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Six Steps to Open an NRO account


An NRO (Non-Resident Ordinary) savings account is where you can maintain and manage your income earned in India such as rent, dividends, pension, etc. An NRO account can be opened in the form of a savings, current or fixed deposit account. Repatriation of funds from NRO accounts is permitted by RBI, subject to certain limits. Procedure for opening an NRO account is as follows:

1.      Options
The non-resident Indian can convert his/her existing resident account in India to the NRO account or open a new NRO account. Documentary proof that the account holder is a non-resident as defined in Indian tax laws is a prerequisite for NRI accounts.

2.      Difference between NRO & NRE Account
Unlike NRE accounts, interest earned on this account is taxed at the rate of 30% (plus surcharge) and other applicable taxes in India according to the ITA. In order to take the benefit of lower rates of tax as per double taxation avoidance agreement (DTAA) entered in by India, NRIs need to submit the Tax Residency Certificate issued by Tax Authorities of the country of his residence.

3.      Documents
Documents such as proof of identity, NRI status proof, proof of foreign address and two photographs that need to be submitted. In case of a new account, the NRI will have to fill up a new account opening form with similar KYC documents. Proof of residence abroad can be in the form of employment detail, student status, dependent visa status, or a copy of the resident permit in the overseas destination. This proof needs to be attested by the Indian embassy, notary or branch of an Indian bank with an overseas branch.

4.      Transaction Proof
Banks also seek proof of financial transactions abroad, be it in the form of a cheque drawn on an overseas account or credit card statement that is not over six months old.

5.      Account opening Duration
In case of conversion, once documents are received and verified, existing savings the account will be re-designated as NRO account. For new accounts, once all the documents are received along with the initial amount, the account is opened.

6. Points to Remember
·         Interests earned on this account is taxed at the rate of 30% (plus surcharge) and other applicable taxes in India according to the ITA. In order to take the benefit of lower rates of tax as per double taxation avoidance agreement (DTAA) entered in by India, NRIs need to submit the Tax Residency Certificate issued by Tax Authorities of the country of his residence.
·         NRO accounts can be opened as a joint account with other Non-Resident Indian(s) and Resident Indians. However only resident close relative can be added as joint account holder in NRO accounts on "Former or Survivor" basis only.



The information provided in this article is generic in nature and for informational purposes only. It is in no manner can act as a substitute for specific advice in your own circumstances. We strongly recommend you to seek professional guidance pertaining to your query or doubt.

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