NRI's CORNER
F.E.M.A.
NRO Account
 
NRI's CORNER - NON-RESIDENT (ORDINARY) DEPOSIT ACCOUNT – NRO
 
A Non Resident (Ordinary) Account can be opened and maintained by - any person residing outside India being an NRI & also a foreigner i.e. both Bala Chander residing in USA as an NRI  as also Bill Clinton residing in USA too as a foreigner can open and operate NRO accounts.
The accounts are not convertible / non repatriable and are maintained in Indian rupees in the form of savings, current and recurring or fixed deposit accounts.
Provisions as regards eligibility, types of accounts, permitted debits / credits, rate of interest, Loans against the security of funds held in NRO account, change of residential status of account holder, repatriation of funds by NRI nominee, and miscellaneous matters such as joint holding, operations by POA etc. are provided herein.
Note: Opening of accounts by individual/entities of Bangladesh/Pakistan nationality requires approval of Reserve Bank of India.
 
1.  Definitions :
  
.01        "Non Resident Indian  [NRI] means an Indian citizen or a foreign citizen of Indian origin (excluding citizens of Bangladesh and Pakistan)  residing outside India.
RBI has clarified that students studying abroad also be treated as NRIs under FEMA and thus are eligible for opening  NRE/FCNR a/cs as also foreign investments .  
 
.02        "Person of Indian Origin" means an Indian citizen or a foreign citizen other than  citizen of Bangladesh and Pakistan who;
       i)       at any time held an Indian Passport, or
       ii)      himself or his parents or grand parents were citizens of India , or
       iii)     is a spouse of an Indian citizen, or
       iv)     is a spouse of person referred to in (i) or (ii) above. 
 
.03        Overseas Corporate Body[OCB] were eligible to open and maintain NRE account till 3.10.2003..
OCB means a Company, Partnership Firm, Society or body wherein 60 % or more ownership lies with NRIs or a Trust wherein 60 % or more financial interest is irrevocably held by NRIs.
.04        "NRO Account" means a Non-Resident Ordinary account referred to in clause (iii) of sub-regulation (1) of Regulation 5;
  
FEATURES OF NRO 
 
1.
Eligibility
Any person resident outside India including an NRI who is a citizen of India or a foreign citizen of Indian origin residing outside India as also a foreigner and an Overseas Corporate Bodies (OCBs).
Opening of accounts by individual/entities of Bangladesh/Pakistan nationality/ownership requires approval of Reserve Bank.
2
Currency
Indian Rupees.
3
MODE OF DEPOSIT
Period   
Income from domestic non-repatriable sources or  realisations from local investments / sources ,
transfer from NRE/FCNR accounts ; forex remittance from abroad  or deposit of  foreign exchange  during visit to India
15 days to 120 months
4.
JOINT HOLDING   
Permissible with other NRIs as well as Residents. (resident attorney can also operate).
5
INTEREST
Banks can offer at par with resident accounts.
6.
REPATRIABILITY
Interest   Repatriable-  subject  to payment of tax
Balance repatriable upto US$ 1 mn per financial year [under US $ one million scheme] 
Repatriation from NRO to NRE is permissible w. e. f. 07th May 2012.
7
LOANS
Available to account holder as well as third party resident in India
8
NOMINATION
Permissible with NRIs as well as Residents.
9.
TRANSFERS
Permissible in account holder's other  NRO accounts or NRE accounts.
10.
VARIOUS TYPES OF ACCOUNTS
Saving, Current, Recurring and Fixed Deposits account.
11
PREMATURE    WITHDRAWAL 
Permissible: - However for period of  less than 15 Days   -  No interest payable ;  above 15 Days  -   Subject to Penalty - As per Bank Rules.
12
TAXABILITY
Interest income  liable to  tax
Balance not subject to Wealth Tax.
No Gift Tax provisions in India . However w.e.f. 1-4-2006  amount received in excess of Rs.50,000 by way of gifts from persons other than specified relatives is included in donee’s income and chargeable to income tax.
13.
TAX DEDUCTION
Banks required to deduct tax at source from interest payable at rate of 20% if initial credit from NRE/ FCNR or forex remittance otherwise 30%.+ surcharge & education cess.
NRIs can also claim benefits of Dual Tax Treaty tax rate.
14
RETURNING NRIs
NRO account is to be redesignated as resident account immediately upon return
15.
PERMISSIBLE CREDITS
Income from domestic non-repatriable sources or  realizations from local investments / sources
Remittances to India in any permitted foreign currency.
Personal cheques drawn in foreign currency and/or  bank drafts drawn in foreign currency or Indian rupees drawn abroad.
Foreign currency / TCs deposited by NRI during visit to India . Import of currency exceeding US$ 5000 and TCs of equal amount require a Currency Declaration Form(CDF).
Any other credit if covered under general or special permission granted by Reserve Bank.
16
PERMISSIBLE DEBITS 
Local disbursements.
Interest fully repatriable subject to tax.
Remittances outside India upto and under US$ 1 mn per financial year.
Transfer to NRO accounts of the account holder or another NRI.
Investment in shares/securities /commercial paper of an Indian company or for purchase of immovable property in India permitted under FEMA on non-repatriation basis.
Any other transaction if covered under general or special permission granted by the Reserve Bank.
 
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