You need an NRO account for carrying out financial transactions in India. Such accounts offer several benefits to an NRI or PIO. However, with so many options around you, it is easy to get confused while opening an NRO account.
Read on to know about the top-5 things you need to consider before opening an NRO account.
- Analyse Your Needs
As an NRI (Non-Resident Indian) or PIO (Person of Indian Origin), you need an NRO account for receiving money in India. The income may be in the form of a dividend, interest, rent, salary, pension, etc. You can apply for an NRO account, savings and current accounts, or fixed deposit in India.
An NRO account comes with many benefits, such as fund repatriation of up to US$ 1 million in a financial year, high-interest rates, simple account opening procedure, seamless account management, etc. Choose the bank carefully, as it is ultimately the bank that decides the features you will get from the NRO account. Alternatively, you can convert your existing bank account into an NRO account.
- Explore the Features and Tax Implication
Whether you apply for an NRO account or convert your existing savings account into an NRO account, you must submit proof that your residency status has changed. Generally, the interest you earn on your deposits in an NRO account is taxed at 30% (excluding surcharge). However, if you want to save tax, you may explore the provisions of the Double Taxation Avoidance Agreement (DTAA) and submit the Tax Residency Certificate to Indian authorities to claim a lower rate of tax.
You can apply for a joint NRO account with another NRI or resident Indian. However, Indian laws state that you can only add a resident who is a close relative to the joint account holder. The mode of account operation will be ‘Former or Survivor.’
An NRO savings account with RBL bank can fetch you gravity-defying interest rates up to 6.50%. Moreover, you can avail of free internet banking, domestic debit card, free SMS alerts, free bill payment services, and payable at-par checkbooks. Such features. Hence, before applying for an NRO account, you should check the features and clarify the tax rates to ensure maximum returns.
- Know About the Documents
Before applying for an NRO account, you need to check the documents required. The documents vary from bank to bank. However, some documents are mostly standard for all investors. To open an NRO account, you have to submit a copy of your Indian passport, PIO or OCI Card (if applicable), resident card or Visa, address proof, passport-size photograph, and PAN or Form 60.
If you are not present in India during the account opening, you need to download the application form from the bank’s website, attach the Know-Your-Customer (KYC) documents, and get it attested from any bank-specified authority.
- Evaluate Your Eligibility
Although an NRO account is meant for NRIs or PIOs, you need to fall in a category specified by the bank to apply for an NRO account. Banks generally extend the NRO account facility to NRIs/PIOs who have gone abroad for employment, study, business, or vocation. Moreover, any individual deputed or posted in any UN organization or working as a mariner or oil rigs is treated as an NRI. Additionally, any person, such as children or spouse, on a dependent Visa is considered an NRI.
Hence, before applying for an NRO account, evaluate your eligibility and negotiate with the bank (if the need arises).
- Check the Fees and Charges
Any world-class bank displays all charges on its website. You can generally find the fee-list on the product page. If any bank does not display the fee-list, you must stay cautious, as the charges might be higher than the average.
The Average Monthly Balance (AMB) of an NRO account is generally INR 10,000. If your balance short of the AMB, the bank may charge a non-maintenance fee of up to INR 500 per month.
Additional Read: Difference between NRE and NRO Accounts
An NRO account with a world-class bank like RBL Bank can open a world of opportunities. Ensure that your signature matches the signature on your passport, as any mismatch in the signature can compel the bank to reject the loan application.