Being an NRI, it is essential to understand the basic aspects of the bank accounts that they can operate. Here, we will focus specifically on the NRO to NRE Transfer as a preview of NRO to NRE Fund Transfer: Ultimate Guide 2023.
What is NRO Account?
The Non-Resident Ordinary (NRO) account is used to maintain the income that is generated in India by an NRI. This income can be in various forms such as rent from your property, salary in India, interest on investments, and much more. However, there is one factor that separates the NRO Account from the other two types of NRI Bank Accounts viz. Non-Resident External (NRE) & Foreign Currency Non-Resident (FCNR). This factor is Taxation.
NRO Account Tax
On both NRE and FCNR Accounts, you don’t have to pay any taxes on the interest earned whereas, in case of NRO, a tax at the rate of 30% is charged along with surcharge and cess on the interest earned.
Since, the NRO Account is used to maintain the income that is generated in India, the interest earned is taxable in India.
NRO Savings Account
There are multiple types that you can choose from while opting for an NRO Account. The types are as follows:
- NRO Savings Account
- NRO Current Account
- NRO Recurring Deposit
- NRO Fixed Deposit (NRO FD)
Since, the NRO savings account is one of the most sought after types of the NRO Account. Let’s understand it a bit more.
As discussed above, the NRO Savings Account will be used to maintain the income generated in India by an NRI. But why is it important? It is important because NRIs can’t hold a Resident Individual Savings Account in India. Therefore, it becomes necessary for NRIs having any sort of income generated in India to hold an NRO Account for its maintenance.
NRO Account Details
The NRO Account has many elements we need to understand. Here’s a table to provide you with a basic overview of the NRO Account.
| Factors to consider | Non Resident Ordinary (NRO) Account |
|---|---|
| Purpose | For income earned from India (pension, rent etc.) |
| Currency | INR |
| Tenure of Deposits | 7 days to 10 years |
| Interest | Up to 7.50%* |
| Repatriation(transfer of money from Indian bank account to foreign bank account) | Up to a maximum of 1 million USD per financial year |
| Tax Deductions | Tax on Interest earned (not on principal amount): 30% tax + surcharge + cess will be deducted at the source of interest earned in India |
Can I transfer money from NRO to NRE Account?
Yes. An NRI can transfer money from NRO to NRE Account provided that they have paid the taxes liable on the funds being transferred to the NRE Account. It is necessary to understand the process of transfer from NRO to NRE Account involves certain checks and balances to ensure the collection of liable taxes as the funds that are deposited in the NRE Account of the NRI are completely and freely repatriable.
NRO to NRE Transfer: The Road to the Ultimate Guide
A preview is meant to establish a basic set of ground rules and facts that needs to be kept in check while you go ahead with the major processes.
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