Article
Feb 17, 2026
NRE vs NRO Account: Which One Should Your Mutual Fund SIP Go Into? (2026)
Most NRIs pick one account to start their SIP without thinking it through, usually whichever the bank set up first. That single decision affects how your money is taxed, how freely it moves back abroad, and how much paperwork waits for you at redemption.
The Core Difference
NRE = Foreign earnings. Fully repatriable. Account interest is tax-free in India.
NRO = Indian earnings. Repatriation capped at USD 1 million/year. Taxable.
Both hold INR. The difference is where the money came from — and that determines everything downstream.
The Tax Myth Worth Busting
Both NRE and NRO investors pay the same Indian capital gains tax on mutual fund redemptions. What's tax-free in NRE is the savings/FD interest — not your fund returns.
Capital Gains Tax for NRIs (2025–26)
Fund Type | Holding | Tax |
Equity (≥65% Indian) | < 12 months | 20% + cess |
Equity (≥65% Indian) | > 12 months | 12.5% above ₹1.25L |
Debt funds | Any | Slab rate, TDS 30% |
What Actually Changes: Repatriation
This is where the real difference lies.
NRE-sourced SIP: After TDS, redemption hits your NRE account. Send it abroad anytime. No forms, no CA, no ceiling.
NRO-sourced SIP: After TDS, money sits in NRO. Every repatriation needs Form 15CA + Form .15CB (CA-certified). Mandatory. Paid. Repeated every time.
Over a 15-year SIP with multiple redemptions, that's not a one-time friction — it compounds.
Simple Decision Rule
Foreign salary funding the SIP? → NRE
Indian rent, dividends, or local income? → NRO
Investing jointly with a resident Indian? → NRO (resident can only be second holder in NRE)
The most common mistake: foreign income landing in NRO by default because the bank set it up that way. That one oversight costs you free repatriation — for no reason.
The Takeaway
Route foreign money through NRE. Let Indian income stay in NRO. Never mix the two without a reason. That discipline, applied from day one, keeps your exit options clean.
How Pivot Money Helps NRIs Invest With Clarity
Pivot Money is built specifically to remove the friction NRIs face while investing in India.
• Fully digital onboarding from anywhere in the world
• NRI-compliant account setup and documentation guidance
• Curated mutual fund portfolios matched to your goals • One dashboard to track all your India investments
• Tax-ready reports and compliance support
Instead of navigating regulations alone, NRIs get a structured investing system designed for long-term wealth creation