As an individual who is travelling abroad, there are plenty of factors you will need to take into consideration. For one, the financial investments you have made for yourself as well as your family will be needed to be taken into consideration. But while closing down your investment schemes and the accounts may seem like a viable option, you can always convert your current account into an NRI account, which is namely the NRO account.
This account offers NRI’s the means to invest their income earnings such as the rent, pension, dividends and other selected forms of income, while settled abroad. The account holder can also transfer foreign currency into this account, which can be converted into the local INR currency when required. While this account has several other benefits and other constrictions that you should be aware of. Given below are some of the features you need to be aware of when opening this loan:
Purpose of the account:
As mentioned previously, the NRO account serves the purpose of allowing the account holder to accumulate and maintain a regular flow of income from India.
With this account, a joint account can be held, by both NRIs. In this account, the co – account holder can also be a resident Indian.
Income Deposit and taxation:
Theseare the main factors of anNRO account you need to be aware of. If you are a non-resident Indian and wish to save or operate money that is sourced from incomes generated within India, then you should opt for this account.Incomes generated from India such as the proceeds from the sale of property, rental income, interest earned on other deposits in India; dividend earned from stocks will need to be deposited in this account. However, in this account, all funds are taxable.
Currency Option for Fund Deposit:
One of the main differences between the NRO account and the other account is the currency option for the deposit. With this account, you can deposit both the foreign funds as well as INR funds. However, it will be held in the INR value in the account
Repatriation of Funds:
Unlike the other accounts, the NRO account has several restrictions when it comes to therepatriation of funds. For one, the account holder can repatriate only an amount of 1million USD during a single financial year.
As compared to the other NRI accounts, the NRO account has tax impositions, which affects the income earned in the account. With this account, not only is the income taxed, but also the interest earned in the account. Taxes such as the income tax, wealth tax, gift tax, etc., are applicable tothis account. However, account holders do have a reduced tax benefit, which can be availed under the Double Taxation Avoidance Agreement (DTAA).