NRO Full Form-Non Resident Ordinary Account

Non-Resident Ordinary (NRO) Account: Features, Benefits, Taxation, and Repatriation Rules

A Non-Resident Ordinary (NRO) Account is a banking facility for Non-Resident Indians (NRIs) to manage income earned in India, such as rent, dividends, pensions, or interest. Unlike NRE accounts for foreign income, NRO accounts handle domestic earnings, ensuring compliance with Reserve Bank of India (RBI) regulations. This article explores the features, benefits, taxation, and repatriation rules of NRO accounts.

What is an NRO Account?

An NRO account is a savings or fixed deposit account in Indian Rupees (INR), designed for NRIs to manage income generated in India, such as rent, dividends, or pensions.

Eligibility

NRO accounts are available to Non-Resident Indians (NRIs), Persons of Indian Origin (PIOs), and Overseas Citizens of India (OCIs).

Key Features

NRO accounts offer:

• Currency: Maintained in INR; accepts Indian and foreign currency (converted to INR).
• Joint Holding: Can be held with another NRI or resident Indian.
• Repatriation: Up to $1 million per year, subject to tax compliance and RBI rules.
• Taxation: Interest is taxable with TDS; DTAA benefits may apply.
• Account Types: Savings for transactions or fixed deposits for higher interest.
• Nomination: Allows designating a nominee for fund transfers.

Benefits

NRO accounts provide:

• Income Management: Efficiently handles Indian income.
• Banking Features: Includes cheque books, debit cards, and online/mobile banking.
• Investment Options: Funds can be used for mutual funds, real estate, or stocks.
• Repatriation Flexibility: Allows up to $1 million annual repatriation.
• Loan Collateral: Can be used to secure loans in India.

Taxation Rules

NRO account taxation includes:

• TDS: 30% on interest income, reducible via DTAA (e.g., 15% for the USA).
• Income Tax Returns: Required if taxable income exceeds the threshold.
• DTAA Benefits: Avoids double taxation in countries with agreements.

Repatriation Rules

NRIs can repatriate up to $1 million annually from NRO accounts:

• Limit: Covers principal and interest, post-tax payment.
• Documentation: Requires Form 15CA (remitter declaration) and Form 15CB (tax compliance certificate).

How to Open an NRO Account

To open an NRO account:

• Bank Selection: Choose an RBI-authorized bank.
• KYC Documents: Submit passport, visa, NRI status proof, address proofs, and PAN card.
• Fund Transfer: Deposit funds to activate the account.
• Activation: Account is activated post-verification.

An NRO account is vital for NRIs managing Indian income, offering flexibility in deposits, investments, and repatriation while ensuring tax compliance. NRIs should assess their needs, compare bank offerings, and understand RBI and tax regulations to optimize their financial management.

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