An NRO is a Non-Resident Ordinary (NRO) Account, defined under sec 2 (viii) of Foreign Exchange Management (Deposit) Regulations 2000. It is a popular avenue among several Non-Resident Indians (NRIs) to manage their deposits or income earned in India such as dividends, pension, rent, etc. This account allows you to receive funds in either Indian or foreign currency. An account holder can deposit and manage their accumulated rupee funds without any hassle.
For NRIs to invest money in India it is essential to hold an NRO account. NRO account can be opened to make bona fide transactions in INR. Money that is earned from a foreign country can be deposited in NRO as well as in NRE accounts, though money earned in Indian rupees can only be deposited in NRO accounts and not in NRE accounts. Funds from the NRO account cannot be transferred into NRE accounts.
In NRO accounts the deposits can be in foreign and Indian currencies but the withdrawal can only happen in Indian denomination and cannot be repatriated into any foreign currency. The NRO account deposits are not subjected to daily currency fluctuations.
An NRO (current / savings) account can be opened by a foreign national, who is visiting India and is not of an Indian origin, with the money earned from outside of India through a banking channel or by the sale of foreign exchange to India. The NRO accounts can be opened as a joint account with other NRI(s) and with the resident Indians as well. However, the joint account can only be opened with close relatives.
Foreign Exchange Management Act (FEMA) guidelines, clearly mention that it is illegal for NRIs to have savings accounts in India. It is mandatory for them to put all their earned money in NRO accounts. Opening an NRO account is viable for two reasons, they can send the money to India that they have earned outside the country at any time and also retain their income from India via any assets in the home country.
Opening an NRO account will allow you to deposit your savings and earnings from Indian sources such as rent, dividends, pension, interest etc. Interest earned in NRO accounts is taxable and also is subject to the applicable tax deduction at source.
NRO accounts can repatriate the interest amount, the principal amount can be repatriated within the set limits. NRO doesn’t allow free repatriable nature of funds and you can send up to $1million in a year after paying relevant taxes.
You can transfer money easily in an NRO account through several online or offline modes. With all the online services the account can be accessed anytime and anywhere. The minimum monthly balance in an NRO account is Rs 10,000. If your total finances include income earned in India and you want to manage it within the country, you can ideally opt for an NRO account.
