Are you thinking of relocating to a foreign country and becoming an NRI? Have you transformed your savings account to an NRO account? If you have not done it yet, you should.
What is an NRO account?
A Non-Residential Ordinary account or NRO is a savings account for people who are Indian nationals, currently categorised as a non-residential Indian. In such an account, you can keep money in the Indian and foreign denomination.
Here are some reasons and features why you should switch out your accounts before leaving India.
1. NRIs are not allowed to keep normal savings account
You are designated as a non-residential Indian if you stay abroad for more than 182 days in a fiscal year. In such a case, you are not allowed to operate a savings account in India. So, it is best to change your savings account into an NRO savings account.
2. Making payments in India
If you are an NRI and operate and NRO account, you can easily make payments in India from your current place of residence. This feature is useful in case you have EMIs to pay back in India or other financial responsibilities to take care of. An NRO account will ensure that you can freely make these payments without having to transfer funds, which would act as an extra burden on you.
3. Essential in case of income source in India
You may have moved to a foreign country, but you may still have a source of income inside India. This can be a monthly rent or income from a business establishment. These funds can only be saved through an NRO account. This again saves a lot of hassle and lets you keep all of your earnings without needing to lose some of it in transfers.
While NRO accounts are quite advantageous if you have an income source in India, the same is not that beneficial for all. In fact, people who do not have any income or savings in their Indian accounts, they can transform their savings account into an NRE account. An NRE account only allows you to deposit foreign denomination.
There are several other financial matters, which you should handle prior to changing your status to NRI. These changes will make the transition process much simpler for you to handle.
After your status has been updated to NRI, remember that any savings in your NRO account will likely be taxed as per the standard. However, foreign currency kept in an NRE account cannot e taxed in India.
What is an NRO account?
A Non-Residential Ordinary account or NRO is a savings account for people who are Indian nationals, currently categorised as a non-residential Indian. In such an account, you can keep money in the Indian and foreign denomination.
Here are some reasons and features why you should switch out your accounts before leaving India.
1. NRIs are not allowed to keep normal savings account
You are designated as a non-residential Indian if you stay abroad for more than 182 days in a fiscal year. In such a case, you are not allowed to operate a savings account in India. So, it is best to change your savings account into an NRO savings account.
2. Making payments in India
If you are an NRI and operate and NRO account, you can easily make payments in India from your current place of residence. This feature is useful in case you have EMIs to pay back in India or other financial responsibilities to take care of. An NRO account will ensure that you can freely make these payments without having to transfer funds, which would act as an extra burden on you.
3. Essential in case of income source in India
You may have moved to a foreign country, but you may still have a source of income inside India. This can be a monthly rent or income from a business establishment. These funds can only be saved through an NRO account. This again saves a lot of hassle and lets you keep all of your earnings without needing to lose some of it in transfers.
While NRO accounts are quite advantageous if you have an income source in India, the same is not that beneficial for all. In fact, people who do not have any income or savings in their Indian accounts, they can transform their savings account into an NRE account. An NRE account only allows you to deposit foreign denomination.
There are several other financial matters, which you should handle prior to changing your status to NRI. These changes will make the transition process much simpler for you to handle.
After your status has been updated to NRI, remember that any savings in your NRO account will likely be taxed as per the standard. However, foreign currency kept in an NRE account cannot e taxed in India.
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