Indians reside in different parts of the world. Some travel abroad for higher education, work, marriage, medical treatments, etc. Many people settle there to make a living and improve their quality of life. They also aspire to achieve and have some missions to accomplish. So, people look for means to save money.
An NRO Account helps Indians face financial troubles in and outside India swiftly. For Indian citizens settling abroad indefinitely, managing Bank Accounts in two separate countries can be challenging. They also face trouble while repatriating to their homeland. Hence, they opt to retain a part of their income in India and manage other investments in their country.
An NRO online helps convert currencies and serves plenty of tax benefits to NRIs. It allows them to open a Joint Account with a resident Indian, an NRI, or a close relative. There is a financial limit on the Remittance amount for overseas transactions. You cannot transfer more than INR 1 million in a fiscal year, i.e., from April to March. Following are other guidelines you should know before opening the account:
DO’S
- Check for tax benefits: These accounts provide tax benefits. The foreign currency saved in them is the income earned by the NRIs, including taxes. It has charges on the interest earned, and credit balances and is subject to wealth and gift tax. The taxable deduction depends on the current TDS rates. NRIs can use the DTAA facility to avoid interest charges. Consider checking the available tax deduction options.
- Understand the process: An NRO Savings Account is used for depositing NRI’s cash in international and Indian currency. The withdrawal happens in Indian currency. So, the income originating from India is liable for deposit only in the NRO Account.
- Appoint a power of attorney: Most account applicants are asked to select a trusted, close relative for power of attorney. The NRI may be absent during the financial family crisis. Therefore, choose a power of attorney for the account who can control the finances in your absence.
DON’T’S
- Avoid adding incorrect details: Never add false information, which leads to application rejection. Ensure adding accurate details for important information on every document, such as a photocopy of a valid visa, Indian passport, overseas residential address proofs, local address proofs, and NRI status proofs.
- Avoid maintaining Savings Accounts in India: It is illegal for NRIs to hold a Resident Savings Account, according to the Foreign Exchange Management Act. Nevertheless, they can open an NRO Account.