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NRO Account

General

Non-Resident Ordinary Account

A rupee-denominated bank account for NRIs to manage India-sourced income like rent or dividends, with taxable interest and capped annual repatriation.

Definition

An NRO account is a rupee-denominated bank account for NRIs to manage income earned within India, rent, dividends, pension, or interest on Indian investments. Unlike an NRE account, which is reserved for foreign earnings and offers tax-free interest, NRO interest is fully taxable and repatriation is capped.

This account type is typically what a resident savings account converts into once someone's status changes to NRI, since continuing to operate a resident account isn't compliant, but India-sourced income still needs somewhere to land.

Formula

There's no calculation, but repatriation from an NRO account follows a cap:

Maximum Annual Repatriation = USD 1 million (subject to applicable tax clearance via Form 15CA/15CB)

Worked Example

An NRI owns a rental property in India generating ₹6,00,000 in annual rent, deposited into an NRO account, along with ₹40,000 in interest earned on the NRO balance itself.

  • Rental income: taxable in India, deposited into NRO
  • NRO interest: ₹40,000, also taxable, typically with TDS already deducted before crediting
  • To transfer accumulated funds abroad, the NRI needs Form 15CA (and 15CB if the amount is significant) confirming taxes are settled, before the transfer can proceed, within the USD 1 million annual cap

Key Things to Know

  • Reserved for India-sourced income, not foreign earnings. Foreign income should go into an NRE account instead, keeping the two income streams properly separated.
  • Interest is taxable, often with TDS deducted upfront. This is a key difference from NRE accounts, where interest is fully tax-exempt.
  • Repatriation is capped at USD 1 million per financial year. This applies to both principal and accumulated income being transferred abroad, subject to tax documentation.
  • Form 15CA/15CB is required for repatriation. A CA certificate confirming tax compliance is generally mandatory before funds can be moved out of an NRO account internationally.
  • Existing resident accounts typically convert to NRO upon NRI status. This is the standard, expected path, rather than needing to open a brand-new account from scratch.

Related Terms

NRE AccountNon-Resident External AccountRepatriationRepatriation of FundsNRINon-Resident Indian

Frequently Asked Questions

What kind of income goes into an NRO account?
India-sourced income, rent from property, dividends, pension, or interest from Indian investments, all get deposited into an NRO account rather than an [NRE account](/glossary/nre-account/), which is reserved for foreign earnings.
Is interest on an NRO account taxed?
Yes, unlike NRE interest, NRO interest is fully taxable in India, typically with TDS deducted at source before it's credited, at a rate that's often higher than what a resident would pay on similar interest.
Is there a limit on how much I can transfer out of India from an NRO account?
Yes, NRO repatriation is capped at USD 1 million per financial year (subject to applicable taxes and documentation), unlike an NRE account which has no such cap.
Can I convert a resident savings account directly to an NRO account?
Yes, this is actually the standard path, once you become an NRI, your existing resident savings account is typically converted to an NRO account rather than closed and reopened.
Do I need a CA certificate to repatriate money from an NRO account?
Yes, generally you need Form 15CA and, depending on the amount, a Form 15CB certificate from a chartered accountant confirming applicable taxes have been paid before funds can be repatriated abroad.