When you leave India and settle down abroad, you would need to re-designate your savings account into either an NRE or an NRO account. The NRO account is also known as the Non-Residential Ordinary account and lets you handle anything you earned in India in the form of dividends, rent, pension etc. Here is a look at some of the advantages of an NRO savings account.
1. Savings in foreign currency
An NRO savings account will allow you to keep money both in INR and other currencies. This is advantageous, since you no longer need to convert the foreign currency into INR in order to store the funds. This way, you can choose to convert the currency when you get a favourable exchange rate, instead of converting it prior to depositing it into the account.
2. Essential for making payments in India
The NRO saving account is very handy in case you have certain expenses to cover in India, even while you live abroad. For instance, you may have taken a loan prior to leaving the country and now you need to repay the same. The easiest way to do this is to open an NRO savings account, so that the lender can get the EMI each month from this account.
3. Helps to maintain income in India
If you have a source of income in India, an NRO saving account will help you handle the transactions with that source. For instance, you may have some money coming in from rent or a business every month. With an NRO account, the income will be safely stored in India and it will be easier for you to manage these funds.
4. Joint Holding
According to the mandate from the Reserve Bank of India (RBI), you can jointly hold an NRO savings account with an Indian resident which will make it more convenient for you to regulate the account. You can choose to open an NRO account with a fellow NRI as well.
However, there are some drawbacks to the NRO account, which may cause you to rethink about your decision of opening such an account. For instance, the interest generated on the sum present in the NRO account is taxable. In fact, the government charges 30 percent tax on the interest garnered from such an account. Government taxes such as income tax, gift tax, wealth tax, are applicable to the NRO savings accounts.
NRO accounts have both advantages and disadvantages to them. So, evaluate you needs carefully and decide whether an NRO account is suitable for you or not.
1. Savings in foreign currency
An NRO savings account will allow you to keep money both in INR and other currencies. This is advantageous, since you no longer need to convert the foreign currency into INR in order to store the funds. This way, you can choose to convert the currency when you get a favourable exchange rate, instead of converting it prior to depositing it into the account.
2. Essential for making payments in India
The NRO saving account is very handy in case you have certain expenses to cover in India, even while you live abroad. For instance, you may have taken a loan prior to leaving the country and now you need to repay the same. The easiest way to do this is to open an NRO savings account, so that the lender can get the EMI each month from this account.
3. Helps to maintain income in India
If you have a source of income in India, an NRO saving account will help you handle the transactions with that source. For instance, you may have some money coming in from rent or a business every month. With an NRO account, the income will be safely stored in India and it will be easier for you to manage these funds.
4. Joint Holding
According to the mandate from the Reserve Bank of India (RBI), you can jointly hold an NRO savings account with an Indian resident which will make it more convenient for you to regulate the account. You can choose to open an NRO account with a fellow NRI as well.
However, there are some drawbacks to the NRO account, which may cause you to rethink about your decision of opening such an account. For instance, the interest generated on the sum present in the NRO account is taxable. In fact, the government charges 30 percent tax on the interest garnered from such an account. Government taxes such as income tax, gift tax, wealth tax, are applicable to the NRO savings accounts.
NRO accounts have both advantages and disadvantages to them. So, evaluate you needs carefully and decide whether an NRO account is suitable for you or not.
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