In this article we’re explaining exactly what NRO means. But, instead of keeping you waiting, here’s the true definition:
What Does NRO Mean?
NRO means Non-Resident Ordinary Account or NRO account. An NRO account is one of three bank accounts available to non-resident Indians (NRIs). The other two accounts are NRE and FCNR accounts. NRO accounts can be either a savings account or a fixed deposit account, and funds can be received in rupee or foreign currency.
We share further details about what NRO means and how the NRO account compares to the other non-resident Indian banking options below.
Feel free to use the table of contents to jump ahead to the sections most relevant to you.
Table of Contents
- What Does NRO Mean?
- Who Is Eligible for a Non-Resident Ordinary Account?
- What Is the Benefit of a Non-Resident Ordinary Account?
- Frequently Asked Questions
- Ready to Explore Your Options?
Who Is Eligible for a Non-Resident Ordinary Account?
Eligibility for a Non-Resident Ordinary Account is determined by Indian citizenship or origin. To open an account, applicants must present an Indian passport and PAN card. If an applicant does not have an Indian passport, they need to provide a PIO card or marriage certificate.
Importantly, NRO accounts are typically used by non-resident Indians with locally sourced income. This may include income generated from rental properties, investments, dividends, pensions, etc.
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What Is the Benefit of a Non-Resident Ordinary Account?
The primary benefit of a Non-Resident Ordinary Account is that it provides the account holder with an easy way to receive deposits in India. This is especially important for non-resident Indians living outside of India with local income producing assets.
That said, the Reserve Bank of India does place restrictions on how much money can be withdrawn and repatriated to your foreign country each year. This RBI restriction limits NRO accounts to a maximum of USD 1 mm per financial year.
Frequently Asked Questions
Below are three of the most common questions that we receive from people asking what NRO means. If you have further questions you would like answered, don’t hesitate to get in touch with us directly.
What Is NRO vs NRI Account?
The main difference between an NRO and NRI account is that an NRO account refers to a specific type of account (Non-Resident Ordinary Account) while NRI refers to the broad categorization of accounts that non-resident Indians can open in India. In addition to the NRO account, there are two other NRI accounts, which are the NRE (Non-Resident External) account and the FCNR (Foreign Currency Non-Resident) account.
Which Is Better NRE or NRO?
To decide if NRE or NRO is a better account for your needs, you need to determine your intended use for the account. For example, NRE is solely used to receive foreign earnings and results in any foreign currency deposits being converted to rupee. However, an NRO account can hold both foreign currency deposits and rupee deposits and is primarily used for holding Indian sourced income.
Is a Non-Resident Ordinary Account Taxable?
Yes, a Non-Resident Ordinary Account is taxable at the regular income tax level. This relates to any earnings from the account. This reflects the purpose of the account, which is to hold local earnings on behalf of non-resident Indians.
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