Article

NRO Account for NRIs
August 24 , 2012

The Non Resident Ordinary account or the NRO Account is a type of bank account held by NRIs. Such an account can be opened with most Indian banks. This account is denominated in Indian Rupees, and is not freely repatriable. Features of NRE account are detailed below.

Repatriation from NRO account

When a person leaves India to become an NRI, her existing savings bank accounts must be redesignated as either NRO or NRE accounts.

Funds in NRO account are not freely repatriable. This means that not all the money in this account, even if brought from outside, can be transferred back abroad. The principal amount is not repatriable and can be used only for local payments. However, the interest earned is fully repatriable. Other current incomes such as pension, dividend, rent, etc are also repatriable, subject to producing the appropriate certificate from a CA.

Funds up to USD 1 million (or equivalent) per financial year can be repatriated out of the balance held in NRO accounts for any bonafide purpose after satisfying documentation requirements.

For earnings from abroad that is brought to India and converted to Rupees, the other type of account, NRE account is generally preferred as it is repatriable.

Source of funds in NRO account

NRO account can be opened in any currency. It will be converted to INR and the account will be maintained in INR. You can have NRO savings, current or term deposit accounts. Rupee loan can be availed against NRO fixed deposit or recurring deposit.

In NRO account you can have money remitted through foreign bank accounts, foreign currency tendered on visit to India, sale proceeds from property, gift money and inheritance. In addition money from current income like rent, dividend, interest, pension or salary from Indian sources can be credited to NRO account.

Taxation in NRO account

Funds in NRO account are taxable since funds in this account could be originating in India. Interest on balances attracts income tax and the balances could attract wealth tax. TDS applies on NRO term deposits at 30% in case of interest over the level stipulated by tax authorities from time to time.

However if there is a Double Taxation Avoidance Agreement with your country of residence then you can avail tax benefit on NRO account by providing a self-declaration in the prescribed format, PAN card copy, Form 10F and tax residency certificate. This needs to be for each year of deposit.

Interest in NRO account

According to present RBI rules balances in NRO account cannot earn interest higher than deposits in domestic accounts. Banks are free to fix any rates within this restriction.

Nomination, joint account, loan facility

NRO account has nomination facility. The account can be operated jointly with a resident who is a close relative or an NRI.

Documents for opening NRO account

You need to submit completed application form signed and attested by your banker/Embassy of India/public notary or any person known to the bank and be accompanied by

- Copy of passport

- Copy of Visa

- Latest Overseas bank statement in original, latest overseas telephone/electricity bill in original as residential proof

NRE account or NRO account for you?

If you want to park earnings from India in rupees in India then you need an NRO account. Similarly if you wish to operate a account jointly with spouse or a relative who lives in India then you require NRO account.

Fintotal Knowledge the best place to learn more on personal finance.

The language is simplified and written specially for non finance background individuals.


Explore more in a easy manner.

Table of Contents

Table of Contents

  • No Article Listed
  • No Article Listed
  • No Article Listed
  • No Article Listed
  • No Article Listed
  • No Article Listed
  • No Article Listed
  • No Article Listed
  • No Article Listed
  • No Article Listed

Get the all financial products under one roof only at

you will NEVER GO WRONG with us!

Unbiased . Best Deals . Appropriate Products . No Mis-selling