	Freely repatriable	Current income can be sent abroad; balances up to USD 1 million per financial year, after Indian tax	Freely repatriable
Indian tax on interest	Exempt from income tax (RBI para 4.12)	Taxable in India	Ask your bank
Account types	Savings, current, recurring or fixed deposit	Any form, including fixed deposit	Fixed deposit only
Joint with a resident relative	Yes, "former or survivor"; the resident can operate it only with a power of attorney	Yes, "former or survivor"	Same as NRE

Exchange risk differs. NRE and NRO balances are in rupees, so their value in Canadian dollars moves with the exchange rate. FCNR(B) deposits stay in a foreign currency.

What happens to your resident savings account?

The RBI direction says that when a resident Indian becomes a person resident outside India, "his existing resident account should be designated as NRO account". In practice:

Tell your bank in writing that your status has changed. Give your new address and your Canadian status document.
The bank converts the account to NRO. It updates your KYC (know your customer) records.
Do the same for fixed deposits, demat accounts and mutual funds. Each provider has its own process.
Open an NRE account if you plan to send money from Canada to India, or want rupee savings you can move back freely.

Keeping a resident account after you become non-resident is not allowed under these rules. Ask your bank how long it gives you to convert.

Moving your Indian money to Canada

Before you leave, you are still resident. You can send money abroad under the Liberalised Remittance Scheme (LRS), up to USD 250,000 per financial year. Tax collected at source (TCS) may apply. See how to bring money from India and what changed in TCS after Budget 2026.

After you leave, LRS no longer applies. The RBI Master Direction on Remittance of Assets covers non-resident Indians (NRIs) and persons of Indian origin (PIOs). They can remit up to USD 1,000,000 per financial year. This can come from NRO balances, sale proceeds of assets, and assets inherited in India. Key conditions:

You show documents for the source of the money.
Applicable Indian taxes must be paid. RBI says banks must follow Indian tax law. For years, banks asked for tax Forms 15CA and 15CB; ask your bank which forms apply under the Income-tax Act, 2025, which came into force on April 1, 2026.
For remittances from an NRO account, you give the bank a written undertaking that the money comes from your own funds in India, not from borrowing or from another person's NRO account.
If you send it in instalments, use the same bank (authorised dealer).
More than USD 1 million in a financial year needs RBI approval.

You can also move NRO money to your NRE account, within the same USD 1 million facility.

How Canada taxes your Indian accounts

From the day you become a resident of Canada, the Canada Revenue Agency (CRA) says you report your world income: "income from all sources inside and outside Canada".

NRE interest is exempt from Indian income tax under the RBI direction. But it is still income for Canada. Report it on your Canadian return.
NRO interest is taxed in India and is also income in Canada. You may claim a federal foreign tax credit on Form T2209 for the Indian tax you paid. Our foreign tax credit calculator shows how it works.
Form T1135. If the total cost of your specified foreign property is more than $100,000 (CAD) at any time in the year, you must file Form T1135. The CRA's example counts a foreign bank account as specified foreign property. You do not file it for the year you first become resident. Use the simpler Part A if the total was under $250,000 all year. Check with our T1135 checker.

Report Indian interest in Canadian dollars. The Canada-India tax treaty may limit the Indian tax on interest. An adviser who knows both countries can check your case.

Worked example: Anil's first full year in Canada

Anil became a Canadian resident in May 2025. In 2026, his first full year, he has:

an NRO account (his old savings account) with ₹20 lakh (1 lakh = 100,000 rupees);
an NRO fixed deposit of ₹60 lakh;
an NRE account he opened to hold part of his Canadian salary.

In India: his bank deducts tax on NRO interest. NRE interest has no Indian income tax.

In Canada: he reports both the NRO and NRE interest for 2026 on his Canadian return, converted to Canadian dollars. He claims a foreign tax credit for the Indian tax on the NRO interest.

T1135: he converts the cost of his Indian accounts (₹80 lakh) to Canadian dollars. If the total was more than $100,000 (CAD) at any time in 2026, he files T1135 for 2026. He did not need to file for 2025, his first year of residence.

Checklist: before and after you leave India

Before you leave

Decide how much to send under LRS while you are still resident.
List every account, deposit, demat account and policy you hold.
Ask your banks about their NRO conversion and NRE opening process.
Make sure your PAN is active and linked as required.

After you arrive in Canada

Tell each Indian bank and investment provider about your new status.
Convert resident accounts to NRO. Open NRE if useful.
Keep annual interest statements and Indian tax certificates for your Canadian return.
Track your total foreign property for T1135.

Planning to move back one day? See moving back to India. RBI rules let returning residents redesignate NRE and NRO accounts as resident accounts, or move NRE balances to a Resident Foreign Currency (RFC) account.

Common questions

Can I keep my Indian savings account after moving to Canada?

Not as a resident account. The RBI direction says your existing resident account should be designated as an NRO account when you become a person resident outside India. You can keep it open as an NRO account.

Is NRE interest tax-free in Canada?

No. The RBI direction says NRE interest is exempt from Indian income tax. Canada taxes residents on world income, so you report NRE interest on your Canadian return.

How much can I send from my NRO account to Canada?

Up to USD 1 million per financial year (April to March) from NRO balances and sale proceeds of assets, after Indian taxes, under the RBI Master Direction on Remittance of Assets. More needs RBI approval.

Can my parents be joint holders on my NRE account?

Yes. RBI allows an NRE account to be held jointly with a resident relative on a "former or survivor" basis. The resident relative can operate it during your lifetime only as a power of attorney holder.

Do I need to file T1135 for my Indian accounts?

If the total cost of your specified foreign property is more than $100,000 (CAD) at any time in the year, yes, except in the year you first became resident. The CRA treats foreign bank accounts as specified foreign property.

Sources

Checked against these sources on October 10, 2026. Spotted something out of date? Tell us.

NRE vs NRO accounts for Indians moving to Canada: what to do with your Indian money