Non-Resident Ordinary (NRO) accounts allow Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs) to manage their income earned in India. You can open an NRO account to manage your income in India. This article will explore the critical details of opening and maintaining NRO accounts.
What is an NRO Account?
An NRO account allows NRIs and PIOs to manage their money in India through sources like rent, dividends, pensions, and interest. The income from these sources is considered taxable in India.
Financial institutions in India permit NRO accounts to be opened as savings, current, recurring or fixed deposit accounts. They can permit you to hold your NRO account jointly with Indian residents or other NRIs/PIOs. Notably, there is no restriction on the number of NRO accounts you can open in India.
Opening an NRO Account
The process to open an NRO account is simple and easy to understand. You must submit your identity and address proof documents and your PIO/OCI card. You might also need to provide proof of your overseas address.
Many financial institutions in India allow online applications to open an NRO account. You can submit your application offline as well. After opening your NRO account, your initial deposit in the NRO account can come from your NRE (Non-Resident External) or FCNR (Foreign Currency Non-Resident) account as well as from the remittances from abroad.
There are usually no restrictions on the amount (& frequency of deposits) you can deposit in your NRO account.
Maintaining an NRO Account
You can consider the following tips to maintain your NRO account.
Regular Deposits
Make sure that you fund your NRO account regularly. You can use your earnings in India and from abroad to fund your NRO account. Please note that your earnings from abroad will first be converted into Indian currency and then deposited in your account.
Compliance With Taxation Rules
Payment of Tax Deducted at Source (TDS) is applicable on the interest earned on NRO accounts. You would have to ensure that your NRO account deposits are fully compliant with the existing taxation laws in India.
If the earnings deposited in your NRO account exceed the taxation threshold, take proactive measures to file your income tax returns and claim any refunds on your declared income. 30% of your total income accrued in India and deposited in your NRO account is subject to 30% taxation. An additional cess of 3% is also applicable.
Regularly Monitoring Your NRO Account
Ensure that you check your NRO account balance and review the statements regularly. Online banking for NRO accounts offered by most financial institutions in India can help you monitor your financial transactions in these accounts.
Final Glimpse
NRO accounts enable NRIs to manage their earnings in India. Opening and maintaining an NRO account with reputable financial institutions such as IDFC First is straightforward. Compliance with regulatory requirements and taxation laws allows for smoothly maintaining NRO accounts.
