NRO stands for Non-Resident Ordinary accounts. It can be opened by NRIs jointly with other NRIs or residents. The funds in NRO accounts are held in rupees. NRO accounts are taxable in India at a flat rate of 30%. Tax will be deducted at source on interest earned in the NRO accounts irrespective of the amount of interest. Money deposited in NRO accounts can be both from earnings abroad as well as sources in India.
The best answer to whether funds held in NRO accounts is repatriable is that it's conditional. This is unlike the case with NRE accounts where repatriation of funds is freely allowed. There are conditions on repatriation of funds held in NRO accounts - you have to carefully consider the rules if you decide on NRO account option. According to a RBI circular: "A Non-Resident Indian (NRI) or a Person of Indian Origin (PIO) may remit an amount up to USD one million, per financial year, out of the balances held in his Non-Resident (Ordinary) Rupee (NRO) account / sale proceeds of assets (inclusive of assets acquired by way of inheritance or settlement), for all bonafide purposes, to the satisfaction of the authorized dealer bank, on production of an undertaking by the remitter and certificate by a Chartered Accountant in the formats prescribed by the Central Board of Direct Taxes vide their Circular No.10/2002 dated October 9, 2002."
Some of the bonafide reasons allowed for repatriation of NRO funds include:
- Education of self or children up to US $30,000 per year.
- Medical Expenses of account holder or family members up to US $100,000.
- Sale Proceeds of immovable property, held for a period of 10 years, up to US$ 100,000 per calendar year.
You can have a NRO savings account (with 3.5% interest) or you can invest in NRO fixed deposits. You can check latest NRO fixed deposit rates at Ratekhoj.
