Here’s how much money NRIs can deposit from their NRO accounts in a fiscal year
- One can apply for an NRO account together with a resident Indian or even an NRI
- An NRO account prevents you from paying over $ 1 million including taxes in a tax year
- You can repatriate the interest amount freely, but the principal amount can only be repatriated within the fixed limits
New Delhi: NRIs (Non-Resident Indians) with income both abroad and in India often encounter difficulties in managing their finances. They often have trouble keeping track of bank accounts in another country, and also when trying to repatriate money to their personal account. Non-Resident Rupee (NRE) and Ordinary Non-Resident (NRO) rupee accounts help with this.
A Non-Resident Ordinary Account (NRO) is a popular way for many Non-Resident Indians (NRIs) to manage their deposits or income earned in India, such as dividends, pensions, rents, 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 Note that only Indian currency can be withdrawn as NRO accounts, foreign currency you deposit into the account is converted to INR.
NRO account request:
One can apply for an NRO account jointly with Indian resident on former or survivor basis only. One can also open an NRO account with another NRI.
Features of the NRO account:
- With an NRO account, you are free to repatriate or transfer the interest you earn on the deposited capital.
- You can also transfer the principal amount within the specified limits.
- Up to $ 1 million can be transferred in a fiscal year after payment of applicable taxes.
- Interest earned on an NRO Account is taxable at 30%, deductible at source. In case the depositor is a resident of one of the countries with which India has a DTAA, the tax will be deducted in accordance with the DTAA (Double Taxation Avoidance Agreement) agreed between India and the respective country
- Income earned in India deposited into an NRO account may include rent, dividend, pension, etc.
If your total income includes income earned in India and you want to manage it in 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 tax obligations.
Transfer of funds from NRO to an account abroad:
1. From NRO to a foreign account: Repatriation of up to $ 1 million or the net equivalent of applicable taxes during a fiscal year is permitted, for good faith purposes, subject to the presentation of the necessary documents, if applicable. You can mail / mail or submit in person a letter requesting to transfer funds from the NRO account to an overseas account.
2. Transfer of funds from NRO to NRE / FCNR (B): The transfer of funds from the NRO account to the NRE account is permitted up to the aggregate limit of $ 1 million or the equivalent per fiscal year, subject to the presentation of the necessary documents, if applicable. You can post / mail or submit in person a letter requesting to transfer funds from the NRO account to the NRE / FCNR account (B).
It should be mentioned that when Oveseas Citizen of India (OCI) comes to India with the intention of staying indefinitely and stays longer than 182 days, it loses the privileges that NRI / PIO / OCI have. These OCIs are required to reconvert / convert their NRE / NRO / FCNR accounts into a resident account, or their NRE / FCNB account into an RFC account, as the case may be.