Fixed Deposits for NRIs: Best Rates, Banks & Tax Rules
For Non-Resident Indians (NRIs), fixed deposits in India continue to be a safe and stable way to earn returns in Indian currency. Whether you’re looking for capital preservation, regular income, or repatriation-friendly options, fixed deposits offer flexibility with decent returns.
In this guide, we break down the types of NRI FDs, current rates, tax implications, and smart tips to make the most of your deposit.
Types of NRI Fixed Deposits
NRIs can choose from three main types of fixed deposits, depending on their financial needs and source of funds.
1. NRE Fixed Deposit (Non-Resident External)
Funded through foreign income and maintained in INR
Principal and interest are fully repatriable
Interest earned is tax-free in India
Best for NRIs who want to bring foreign income into India and earn interest without worrying about Indian taxes
2. NRO Fixed Deposit (Non-Resident Ordinary)
Funded through income earned in India—like rent, dividends, or pension
Principal is non-repatriable beyond $1 million per year, interest is repatriable after tax
Interest is taxable at 30% + surcharge + cess unless a DTAA benefit is claimed
Best for NRIs who have existing earnings in India they don’t need to remit immediately
3. FCNR Deposit (Foreign Currency Non-Resident)
Held in foreign currency (USD, GBP, EUR, etc.)
Fully repatriable, both principal and interest
No exchange rate risk, but typically lower interest rates
Best for NRIs who want to preserve their foreign currency earnings without converting to INR
Current NRI FD Interest Rates (as of June 2025)
Rates vary depending on the bank and tenure. Below are approximate annual interest rates offered by leading banks:
| Bank | NRE FD (1-3 years) | NRO FD (1-3 years) | FCNR (USD, 1-3 years) |
|---|---|---|---|
| SBI | 6.80% | 6.80% | 3.50% |
| ICICI Bank | 7.10% | 7.10% | 3.75% |
| HDFC Bank | 7.00% | 7.00% | 3.60% |
| Axis Bank | 7.20% | 7.20% | 3.80% |
| IDFC First | 7.50% | 7.50% | Not Offered |
Always confirm with the bank or official website before investing, as rates change frequently.
Tax Implications on NRI Fixed Deposits
NRE and FCNR FDs
Interest earned is completely tax-free in India
No TDS is deducted
You may need to declare the income in your country of residence depending on local tax laws
NRO FDs
Interest is taxable in India at 30% (plus surcharge and cess)
TDS is deducted at source by the bank
You can lower your tax liability by using the DTAA (Double Taxation Avoidance Agreement) with your country by submitting Form 10F, Tax Residency Certificate (TRC), and PAN
Real-Life NRI Example
Amit, an NRI living in Dubai, wants to earn safe returns on ₹20 lakh. He opens an NRE FD with a private Indian bank for 2 years at 7.10%. His interest income of ₹2.84 lakh (approx.) over 2 years is tax-free and fully repatriable to his UAE account.
On the other hand, Priya, an NRI in the UK, earns rental income in India. She parks ₹10 lakh into an NRO FD and receives interest of ₹71,000. She gets 30% TDS deducted but files for DTAA benefits to reduce her tax to 15%.
How to Open an NRI FD Account
Most banks allow NRIs to open fixed deposit accounts online or via email with the following documents:
- Valid passport and visa
- Overseas address proof
- PAN card
- NRE or NRO savings account
- FATCA declaration and KYC form
You can also appoint a Power of Attorney (POA) to manage your FD investments if you’re not in India.
Smart Tips to Maximize FD Returns
- Compare rates across banks—private banks often offer better returns
- Ladder your FDs by splitting amounts across different tenures
- Use NRE FDs to earn tax-free interest and simplify repatriation
- For NRO FDs, use DTAA benefits to reduce tax burden
- Reinvest interest to maximize compounding, if not needed for income
Conclusion
Fixed deposits remain a reliable choice for NRIs seeking stability, tax efficiency, and repatriation flexibility. By choosing the right type of account—NRE, NRO, or FCNR—and staying aware of interest rates and tax rules, you can make informed decisions that align with your financial goals in India and abroad.
Start with what fits your income source and risk profile, and revisit your FD strategy annually to ensure you’re on track with your overall wealth plan.