NRO Account - Benefits, Difference & Eligibility of NRO Account
If you're living abroad but still earn money in India—like rent, pension, or dividends—you need a safe way to manage that income. That’s where an NRO Account helps. NRO stands for Non-Resident Ordinary account. It’s a special bank account made for NRIs (Non-Resident Indians) to handle money earned in India. Whether it’s rental income from your flat in Mumbai or interest from fixed deposits, this account makes it easy to receive, store, and spend that money in India.
What is an NRO Account in Simple Words?
An NRO Account is a bank account for NRIs to manage their Indian income.
This income can include:
- Rent from property
- Interest from savings or fixed deposits
- Indian salary (if any)
- Pension or dividends
- Earnings from a side business in India
You can open it as a savings or current account,and use it like a regular bank account—but with some rules for tax and money transfers.
Who Can Open an NRO Account?
You can open an NRO account if:
- You’re an NRI (Indian citizen living outside India)
- You are a Person of Indian Origin (PIO)
- You earn income within India after becoming non-resident
You will need:
Banks offer online and offline options to open an NRO account, and joint accounts with another NRI or resident Indian (with conditions) are allowed.
Key Benefits of Having an NRO Account
BenefitDetails
Manage income earned in IndiaCollect rent, dividends, pension, etc.Pay Indian bills easilyUtility bills, EMIs, insurance premiumsJoint account facilityCan open with NRI or resident IndianFixed deposit optionsHigher interest than regular savingsLocal payments made easyATM, UPI, cheques—all work as usual
It works just like any Indian savings account but is meant for NRIs with Indian income.
Taxation Rules on NRO Accounts
- Interest earned on NRO savings or FDs is taxable in India
- TDS (Tax Deducted at Source) of 30% (plus surcharge) is usually applied
- You can claim a refund or benefit under DTAA (Double Tax Avoidance Agreement) if your country has one with India
So, NRO income is not tax-free like NRE accounts.
How is NRO Different from NRE Account?
FeatureNRO AccountNRE Account
UseIndian income onlyForeign income remitted to IndiaTax on InterestTaxable in IndiaTax-free in IndiaRepatriation LimitUp to $1 million/year (with documents)Freely repatriableJoint AccountWith NRI or Indian residentWith NRI onlyCurrency DenominationHeld in INRHeld in INRIdeal ForNRIs earning from Indian sourcesNRIs wanting to park foreign earnings in INR
Real-Life Example
Ravi lives in the UK but owns a shop in India. He earns ₹25,000/month rent. He also gets interest on his Indian fixed deposit. He needs a way to collect and spend this money in India.
He opens an NRO account with an Indian bank. His rent and interest go into this account. He pays local bills and sends ₹5 lakh abroad after taxes by showing documents.
This is the typical use of an NRO account.
Can I Send Money Abroad from My NRO Account?
Yes, you can. This is called repatriation.
But there’s a rule:
- You can send up to USD 1 million per financial year abroad from your NRO account
- You must provide proof of tax payment (Form 15CA/CB or similar)
So yes, your money is not stuck in India, but it’s not as flexible as an NRE account.
Pros and Cons of NRO Account
ProsCons
Helps manage Indian incomeInterest is taxable in IndiaEasy to open and operateRepatriation has a yearly limitCan pay local expensesNeeds documents for sending money abroadCan open jointly with residentsHigh TDS on interest earned (unless claimed back)
Final Thoughts
An NRO account is a smart choice for NRIs who still earn from Indian sources. It lets you collect income, pay bills, and move funds easily. Just remember—interest is taxable, and repatriation is limited.
Before choosing between NRO and NRE, think about your income sources and how often you plan to send money abroad.
With trusted partners like Motilal Oswal, you can manage your NRI accounts, investments, and taxes smoothly—all in one place.