New Delhi: NRIs (Non-Resident Indian) with earnings both abroad and in India often face difficulties in managing their finances. They often find it difficult to track bank accounts in a different country, and also when trying to repatriate money to their home account. Non-Resident rupee (NRE) & Non-Resident Ordinary (NRO) accounts help with this.

A Non-Resident Ordinary (NRO) account is a popular way for many Non-Resident Indians (NRIs) to manage their deposits or income earned in India such as dividends, pension, rent, etc. This account allows NRIs to receive funds in either Indian or foreign currency. Note that only Indian currency can be withdrawn as NRO accounts the foreign currency you deposit into the account is converted to INR.

NRO account application:

One can apply for an NRO Account jointly with an Indian resident on former or survivor basis only. One can also open an NRO account with another NRI.

Features of NRO Account:

• With an NRO Account, you are free to repatriate or transfer the interest you earn on the principal amount deposited. 
• You can also transfer the principal amount within specified limits. 
• One can transfer up to $1 million in one financial year post payment of applicable taxes.
• The interest earned on an NRO Account is taxable at 30%, deductible at source. In case, the depositor is resident of any of those countries with whom India has a DTAA, the tax will be deducted as per DTAA (Double Taxation Avoidance Agreement) agreed between India and the respective country
• The income earned in India, deposited in an NRO Account can include rent, dividend, pension, etc.

If your total income includes income earned in India and you want to manage it within the country, you can opt for an NRO account. An NRE account can be opened if you want to transfer your foreign income to India and want to avoid taxation liabilities.

Funds transfer from NRO To overseas account:

1. From NRO to overseas account: Repatriation up to $1 million or equivalent net of applicable taxes in a financial year is permitted, for bonafide purposes, subject to the submission of necessary documents as applicable. You can post/courier or submit in a person a request letter for transfer of funds from NRO account to an overseas account.

2. Funds transfer from NRO to NRE/FCNR (B): Transfer of funds from NRO to NRE account is permitted within the overall ceiling of $1 million or equivalent per financial year, subject to the submission of necessary documents as applicable. You can post/courier or submit in a person a request letter for transfer of funds from NRO to NRE/FCNR (B) account.