For Non-Resident Indians (NRIs), managing income earned in India can be challenging. This is where Non-Resident Ordinary (NRO) bank accounts come into play. These accounts are crucial for NRIs, allowing them to handle earnings such as rent, dividends, and pensions in India with ease.
An NRO account accommodates both foreign and Indian currencies, but withdrawals are only possible in Indian currency, with repatriation limited to a specific amount per financial year. Additionally, interest earned on an NRO account is taxable and is deducted at source. Read on to discover everything you need to know about NRO bank accounts.
1. Purpose
NRO accounts are instrumental for NRIs to manage income earned in India while residing abroad. Such accounts cater to distinct income sources such as dividends, rental earnings or any other income generated within India. One of the key features of NRO account is their ability to facilitate repatriation of funds back to the NRI’s home country, although this is restricted to up to $1 million per financial year and subject to specific conditions.
2. Tax Implications
Income deposited into NRO accounts is subject to taxes, including Tax Deducted at Source (TDS) at a rate of 30% on interest earned within India. Under the Double Taxation Avoidance Agreement (DTAA), the TDS rate applicable would be in the range of 10-15% as per the country of residence depending on the prevailing DTAA agreement.
3. Currency Conversion
Funds held in NRO savings accounts are maintained in Indian rupees, which eliminates the need for constant currency conversions for transactions performed within India. This stability in currency helps NRIs manage their finances efficiently, avoiding exchange rate fluctuations and associated expenses.
4. Benefits
NRO accounts offer NRIs with considerable benefits, including flexibility in managing their Indian earnings. They provide easy fund access through distinct banking channels and ensure compliance with financial regulations. NRIs can effectively use their income earned in India for savings, investments, or other financial commitments while residing abroad, leveraging the robust banking infrastructure offered by NRO accounts.
5. Banking Services
This NRI account offers a holistic suite of banking services personalised to meet the particular needs of NRIs. These include advanced digital banking features such as mobile banking, internet banking, and access to virtual branches. These services allow NRIs to manage their funds conveniently from anywhere, facilitating bill payments, online transactions, and other financial activities seamlessly. This ability to manage accounts online through an NRO account adds a layer of convenience.
In case, you are looking to undertake the NRO account opening online process, IndusInd Bank should be at the top of your list. Why? Explore the benefits it offers to find out:
Feature | Details |
Domestic use of debit card | Access in India for local transactions |
Free cheque book | For use in India |
Digital banking services | Net banking, mobile banking, and video branch |
Fund transfer options | Host of online and telegraphic options to transfer funds |
Mandate holder | Can appoint a mandate holder to manage the account in India |
To sum up
NRO bank accounts are crucial for NRIs to manage income earned in India, such as dividends, rent, and pensions while residing abroad. These accounts allow funds to be maintained in Indian currency, simplifying transactions in India and lowering currency conversion hassles. Income in NRO accounts is subject to taxes, with TDS rates applicable. Also, they offer the benefit of comprehensive banking services personalised to your needs, including internet banking and mobile banking. Opening this account online offers great convenience in performing transactions and ensures compliance with financial regulations.
So, if you do not have an NRO account yet, consider opening one today to efficiently manage your earnings generated in India and access a range of financial services from anywhere in the world.
