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NRO Account

The NRO account allows an NRI to receive funds in Indian or foreign currency and the interest earned is subjected to income tax in India.

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An NRO bank account is an ordinary saving bank account opened for NRIs. This is the reason it is called a Non-Resident Ordinary (NRO) account. Being an ordinary bank account, it can be used for all regular transactions in India including making payments, shopping, receiving earnings in India i.e. rent, pension, etc.

An NRO Account is for NRIs to manage/invest their Indian earnings on non-repatriation basis. The funds in an NRO account are repatriable with certain rules and limits by the RBI.

Key Facts

  • Money in NRO account is repatriable with certain restrictions.
  • Money in this account is always in Indian Rupees.

NRO Account Types

An NRO bank account is further classified into:

  1. NRO Account (Non-PIS)
  2. NRO PIS Account

The NRO PIS Account is an NRO Saving Bank Account with PIS Permission. Initially, this account was required for investing in the Indian Stock Market on a non-repatriation basis. However, with relaxation in the rules by RBI, PIS permission is now not mandatory for NRO mode of transactions and NRIs can invest in equity stocks with NRO Non-PIS account. However, still, many brokers are not offering to trade through NRO account without PIS due to the responsibility of complex TDS computation and deduction at broker end which not many can handle.

The NRO Non-PIS Account is a normal NRO saving bank account without any PIS permission. As mentioned above, NRIs can invest in equity stocks through this account. NRO Non-PIS account is mandatory for NRIs to invest in equity derivatives (F&O) in India. NRO account is used to manage NRI's earning (i.e. Rent, Pension) and expenses in India. The transactions in this account are not reported to RBI.

NRO to NRE Transfer

Money transfer from NRO to NRE Account is now permitted by RBI. It require the submission of documents to the bank. The limit of transfer is set by RBI to 1 million USD in a financial year.

An NRI has to fill a 'Request Letter for Transfer of Funds from NRO a/c to NRE a/c' form and submit it to the bank to get the approval.

A separate form has to be submitted if the NRO and NRE bank accounts are with different banks.


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