Too many questions surround the aspect of NRO to NRE Fund Transfer and make up the doubt pool of NRIs. The concept of NRO to NRE Transfer requires knowledge of both these NRI Banking Accounts in particular and understanding the underlying aspects associated with the fund management of these accounts. So, in this article we will guide you through the prospect of fund transfers from NRO to NRE Account.
Fund transfer from NRO to NRE Account: Can I transfer money from NRO to NRE Account?
Yes! An NRI can transfer funds from NRO to NRE account after providing proper documentation stating that all the taxes are paid on the funds being transferred to the NRE Account because both the principal and interest earned on NRE Deposits are fully and freely repatriable. Transfer of funds between these accounts are subject to taxation. Only after you have paid all your taxes on the funds in NRO Account, can you transfer it to the NRE Account.
Another doubt that can arise here will surround the topic of NRO to NRE Fund Transfer Limit. Is there any fund transfer limit while transferring funds from NRO to NRE. If so, what is it? We will cover this aspect in the next segment.
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How to transfer money to NRE Account?
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NRO to NRE Fund Transfer Limit
You can repatriate funds from NRO accounts only up to a maximum limit of USD 1 million per financial year as allowed by Reserve Bank of India (RBI). The funds are not freely repatriable. The interest earned on NRO Deposits is taxable in India at 30% along with surcharge and education cess deducted at the source of interest earned in India.
To understand in detail about the aspect of NRO to NRE Money Transfer, we need to go through an overview of these accounts.
What is NRO and NRE Account: An Overview
Let’s get to the crux of the NRO and NRE Account to understand about their usage and benefits in detail:
- Non-Resident Ordinary (NRO) Account: The NRO account can be opened for the purpose of maintaining the income earned from India such as income from rent, pension, etc. The repatriation of the money in the account can be done up to a maximum of 1 million USD per financial year. Note: 30% tax + surcharge + education cess will be deducted at the source of interest earned in India
- Non-Resident External (NRE) Account: The NRE account can be opened for the purpose of maintaining the income earned outside India with tax free interest (upto 7.95%*) on Fixed Deposits. Both the principal amount and interest earned are completely repatriable from India.
| Factors to consider | Non Resident Ordinary (NRO) Account | Non Resident External (NRE) Account |
|---|---|---|
| Purpose | For income earned from India (pension, rent etc.) | For income earned outside India |
| Currency | INR | INR |
| Joint Account Holder | Both NRIs as well as Residents | Only NRIs |
| Tenure of Deposits | 7 days to 10 years | 1 year to 10 years |
| Interest | Up to 7.30%* | Up to 7.81%* |
| Repatriation(transfer of money from Indian bank account to foreign bank account) | Up to a maximum of 1 million USD per financial year | Both Principal (money invested initially) and Interest completely repatriable |
| Tax Deductions | Tax on Interest earned (not on principal amount): 30% tax + surcharge + education cess will be deducted at the source of interest earned in India | No tax |
Benefits of NRO/NRE Accounts for NRIs
| Non Resident Ordinary (NRO) | Non Resident External (NRE) |
|---|---|
| -Maintain the income generated in India from sources such as pension, rental income etc without any hassle -Earn interest on the funds in the account up to 7.30%* -Invest in opportunities such as Mutual Funds, IPOs etc. -Link NRO Account to a PIS Account and trade in Indian stocks -Convenient Banking Experience | -Park money earned abroad and earn tax-free interest up to 7.81%* -24*7 withdrawals using International Debit Cards –Invest in opportunities such as Mutual Funds, IPOs etc. -Link NRE Account to a PIS Account and trade in Indian stocks -Convenient Banking Experience -Repatriate funds abroad fully and freely |
How to open an NRI Bank Account?
Can I transfer money to NRO Account from abroad?
Yes. NRIs can transfer money to NRO Account from abroad. To understand this part we need to explore the permissible credits in an NRO Account.
Credits refer to the money that can be deposited in an account. The permissible credits in an NRO Account are:
- Inward Remittances from outside India
- Interest earned on the NRO account balance
- Gifts in INR or loans taken from any resident or NRE/NRO account holder
- Transfers from your own or any other NRE/NRO account
- Any income generated in India for which the taxes are not deducted at source
Can I transfer money from NRO Account to foreign bank?
The process of transferring money from NRO Account to foreign bank is called Repatriation. A similar question put up by NRIs is “How to repatriate money from NRO Account”. Mentioned below is the process, limit and the documents required for fund transfer from NRO to NRE Account:
| Accounts | Process | Limit |
|---|---|---|
| NRO | All the following documents are needed to be submitted at the Bank Branch (in India). You can either submit it when you arrive here or download it online and send the signed copies to bank branch via courier: -Form 15CA (The purpose of this document is to ensure that taxes are collected on the funds before they are remitted abroad as it becomes difficult to recover taxes at a later stage) (Fill the form online on NSDL and print the acknowledgement) -Form 15CB (Certificate of an Accountant) (The Accountant fills the form and shares it with the account holder. The account holder then sends it to the bank via courier) -Form A2 (Form for remittance) -Request Form from the Bank (for details to debit funds from your account) | USD 1 million |
Note: Click on the forms 15CA and 15CB to download.
Documents Required to Transfer Funds from NRO to NRE Account
Here are the list of documents you will need to transfer funds from your NRO to NRE account:
- A signed FEMA declaration
- A cheque made out for the amount or signed letter for funds transfer from NRO to NRE savings account
- Proof of the source of funds
- Form 15CA
- Form 15CB
How to Get Form 15CA?
Given below are the steps to get Form 15CA:
- Head to the website of Income Tax of India.
- Go to the e-filing page to log in.
- Once the page is opened, put your User ID and password. Your User ID is your PAN number.
- After that, click on e-file and select “Prepare and Submit Online Form (other than ITR).
- Click on Form 15CA.
- Complete Parts A-D in the form depending on their relevancy for your request.
- Once you have put in all the required information, verify and submit the form.
- Head to “My Account” from the main page.
- Click on My Returns/Forms.
- Click on the Form 15CA which should be there if submitted successfully.
- Print the form along with the acknowledgement slip.
- Sign the Form 15CA and submit a copy to the bank with your request.
How to get Form 15CB?
A Chartered Accountant, who is registered on the e-Filing portal, accesses and submits Form 15CB. The CA must be assigned Form 15CA by the taxpayer in order to certify the details in Form 15CB. The CA fills the form and shares it with the account holder. The account holder then sends it to the bank via courier.
FAQs
NRO to NRE Fund Transfer in Axis bank can be done after providing proper documentation stating that all the taxes are paid on the funds being transferred to the NRE Account.
Given below is the process for ICICI NRO to NRE transfer of funds:
1. Visit the official website of ICICI bank.
2. With your User ID and password, log in to the ICICI internet banking portal.
3. Click on Funds Transfer from the dashboard.
4. Click on the transfer options.
5. Follow the directions to transfer money to your NRO account.
You can transfer money from your existing NRE account to a NRO account that is also in your name.
NRO to NRE Fund Transfer in ICICI bank can be done after providing proper documentation stating that all the taxes are paid on the funds being transferred to the NRE Account.
Yes. Your parents can deposit money in your NRO Account as gifts in INR or loans taken from any resident or NRE/NRO account holder is allowed in an NRO Account.
