Open an NRI Savings Account
For Non-Resident Indians (NRIs), managing income earned in India—such as rental income, dividends, or pensions—while living abroad can be challenging. If you're wondering what NRO account is, it is a type of bank account that allows NRIs to deposit and manage their Indian income while providing the flexibility to make local payments and remit funds abroad.
This blog will explore the features, benefits, and key requirements of Non-Resident (Ordinary) (NRO) Accounts, helping you make the best decision for managing your finances while living overseas.
An NRO Account allows you to transfer your interest income and principal amount from an Indian bank account to a foreign bank account, subject to certain conditions.
Any interest earned on the principal in an NRO Account is subject to 30% taxation, deductible at source, in addition to any cess and surcharge.
An NRO Account can be opened jointly with a resident Indian citizen on a 'former' or 'survivor' basis. Additionally, it can be opened with another non-resident Indian.
An NRO Account provides the flexibility to receive funds in either Indian or foreign currency. However, withdrawals can only be made in INR. You can also transfer money from your NRE account to your NRO Account.
Open an NRO Savings Account
The following categories of individuals are eligible to open an NRO Savings account:
To open an NRO Account, you must submit documentary proof of your non-resident status.
To open an NRO Account, you need to submit the following documents:
An NRO Account is designed for NRIs to manage income earned in India—such as rent, dividends, or pensions. It's important to note that tax on an NRO Account applies only to the interest earned on your funds, not the entire balance.
Under the Income Tax Act of 1961, interest income is taxed at a flat rate of 30%, plus applicable cess and surcharge. This means that if your account earns, say, INR 100 in interest, approximately INR 30 (plus any additional cess/surcharge) is deducted as tax, leaving you with roughly INR 70 in net interest earnings.
Banks automatically apply Tax Deducted at Source (TDS) on NRO Account interest at this rate. However, if your country has a Double Taxation Avoidance Agreement (DTAA) with India, you may qualify for a reduced TDS rate, ensuring you don't pay more tax than necessary.
This taxation framework ensures that only your earnings are taxed, keeping your principal intact. For further clarification on NRO Account taxation or assistance with opening an NRO Account online, please contact DBS Treasures.
Understanding the differences between an NRE and an NRO Account is crucial for NRIs managing their finances in India. The right choice depends on factors such as income sources, taxation requirements, and repatriation needs.
Here’s a table summarising the key differences between an NRE & NRO Account:
Key Points
NRE Account
NRO Account
Repatriation
Fully repatriable (both principal & interest)
Restricted to USD 1 million per financial year, subject to RBI guidelines.
Taxation
Interest earned is tax-free in India
Interest income is taxable at 30% TDS, plus applicable cess and surcharge.
Deposit Sources
Only foreign income can be deposited
Accepts both Indian and foreign income (e.g., rent, dividends, pension).
Currency Holding
Maintained in INR, with protection against exchange rate fluctuations
Held in INR, but funds have repatriation restrictions.
For NRIs earning solely from abroad, an NRE Account ensures seamless fund transfers and tax-free interest. If you have income sources in India, an NRO Account is essential for efficiently managing local earnings.
Unlike traditional minimum balance for NRO account, a DBS Treasures NRO Account operates on a Total Relationship Value (TRV) model. Here’s what you need to know:
This structure offers flexibility by considering your total banking relationship rather than just account balances.
Opening a DBS Treasures NRO Account is a simple and seamless process. Follow these steps to get started:
Final Note: If you wish to open an account for your overseas income, you can opt for an NRE account, which is exempt from taxes. To open an NRO Account, get in touch with DBS Treasures, and our Relationship Managers will guide you through the steps.
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