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The NRO Account is an Indian Rupee denominated and can be in the form of savings, current, recurring or fixed deposits. Same like the NRE account. The difference between a NRE & NRO is that in the NRO the income is deemed arise or accrue inside India. Since the income is deemed to be inside India, the taxes on the same follow. The tax that is applicable is the Tax deducted at source or withholding tax, as per the Indian tax rules and regulations. To learn more about NRO account, see the below FAQ's
Any Non Resident Indian or Person of Indian Origin can open a NRO Account. Individuals from Bangladesh & Pakistan can also open NRO Accounts, but would need prior permission of Reserve Bank of India (RBI) to do so. A person can mean an individual, a company, a partnership, a trust etc. can open a NRO Account. Post Offices in India can open NRO Accounts.
A NRI or Non Resident Indian is an individual who resides outside India, but is an Indian Citizen.
A ‘Person of Indian Origin (PIO)’ is a person resident outside India who is a citizen of any country other than Bangladesh or Pakistan or such other country as may be specified by the Central Government, satisfying the following conditions:
A PIO will include an ‘Overseas Citizen of India’ cardholder within the meaning of Section 7(A) of the Citizenship Act, 1955. Such an OCI Card holder should also be a person resident outside India.
Yes, the NRO Account can be a Joint Account, provided all the account holders are either NRIs or PIOs or any combination of the two.
The NRO Account is an INR denominated account.
NRO Account can be a Savings Account, a Current(Checking) Account, a Fixed Deposit Account or a Recurring Deposit Account.
The Fixed Deposit or Recurring Deposit can be for a period as are opened for a resident, per the regulations of RBI. There is no special treatment of a Fixed Deposit or Recurring Deposit in an NRO Account.
The permitted credits into the NRO Account are:
The permitted debits are:
NRO account balance cannot be repatriated. The repatriation can only be up to 1 Million INR and under the Regulations of FEMA (Remittance of Assets) issued in 2016.
Income earned in the account is fully Taxed in India.
Yes, the banks can lend on the security of the NRO Account to the account holder or third parties, as per the general lending norms.
The repayment of the loan can be done by inward remittance. It can also be repaid by utilizing the balance held by the account holder in their NRO Accounts.
Loans outside India are not permitted under the NRO Account
The rate of interest on NRO Account are based on the directives of RBI under the guidelines issued by the department of Banking Regulations. The rates are the normal rates as are applicable to resident accounts.
Yes, the NRO Account can be operated under a POA. There are restrictions on the application of the POA. These restrictions are applicable to withdrawals for local payments in INR or remittance to the account from abroad. For sending money abroad the rules as above of 1 million INR apply.
The NRO Account is then designated as a Resident account or the funds held in this account are transferred to a Resident Domestic Account, at the option of the account holder. When a resident moved abroad all his domestic accounts are to be designated as NRO accounts.
The account holder should immediately intimate the bank of the change of the status.
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