An NRO account is a type of NRI account which the Non-Residing Indians can open in any Indian bank. The banking laws in India allow NRI citizens to open different types of NRI accounts and deposit a decent amount of money to improve savings.
The NRO (Non-Resident Ordinary Rupee Account) enables the account holder to deposit money in INR denominations. An NRI can put all types of incomes that he gets from India like dividends and rent. He can also keep the money he gets from abroad in the form of monthly income or pension. Deposits made in foreign currency are changed into rupees in case of an NRO account.
Taxation on NRO Account
Here, all the knowledgeable facts regarding the taxation of the NRO account are discussed in details:
- NRO Accounts are fully taxable: An NRO account holder is liable to pay full tax on the interest income of the NRO account. This tax is termed as per the ‘income from other sources’. However, the account holder can claim a deduction according to Section 80TTA. This can help him to save up to Rs.10,000.
- TDS is levied: For the NRO account interest income, 30% of TDS is deducted by the bank. Surcharges and cess are also imposed. As an account holder, you can claim for a TDS refund if your total income tax is below the deducted amount.
- Foreign Income is not taxable: If an NRI has gained some foreign income, then it would not be taxable in India. So, any foreign income that is deposited in an NRO account in a denomination of INR is not taxable. However, in such cases, an account holder must stay less than 183 days in India.
Now, there are some conveniences that you can enjoy while saving money in the NRO account. Apart from the taxation procedures, knowing the following benefits of the NRO account can help you to manage it easily.
Benefits of Opening NRO Account
- Low minimum balance: You can keep a low minimum balance in the NRO account. Typically, the major banks in the country expect an NRO account holder to keep at least Rs.10,000 in it.
- Adding a joint holder: In the case of an NRO account, you can easily add a joint holder. The NRI citizens mainly add a close relative or partner residing in India. This is a bold step as it can become more comfortable for a person staying in India to deposit the revenue collected from the country and for you to deposit money from abroad.
- Money transfer procedure: Money transferring can be conveniently made from an NRE account to an NRO account. However, you cannot send money from an NRO account to an NRE account.
- Online handling: Due to the advancement of technology, one can easily open and manage an NRO account without visiting a bank. All reputed banks in the country have websites and apps where you can visit and open the NRO accounts and make transactions.
- Debit cards are provided for NRO accounts: The debit cards are provided for the NRO account holders by the issuer banks. These debit cards can be used in numerous banks all over India. You can also get a free checkbook for every NRO account.
Applying for an NRO Account
Now that you have known all about the taxation and benefits of holding an NRO account, it is crucial to know the application procedure to open one. The leading steps are given below:
- Visit the website of the bank from where you want to open an NRO account
- Provide all information as per the requirement of the bank
- Deliver the needful documents to the bank and get the documents verified
- Wait till your NRO account is activated
Being an NRI, you can expect the document verification procedure to be time-consuming. Some vital documents that you need to provide to the bank are photocopies of address proofs in India and abroad, passport and clear photographs. Tax authority certificates are also necessary while you are opening an NRO account.
As an NRI, you have a few options to choose from while opening an account. Some types of NRI accounts in India are NRO accounts, NRE accounts, and FCNR accounts. You should know the taxation method and the essential features that each NRI account can provide you. A banking expert can always help you to choose the right NRI account after considering your financial structure and necessities.
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