What is NRO Account

NRO Account | Videshi.com

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.

Eligibility :

  • 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


Repatriation :

  • 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.

Related Questions

Q: What are the regulations for NRIs to invest in India?

A: NRIs can invest in the Indian stock market only though the Portfolio Investment Scheme (PIS) All secondary market transactions have to be reported to RBI. Investments can be made on a repatriable...

Q: Who can be joint holders in PIS permission?

A: In NRE PIS account all NRIs can be joint holders. But in NRO PIS account joint holders can be resident holders only on former or survivor basis.

Q: Can shares hold in NRO demat account be transferred to NRE demat account?

A: No, NRO shares cannot be transferred to NRE Demat account.

Q: Is capital gains tax applicable on stock investments by NRIs?

A: Yes, capital gains tax is applicable on stock investments by NRIs, the long term capital gains tax is 10% and the short term capital gains tax is 15%.