NRO Account

NRIs in India may open a savings or current account to manage their income earned in the country. Account-holders can quickly deposit and handle their accumulated rupee assets. One may obtain funds in Indian or foreign currency with this account. A non-resident Indian who receives a specified amount of domestic income from any source must open an NRO account to deposit it.

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According to the Union Budget 2020 plan, anyone who has spent more than 120 days in any foreign country with less than 365 days in India in the previous four years is classified as an NRI.

Non-residential rupee ordinary accounts come in a variety of shapes and sizes. It contains options such as current, investment, revolving, and fixed deposits, among others. Before probing into the specifics of the various types of accounts for earnings within the nation, it's necessary first to grasp their essential characteristics.

Difference between NRI and NRO Account

The difference between NRI and NRO account are discussed below:

NRO Account

  • An NRO account can be opened by an NRI to deposit his or her earnings in INR from India.
  • The principal, as well as the interest gained, are also taxable.
  • Individuals may use this category to open savings, current, or fixed deposit account.
  • It can be opened with the help of another NRI or a resident of India.
  • The interest earnings are entirely repatriable. The principal sum will only be repatriated up to 1 million USD or equivalent in a fiscal year.
  • Current exchange rates have no bearing on this.

NRI Account

  • An NRI may open an NRI account to deposit his or her earnings in INR that originate in the individual's country of residence.
  • The whole amount (interest and principal) is tax-free.
  • Savings, new, and fixed deposit accounts are all made more accessible with NRE accounts.
  • The only way to open it is with another NRI.
  • The entire balance can be returned in its entirety.
  • Current exchange rates affect.

Why choose an NRO Bank Account?

The Non-Resident Ordinary Account (NRO Account) is a savings or current bank account in Indian rupees kept in India. If one has earnings in India, the NRO account is the best choice for you (such as rent income, dividend, pension, etc.).

One can deposit foreign currency earnings into your NRO account, which will be converted into Indian Rupees at the current foreign exchange rate1. One can also repatriate up to USD 1 million per financial year from one’s NRO account for bona fide purposes, subject to the submission of required documents.

In India, interest received on an NRO account is taxed according to Indian Income Tax laws.

Eligibility Criteria For NRO Account

Eligibility criteria crucial for opening an NRO account:

  • Residential status-NRI, PIO and OCI
  • Transaction currency-INR
  • The joint account-Joint application can be NRI or residential Indian
  • Power of attorney-Residential Indian

Documents Required For NRO Account

  • An NRO application form has to be filled out.
  • A copy of the NRI's passport.
  • The applicant's visa or residency permit
  • 2/3 copies of the applicant's passport-sized snapshot, depending on the financial institution.
  • Information of the applicant's money remittance.

 When NRIs decide to apply for an NRO account, they should first review the eligibility requirements and then gather the required documentation to make the application process as simple as possible.

Features of an NRO Bank Account

Some of the benefits and features of having an NRO account is:

Earnings in Rupees

As an NRI, you can have recurring income streams in India, such as rent and dividends. These can be safely deposited in an NRO account and used to handle your rupee expenses.

Invest with Confidence

Investing in mutual funds and Indian bonds is simple with an NRO account.

Getting a Loan

NRO fixed deposits may be used as collateral for a loan. These loans regularly have more profound interest rates than unsecured loans.

Hold Accounts Jointly

One can open an NRO account jointly with a resident family member, for example, who can help one handle one’s Indian financial obligations. DBS Treasures provides higher interest rates on NRI savings accounts as well as preferential remittance rates.

Repatriate Funds

If one has sold a house or liquidated savings and want to send the money back to one’s home country, one can deposit the money in an NRO account and send it back to one’s home country (up to USD 1 million a year). In India, one may be required to pay Income Tax and complete repatriation forms.

NRI Account

An NRI Account is a bank or financial institution that is authorized by the Reserve Bank of India (RBI) to provide various services to a Non-Resident Indian (NRI) or a Person of Indian Origin (PIO).

The eligibility requirements for opening an NRE, NRO, or FCNR (B) account vary by bank. In the case of NRI accounts, however, every financial institution in India follows precise eligibility requirements.

These accounts are only available to people who fit into the following categories:

  • In a foreign country, you must be working, own a company, or engage in some trade.
  • Should be employed by the Indian Navy, a foreign-registered airline, an oil rig, or an overseas shipping company that requires the person to spend at least 182 days outside of India's domestic territory.
  • Government employees who hold diplomatic passports.
  • International students who are pursuing their studies in another country.

