Are you a non-resident Indian with income sources in India? Do you want to learn about taxation and how it affects interest and income earned in India? What accounts can you operate? How are they beneficial? You can open different accounts in India to store your foreign earnings, such as Non-Resident External, Non-Resident Ordinary, and Foreign Currency Non-Resident Accounts.
A non-resident Indian settled overseas can open an NRO online to deposit foreign earnings after sharing the income source with the bank. However, withdrawals are permissible only in INR currency. You cannot freely repatriate the funds into a foreign currency from this account. You can deposit the income earned from dividends, pensions, and rent in India.
What are the benefits offered?
The NRO Account allows you to manage your income in India and earn attractive returns on the money deposited. While the income may be taxable, additional benefits include investing directly in Mutual Funds, collecting rent and other forms of income, and carrying out banking transactions in India while you are overseas. Suppose you wish to send money to your country of residence after selling property or liquidating investments in India.
In that case, you can deposit the funds in your NRO Account and transfer the money abroad. In a financial year, you can repatriate up to USD 1 million to your family.
What are the taxation rules?
In India, the interest earned on deposits in NRO Accounts is fully taxable. The earnings from the NRO interest rate are subject to tax deducted at source. A 30% tax and the applicable cess and surcharge are a part of the interest income from these accounts.
Like the NRE Account, you hold the NRO Deposits in the Indian rupee. They are not freely repatriable. These deposits’ interest income also includes taxes under the Indian income tax rules.
What are the requirements?
To open this NRI Account, you must submit some documents to the bank or upload them on the app. Collect and submit your passport copy (pages mentioning your name, address, birth date, date and place of issue, expiry date, photograph, address, signature, immigration stamp and visa page, if any).
You also need to attach NRI status proof, overseas and Indian address proofs, an Indian PAN Card and Form 60 copy, a recent passport-sized coloured photograph, and a current work contract.
Investment alternatives
Besides these accounts, an FCNR Account lets you store funds in seven foreign currencies without incurring exchange risks, including USD, GBP, AUD, Euro, Swiss Franc, SGD, and more.
Final words
Additional features, such as the freedom to pay bills and transfer money to dependent family members in India at will, make NRO Accounts a lucrative option for NRIs. Online Banking facilities make accessing funds from any corner of the world convenient.
