What Is A NRO (Non-Resident Ordinary) Account ?
In Banking terminology, the term NRO Account refers to funds deposited with an Indian financial institution opened by an Indian national with the intention of becoming a NRI. An NRO account is kept in Indian rupees and cannot be converted and repatriated into foreign currency.
- Persons of Indian nationality or origin residing abroad.
- Resident Indians by inward remittances from abroad.
Types Of NRO Account
- Savings Account
- Current Account
- Term / Fixed Deposit Account
Documents Required For NRO Account
In case of NRIs, Properly filled Account Opening form with
- Copy of the Passport
- Copy of Permanent Account Number (PAN)
- Visa / Residence Permit
- Two Copies of Recent Photographs
- Initial Money Remittance
In Case of resident Indians, as stated under Savings Bank Account
Difference Between NRE and NRO Accounts
- NRE account is freely repatriable (Principal and interest earned).
- NRO account has restricted repatriability. i.e permitted remittance allowed from NRO Account is up to USD 1 million net of applicable taxes in a financial year( April - March) after giving undertaking along with a certificate from a chartered accountant.
Tax Treatment :
- NRE account is Tax free (No Income tax, Wealth tax and Gift tax) in India.
- Interest earned in NRO Account and Credit Balances are subject to respective Income tax, Wealth tax, and Gift tax.
Joint Holding :
- NRE account can be jointly held with another NRI but not with resident Indian.
- NRO account can be held with NRI as well as resident Indian.
Deposit and Withdrawl of Funds :
- You can deposit funds from a foreign country (foreign currency) in both NRE and NRO accounts. Funds originating from India ( Indian rupees) can only be deposited in an NRO account and cannot be deposited in an NRE account.
- Withdrawals from both NRE and NRO accounts can only be made in INR.
Funds Transfer :
- NRE account allows you to transfer funds to another NRE account as well as to an NRO account.
- You can transfer funds from an NRO to another NRO account, but you cannot transfer funds from an NRO account to an NRE account.