With plenty of NRI’s travelling abroad settle down or start their own ventures, it is crucial that the financial aspects of one’s banking accounts meet the standard of the foreign residential government’s banking requirements. In this case, these bank accounts can either be shut down, or can be converted into another NRI account, such as the NRO account.
This account functions like any other savings account, however it does have certain restrictions, as mentioned below:
• Repatriation: The NRO account has a restricted reparability of a remitted amount of 1 million USD. If the remitted amount exceeds this amount, an undertaking along with a certification from a charted accountant must be provided.
• Tax treatment: The interest earned and the credit balances on this account are subjected to certain taxes.
• Deposits of income earned in India: If any income is earned in India through financial products such as salary, rent, dividends etc, then the deposit can be made in this account only.
• Joint Holding: The NRO accounts can be jointly held with both NRI’s as well as residents.
If you are looking to convert your residential account to the NRO account here are a few steps you must follow:
Step 1: Fill up the conversion form from the bank – As a part of bank account conversion process, you need to get a specific form from the bank. While you can always approach the bank for this form, you can also down the form from the bank’s website. You can convert all your bank accounts into your name, under the same customer ID.
Step 2: Submitting the required documents – As a part of opening the account, a certain set of documents are required to be submitted. They include the address proof of the overseas address, applicant’s passport, valid visa or work permit. The PIO card will also be required to be provided.
Step 3: Maintaining minimum balance – During the conversion process, the account in question must have a minimum amount in it. If it has zero balance, the required sum of funds must be deposited in it.
Step 4: Submission – The form and documents must be submitted to the required bank branch. Plenty of these banks offer a PO box facility in foreign countries, which allows you to drop off the required documents and forms for processing. On submitted, it must be verified by the bank. Once the verification process has been processed, the account will be re – designated as an NRO account.
In this step, the re – designation may not change the account number, but in all the bank accounts, it will be flagged off as an NRO account. When making this conversion, you need to be aware about the possible charges for carrying out the conversion process.