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No, the interest on FCNR (B) account is not taxable in India till you hold NRI and RNOR status. However, once your status changes to ROR, the interest on the FCNR (B) account becomes taxable in India.
No, you cannot open an FCNR (B) account after becoming an Indian resident. Only NRIs, PIOs, and OCIs are eligible to open an FCNR (B) fixed deposit account.
If you return to India and have an FCNR (B) account and your NRI status changes to resident again, then till the maturity date, you can hold this account at the contracted interest rate. You can also convert your FCNR (B) account to a Resident Foreign Currency (RFC) or a Resident Rupee Deposit account. However, once you become a resident, the interest you receive on your FCNR account will be taxable in India as per the income tax provisions.
Yes, you can withdraw money from your FCNR account before maturity, but there are several consequences you face in this. If you withdraw the amount before one year, then you do not receive any interest on your investment. Additionally, if you make a withdrawal after one year, then you may face 1% penalty on the applicable interest rate at that time. Apart from this, you cannot partially withdraw the deposit amount.
Yes, for NRIs, FCNR (B) deposits it is a good investment option in 2025. It is because this account offers foreign currency protection, low-risk, fixed, and tax-free interest in India. Additionally, one of the safe investment options available for NRIs with foreign funds.
Simple interest is applied to a one-year FCNR (B) deposit account. Further, for FCNR (B) deposit accounts above one year, interest is calculated on a half-yearly basis.
By Manish Prajapat |Last Updated: January 6, 2026
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