Income tax on NRE account

Interest earned on NRE account is exempt. As long as you are having NRE status you can keep the accounts. After that it is advisable to change the status. 

You should get the account converted to resident account. The interest earned on it will be taxable now. You can take 10K exemption under 80TTA.

Once your residential status is changed to RNOR you cannot manitain NRE account. Interest received on NRE account would be taxable. You can hold the FD NRE account till maturity but interest income would be taxable in your hands. You can open RFC account and transfer proceeds of NRE account to RFC account.

You should inform the bank. As I understand the FD will continue till maturity.

You can hold NRE account upto maximum 6 months after you permanently return to India as per FEMA law and after you become ordinary resident your entire interest shall be taxable in India.

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Hi

Upon your return to India permanently, you will have to convert your existing NRO / NRE savings account and deposits into resident savings account and deposits. You may also convert your funds in NRE account /deposits into resident foreign currency (RFC) account /deposits.

Interest from NRE account is tax-free only for non-residents. As soon as you return to India, any interest earned on NRE account will be taxable.

You cannot maintain your NRE account and NRE FDs when you are an RNOR. You need to convert your NRE account to resident account immediately upon returning to India. You need to convert these accounts to resident accounts within a reasonable period of time. The reasonable period can be assumed as 3 months.

NRE Deposits can be held till maturity. You can then convert it to resident account. The amount from the NRE fixed deposits on becoming resident will be taxable.