Documents Required

Some of the documents required to open an NRI bank account:

  • Type of application
  • Photocopies of various passport pages containing Information such as name, address, birth date, passport issuance and expiration dates, and so on.
  • Evidence of jobs
  • KYC documents for work permits, student visas, visa permits, employment visas, and residence visas (if any)

Types of NRO Account

The following are the different types of NRO Account:

NRO Savings Account

In a nutshell, an NRO Savings Account helps you park income received in India, such as rent, dividends, pensions, and so on. The NRO Savings Account makes depositing and managing such accumulated rupee funds easy. As a result, the independence and comfort of hassle-free banking are given.

Key Benefits of NRO Savings Account

  • It also enables you to repatriate funds after making the required tax payments and to run the account via various direct banking channels.
  • All of your current savings (money received abroad) must be transferred to an NRE/NRO savings account.
  • For Non-Resident Indians, opening an NRE and NRO account in India is thus a viable choice.
  • It can benefit NRIs in two ways: they can send their earnings back to India at any time. They can also keep their earnings from India (via any assets) in their home country.

How to Open an NRO Savings Account?

Individuals who are entitled to open an NRO savings account include:

1. NRI (Non-Resident Indian) living outside of India for the following reasons:

  • Working, studying, starting a business, or pursuing a vocation are all options.
  • Individuals assigned to UN organizations or officials sent abroad by the Indian government or public sector enterprises.
  • Indian citizens employed as Mariners, on oil platforms, or foreign-registered airlines.

2. An individual with a foreign passport:

  • If an individual held an Indian passport sometime earlier.
  • By the Indian Constitution or the Indian Citizen Act of 1955, their parent or grandparent was an Indian citizen.

3. The following paperwork is required in the case of NRIs (Non-Resident Indian):

  • The individual has to submit a valid passport copy (that include pages with his name, date of birth, address, date and place of issue, passport expiry date, photograph, his signature, and observation page, if any)
  • A clear NRI status proof, such as a copy of a valid Work/Residence Visa or a valid Residence or Work Permit
  • Proof of Indian Address and Overseas address is also needed.
  • Form 60 or a copy of an Indian PAN card
  • The Colour passport photo was taken recently.
  • Annual fees, replacement fees, chequebook fees, account closing fees, transfer fees, and some penalties (if any, such as a minimum balance penalty) are among the fees associated with the NRO Savings Account.
  • Some NRO Savings Account payments, however, are exempt from such waivers.

Core Benefits of NRO Savings Account

  • With an NRO bank account, one will receive attractive interest rates.
  • Easy Access to any bank branch across India at any time and from anywhere.
  • A debit card is given that allows one to make cash withdrawals from over 80,000 ATMs across India.
  • The balances of your NRO and NRE Savings accounts are connected, allowing one to keep a combined balance in either account.

NRO Current Account

An NRO current account is an account where there is no interest applies to the deposits. The funds in this account are entirely non-repatriable.

Salient Features of NRO Current Account

  • Quick remit, India Link, Telegraphic Transfers, and Cheque/Draft are convenient ways to send money.
  • The Rupee earnings should be deposited in a non-interest-bearing Rupee account.
  • One can open a joint account with a citizen of India.
  • One can use your account balance in India for both repatriable investments and local payments.
  • One can get a free ATM card in India for oneself and the bank’s mandate holder.
  • Get a chequebook with one’s name on it.
  • With accessible banking networks, one can manage your account from anywhere, at any time.
  • To deposit money in one’s account, one can transfer money from a foreign country in a freely convertible currency.
  • Transfer funds from another bank's current NRE/FCNR account.
  • In India, one can make local payments using this account.

Eligibility Criteria

  • If one is a non-resident Indian national or of Indian ancestry, one is eligible.
  • One must notify the bank immediately if one’s status changes from NRI to RI.
  • Only Rupees can be kept in an NRO account.
  • Residents and NRO accounts may be maintained jointly.
  • The current Resident Account must be classified as an NRO Account in the event of a change of status from Resident to Non-Resident.

There are several ways for an NRI to earn money from India while living abroad, whether through real estate rentals or investment returns.

Before moving abroad, these individuals must convert their accounts or open a new account. These accounts are required by law, and failure to comply will result in penalties and fines.

Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C apply.

Written By: PolicyBazaar - Updated: 27 July 2021
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Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.
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