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A Non-Resident Ordinary (NRO) account is a type of bank account in India designed for Non-Resident Indians (NRIs) to manage their income earned in India. It allows NRIs to deposit and manage earnings such as rent, pension, dividends, or business income while being subject to certain tax and repatriation rules.
1. Key Features of an NRO Account
✅ Currency: Indian Rupees (INR)
✅ Purpose: Manage income earned in India (rent, pension, dividends, etc.)
✅ Joint Holding: Can be jointly held with an NRI or a resident Indian
✅ Repatriability: Can repatriate up to $1 million per financial year after tax compliance
✅ Taxability: Interest earned is taxable at 30% (TDS applies)
✅ Deposit Sources: Indian & foreign sources allowed
✅ Withdrawal: Allowed only in INR
🔹 An NRO account is ideal for NRIs with financial ties in India.
2. Who Should Open an NRO Account?
NRIs who:
✔ Earn rental income, pensions, dividends, or other Indian earnings
✔ Need to pay bills, loans, or EMIs in India
✔ Want to hold funds in INR with limited repatriation
✔ Wish to hold a joint account with a resident Indian
🔹 You CANNOT deposit foreign earnings into an NRO account.
3. NRO Account vs. NRE Account
| Feature | NRO Account | NRE Account |
|---|---|---|
| Purpose | Manage income earned in India | Park foreign income in India |
| Currency | INR | INR |
| Taxability | 30% TDS on interest | Tax-Free |
| Repatriation | Up to $1M/year with compliance | Fully repatriable |
| Deposit Sources | Indian & foreign sources | Only foreign sources |
| Joint Holding | With an NRI or a resident Indian | Only with another NRI |
🔹 Choose NRO for Indian earnings; choose NRE for tax-free foreign savings.
4. How to Open an NRO Account? (Step-by-Step Guide)
Step 1: Choose a Bank
- Major banks offering NRO accounts: SBI, HDFC, ICICI, Axis, Kotak, etc.
Step 2: Submit Required Documents
📌 Passport & Visa Copy
📌 Overseas Address Proof (utility bill, bank statement)
📌 Indian Address Proof (if available)
📌 PAN Card (mandatory for tax purposes)
📌 FATCA Declaration (for U.S. NRIs)
Step 3: Fund the Account
- Transfer money from an Indian or foreign bank account.
Step 4: Start Using the Account
- Manage earnings, pay bills, or remit funds abroad after tax compliance.
5. Taxation on NRO Account
| Income Type | Tax Rate (TDS) |
|---|---|
| Interest Earned | 30% |
| Rental Income | 30% |
| Dividend Income | 20% |
| Capital Gains | As per tax slabs |
🔹 How to Reduce Tax?
✔ Claim DTAA (Double Taxation Avoidance Agreement) benefits to lower TDS.
✔ File Form 15CA & 15CB for repatriation beyond ₹5 lakh.
✔ Use ITR filing to claim tax refunds.
6. Repatriation Rules for NRO Account
✅ Up to $1 million per year can be repatriated after:
- Paying applicable taxes
- Submitting Form 15CA & 15CB (certified by a CA)
✅ Documents Required for Repatriation
- Bank Statement
- Income Proof (if applicable)
- Tax Clearance Certificate
🔹 For hassle-free repatriation, ensure proper documentation & tax compliance.
7. FAQs on NRO Accounts
1. Can I deposit foreign earnings into an NRO account?
❌ No, foreign income should go into an NRE account, not an NRO account.
2. Can I convert an NRO account to an NRE account?
✅ Yes, by submitting Form 15CA/15CB and proof of tax compliance.
3. Can I transfer money from NRO to NRE?
✅ Yes, after tax clearance & documentation, but within the $1 million limit.
4. Can I withdraw cash from an NRO account in India?
✅ Yes, withdrawals are allowed in INR.
Final Thoughts
An NRO account is essential for NRIs with financial interests in India. While it allows managing Indian income, it comes with tax implications & repatriation limits. To maximize benefits, consider tax-saving strategies and DTAA claims.
Would you like assistance with selecting the best NRO account or optimizing tax savings? 🚀