NRO Account Explained Simply
1) What is an NRO Account?
- Full form = Non-Resident Ordinary Rupee Account.
- It is a bank account in India for NRIs (Non-Resident Indians).
- Purpose = To manage income earned in India while you are living abroad.
Example: Youre in Dubai, but you have a flat in Hyderabad that earns rent. That rent must be deposited into an NRO
account.
2) Why do NRIs need NRO?
- FEMA (Foreign Exchange law) does not allow NRIs to keep using a normal resident savings account.
- So when you become NRI: Your old resident savings account converted into NRO account.
3) Currency of NRO Account
- The account is in Indian Rupees ().
- All deposits become INR, even if you send money in foreign currency.
4) Sources of Money (Credits)
- Income earned in India rent, dividends, pension, sale proceeds, interest from FDs, etc.
- Foreign remittances can also be sent.
- Transfers from other NRO accounts.
5) Where can money be used (Debits)?
- Pay bills, EMIs, school fees, investments in India.
- Withdraw cash in INR.
- Transfer funds to another NRO account.
- Repatriate (send back abroad) up to USD 1 million per financial year (after taxes and documentation).
6) Repatriation rules (sending money abroad)
- Limit: USD 1 million per FY (AprilMarch).
- You need documents: Form 15CA/CB (CA certificate confirming taxes are paid).
- Funds must be from legitimate sources.
Compare with NRE: NRE = fully free repatriation; NRO = restricted.
7) Types of NRO Accounts
- Savings Account
- Current Account
- Fixed Deposit (FD)
- Recurring Deposit (RD)
8) Tax Rules on NRO
- Interest earned on NRO = taxable in India.
- Bank deducts TDS @ 30% (plus surcharge/cess).
9) Joint Holding
- Allowed with another NRI or with Resident Indian (close relative).
10) Power of Attorney (POA)
- You can give a Resident Indian POA to operate your NRO account.
- POA can pay bills, rent, local expenses.
- POA cannot repatriate abroad or gift money to themselves.
11) Advantages of NRO
- Mandatory and legal for India income.
- Can be joint with Resident relative.
- Repatriation allowed (with limits).
- Can open FD/RD.
12) Disadvantages of NRO
- Interest is taxable.
- Repatriation limited.
- More paperwork.
13) Exam One-Liners
- NRO = Non-Resident Ordinary account in INR.
- Used for Indian income (rent, dividend, pension).
- Interest taxable (TDS @ 30%).
- Repatriation up to USD 1m per FY with documentation.
- Can be joint with Resident relative.
NRE Account Explained Simply
1) What is NRE?
- Non-Resident External Rupee Account.
- INR-denominated bank account in India for NRIs, money comes from outside India (foreign income).
2) Purpose: To park foreign earnings in India in INR, full repatriability, tax-free interest.
3) Currency: INR. Foreign currency remitted is converted to INR.
4) Sources of Money (Credits): Foreign earnings, transfers from other NRE/FCNR, interest earned.
5) Debits: Withdraw INR, pay bills, invest, repatriate abroad freely (no limit).
6) Types: Savings, Current, FD, RD.
7) Tax: Interest tax-free in India.
8) Repatriation: Fully and freely repatriable.
9) Joint Holding: Allowed with NRI; with Resident only on former or survivor basis.
10) Power of Attorney: Resident can operate for local bills, not for repatriation.
11) Advantages: Tax-free, full repatriation, FDs allowed.
12) Disadvantages: Only foreign income allowed, currency conversion risk.
13) Exam One-Liners
- NRE = External foreign income tax-free fully repatriable.
FCNR Account Explained Simply
1) What is FCNR?
- Foreign Currency Non-Resident (Bank) Account.
- Fixed Deposit account in India for NRIs, kept in foreign currency.
2) Purpose: To protect NRIs from currency risk (rupee depreciation).
3) Currency: Permitted foreign currencies USD, GBP, EUR, JPY, CAD, AUD.
4) Sources (Credits): Foreign remittances, transfers from other NRE/FCNR.
5) Debits: Withdraw foreign currency, repatriate, transfer to NRE/FCNR, convert to INR.
6) Type: Fixed Deposit only. Tenure: 15 years.
7) Tax: Interest earned is tax-free in India for NRIs.
8) Repatriation: Fully free.
9) Joint Holding: With NRI; with Resident only on survivor basis.
10) Interest Rules: Lower than NRE due to no FX risk.
11) Advantages: No exchange risk, fully repatriable, tax-free.
12) Disadvantages: FD only, lower rates, tenure restriction.
13) Exam One-Liners
- FCNR = Foreign currency FD, 15 yrs, tax-free, fully repatriable.
RFC Account Explained Simply
1) What is RFC?
- Resident Foreign Currency Account.
- Bank account in foreign currency, opened by returning NRIs/PIOs after they become Residents.
2) Purpose: Hold foreign currency safely in India, avoid forced INR conversion.
3) Who can open: Returning NRIs/PIOs who are now Residents.
4) Currency: USD, GBP, EUR, JPY, CAD, AUD, etc.
5) Credits: Foreign funds/assets brought from abroad, conversion of NRE/FCNR, remittances.
6) Debits: Overseas expenses, remittances, convert to INR.
7) Types: Savings, FD.
8) Tax: Interest taxable in India (RNOR relief possible).
9) Repatriation: Allowed; if you become NRI again, can reconvert to NRE/FCNR.
10) Advantages: Hold foreign currency legally as Resident, useful for overseas needs, fully repatriable if NRI again.
11) Disadvantages: Interest taxable, only for returning NRIs.
12) Exam One-Liners
- RFC = For returning NRIs, foreign currency, taxable in India.
NRI Accounts Comparison NRO vs NRE vs FCNR vs RFC
Feature | NRO | NRE | FCNR | RFC
--------|-----|-----|------|-----
Who can open | NRI/PIO/OCI | NRI/PIO/OCI | NRI/PIO/OCI | Returning NRI/PIO
Purpose | Indian income | Foreign income | Foreign income in foreign currency | Hold foreign currency on return
Currency | INR | INR | Foreign currency | Foreign currency
Types | Savings, Current, FD, RD | Savings, Current, FD, RD | FD only (15 yrs) | Savings, FD
Sources | India income, foreign remittance | Foreign income | Foreign remittance | Funds brought on return
Use | Local payments, limited repatriation | Local/investments, free repatriation | Repatriation abroad | Overseas/INR
conversion
Repatriation | Limit: USD 1m/year | Fully free | Fully free | Fully free if NRI again
Tax | Taxable (30% TDS) | Tax-free | Tax-free | Taxable (RNOR relief possible)
Best for | Indian income | Foreign income | Avoid INR risk | Returning NRIs
Exam keywords | Indian income, taxable, $1m | Foreign income, tax-free, free repat | Foreign currency FD, no INR risk |
Returning NRI, taxable
