Eligibility
NRO accounts can be opened by all non residents. Not only NRIs but any foreign national or entities (except of Pakistani/Bangladesh nationality/ownership) can open such accounts. Joint accounts with other non residents or residents permitted.
Type of accounts
All type of accounts like current, savings, fixed deposits and recurring deposits are permitted under the scheme.
How to open the account
When a resident become non resident his existing account can be converted to NRO account. It can also be opened by filling the prescribed account opening form and by remitting funds from abroad or local source.
Permissible credits.
- Remittance from abroad through banking channel.
- Proceeds of foreign currency travellers cheques/currency notes by the account holder during his temporary visit to India.
- Loans/advances availed against NRE/FCNR deposit of the account holder.
- Proceeds of deposit/investment made on non repatriation basis.
- Any other legitimated dues to the account holder in India including sale proceeds of gold and silver brought from abroad.
Withdrawals
Amount held in NRO account can be withdrawn for
- Local payments in Indian Rupee
- For investments in shares/securities immovable properties on non repatriation basis subject to general or specific permission of Reserve Bank of India.
Repatriability.
Balance under NRO accounts can be repatriated outside India for any bona fide purpose, subject to production of declaration by the account holder under section 195 of Indian Income tax Act, duly verified and certified by a Chartered Accountant in the prescribed format subject to a maximum of USD 1.00 million per calendar year. Interest accrued on NRO account net of tax deducted at source can be credited to NRE account or repatriated outside India as and when required.
Advance against deposits.
Advance to the extent of 90% of the deposit can be availed at a rate of interest of over 2% above the deposit rate plus interest tax.
Taxability
Normally, Income Tax @ 30.00% +3 % Education Cess ( total 30.90%) will be deducted at source by the Bank, on interest earned/paid in NRO accounts irrespective of the amount of Interest. The rates will be as per DTAA (Double Taxation Avoidance Agreement) agreed between India and various countries, in the case of depositors who are resident in those countries. Click here to see the list of countries and rates. This tax deducted at source can be claimed as refund by filing the return of Income as per Income Tax Act, provided the tax deducted is in excess of the tax due for the particular assessment year.
The TDS on interest earned on NRO deposit accounts shall be at 20% (for the current year the rate will be 20.60% including cess) only instead of 30% in the case of ONR accounts complying with the following conditions.
- The deposit should be made out of the remittances in foreign exchange received from outside India.
- The deposit should not have any amount deposited out of funds in India.