NRO Savings Account: Meaning & Features

• An NRO account or Non-Resident Ordinary account helps NRIs manage their earnings received in India effectively.
• Such earnings include dividends, rental income, sale of immovable property, etc.
• You can open this account as a savings, current, recurring, or fixed deposit account.
• This account can be held jointly with residents on a ‘Former or Survivor’ basis. You can also be a joint account holder with other NRIs/PIOs.

An NRO account or Non-Resident ordinary account serves as an important money management tool for NRIs (Non-Resident Indians). It helps to effectively manage their earrings received in India, such as dividends, rental income, etc.If you are an NRI or are planning to shift abroad soon, you must understand the basics of an NRO account. In this context, this blog covers all relevant details of this account that simplifies managing the income generated in the home country. Let’s begin!

The NRO account is suitable for NRIs, PIOs (Person of Indian Origin), and OCIs (Overseas Citizen of India). The account allows receipts of funds in Indian or foreign currency. The account is maintained in Rupee (₹) denomination and you can withdraw money in Indian currency.You can use this account to deposit the income generated in India. For example, you can park the amount received as rent, dividend, pension, sale proceeds from immovable property, gifts, etc. Also Read: Different Types of Bank Accounts In India - Features & Benefits - ABC of Money

You can choose to deposit your funds based on your specific needs in any of the following:

• Savings Account
• Current Account
• Recurring Account
• Fixed Deposit

Here are some of the key features of an NRO Account:

• Joint Ownership: You can hold this account jointly with residents on a ‘Former or Survivor’ basis. Alternatively, you can be a joint account holder with other NRIs/PIOs.
• Allowable Credits: You can receive inward remittances from outside India, legitimate dues in India and transfers from other NRO accounts. Besides, it also permits rupee gift/loan from a resident relative in accordance with the Liberalised Remittance Scheme.
• Permissible Debits: You can use this account to make local payments, transfers to other NRO accounts and remittances of current income overseas. Apart from this, you can repatriate the balance in your account up to USD 1 million per financial year, as per provisions of FEMA (Foreign Exchange Management Act).

Note that you can transfer funds to the NRE (Non-Resident External), account only within this prescribed limit.

• Taxation: The income that you earn in India and deposit in this account is subject to taxation. Also, interest in the account is subject to TDS (Tax Deducted at Source). The tax rates vary according to the DTAA (Double Taxation Avoidance Agreement) between India and the respective foreign country.

If a non-resident returns to India, indicating an intention to stay in the country for an uncertain period, an NRO account may be designated a resident account.
Similarly, when an Indian resident becomes an NRI, their existing resident account should be designated an NRO account.

Opening an NRO Account helps you organise your finances by keeping track of your financial transactions. You can exercise better control and experience seamless fund management.Just like a banking account, it is equally important to have an investment account that can help you achieve your financial objectives. Comply with the applicable FEMA regulations and embark on your investment journey with mutual funds. Also Read: 5 Common Mistakes NRIs Make While Investing in India