Are you a Non-Resident Indian (NRI) earning regular income in the form of rent, pensions, dividends etc., in India? If yes, then you might want to open a bank account to manage these finances. However, doing so is impossible with a regular savings account used by Indian residents according to the current RBI regulations. Instead, you can open an NRO (Non-resident Ordinary) account to perform any banking transactions within the country. Curious about what these accounts are and why opening one is important? Read on.
What is an NRO Account?
With an NRO account (savings/current), you can deposit money in both Indian and foreign currency, and withdraw it in INR whenever required. You can also easily repatriate the interest earned on this account. Moreover, since you can jointly apply for an NRO account with an Indian resident on a Survivor basis, it is wise to open one, especially if you have family members residing within the country. Like most regular bank accounts, these accounts also have a minimum balance requirement. However, the NRO account minimum balance is usually different for different banks.
Benefits of Having an NRO Account
- Conduct Financial Transactions Within India
As stated earlier, having an NRO account makes it easier to manage funds generated in India. These funds can be withdrawn as Indian currency for performing monetary transactions.
So, if you’re keen on investing money earned India in the form of bonds or mutual funds, having an NRO account helps. Any further investments can either be made directly or through the Power of Attorney (PoA).
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- Repatriation of Funds
If you ever need to use the funds in your NRO account, you can quickly repatriate the deposited money, including the interest earned, without restrictions. However, remember that you can only withdraw the remaining amount if it falls within the prescribed limits of USD 1 Mio per financial year.
- Taxation
As an NRI, the last thing you’d want is the stress of paying taxes on your NRI account transactions. Especially since there are different compliances and regulations to take care of.
The interest earned on the NRO account minimum balance or otherwise is taxed at 30% deducted right at the source. This means you don’t have to pay any additional tax on your funds.
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Conclusion
If you are an NRI, having an NRO account can help you efficiently manage funds generated within India.
Not to mention, opening an NRO account involves a straightforward process. And the NRO account minimum balance requirement is usually on the smaller end, making it an attractive savings instrument for NRIs like yourself!