Features of Non-Resident Ordinary Rupee Account Scheme [NRO Account]

A Non-Resident Ordinary Rupee Account or an NRO account is an account that can be operated by any person resident outside India for putting through bonafide transactions in rupees. NRO account opening is a structured process in each bank.

Post Offices in India may maintain savings bank accounts in the names of persons resident outside India and allow operations on these accounts subject to the same terms and conditions as are applicable to NRO bank accounts maintained with an authorised dealer/ authorised bank.

An NRO account can be maintained only as a term deposit. The period for fixed deposits are same as those applicable to resident accounts. The income housed in an NRO account is taxable and the NRO Account Tax is to be paid at applicable income tax rates or DTAA rates, whichever beneficial. 

Can an NRO account be maintained as a joint account?  

Yes, NRO bank accounts can be held jointly in the names of two or more NRIs/ PIOs. They may also be held jointly with residents on ‘former or survivor’ basis.

What are the NRO account rules regarding transactions?   

NRO account rules are many, which are mainly classified as Permissible Credits and Permissible Debits.

Inward remittances from outside India, legitimate dues in India and transfers from other NRO accounts are the permissible credits to the NRO account. Rupee gift/ loan made by a resident to an NRI/ PIO relative within the limits prescribed under the Liberalised Remittance Scheme may also be credited to the latter’s NRO account. 

The NRO bank account can be debited for the purpose of local payments, transfers to other NRO account or remittance of current income abroad. Apart from these, balances in the NRO account cannot be repatriated abroad except by NRIs and PIOs up to USD 1 million, subject to conditions specified in Foreign Exchange Management (Remittance of Assets) Regulations, 2016. Funds can be transferred to NRE account within this USD 1 Million facility. 

Are the deposits in this account repatriable?   

No. They are not repatriable except for all current income. Balances in an NRO account of NRIs/ PIOs are remittable up to USD 1 (one) million per financial year (April-March) along with their other eligible assets.

Can loans be availed against the deposits?  

Loans against the deposits can be granted in India to the account holder or third party subject to usual norms and margin requirement. The loan amount cannot be used for relending, carrying on agricultural/ plantation activities or investment in real estate business. However loans outside India is not permitted.

What are the major NRO account benefits?  

The major NRO Account benefits are: 

  • Can be used to manage all rupee expenses 
  • Ease of Investing in India  
Disclaimer: The views / the analysis contained therein do not constitute a legal opinion and is not intended to be an advice. Readers of this document are advised to seek their own professional advice before taking any course of action or decision, based on this document.

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