The Non-Resident Ordinary Account is a rupee-denominated account which NRIs can open to manage their income in India. You can hold the account jointly with any resident Indian. While Fixed Deposits offer higher interest than Savings Accounts, opening both for a financially secure future is necessary.
An NRO FD offers guaranteed returns as interest at low risk. The interest rates vary among banks. The interest earned on the FD is taxable in India. Moreover, the principal amount is non-repatriable. However, you can transfer the interest amount to a foreign account. You may also transfer funds from the Non-Resident External Account to invest in this deposit. Knw these features before investing:
Attractive interest rates
The deposit offers easy investment with attractive interest rates, allowing you to transfer funds from an existing NRE or NRO Account with another bank in India to create an NRO Deposit. You can also open the Net Banking app to book the deposit and compare the interest rates of various banks. Select the option to get interest credited to your account monthly, quarterly or at the maturity of the deposit.
Tenure
You can select a flexible deposit tenure from seven days to 10 years. You can open the FD only in Indian currency. Only the income earned in India through rent, pension, or interest gets credited to the NRO Account and helps open this NRI Deposit.
Eligibility
Non-Resident Indians (NRI) can open single or joint accounts only with an Indian resident who is a relative of the account holder. Persons of Indian Origin (PIO) can also open a single or joint account following the same clause.
Taxation
Interest earned on NRO Fixed Deposits and Savings Accounts attracts Tax Deduction at Source at 30% plus applicable surcharge and cess. Those who receive income on which TDS is deductible shall furnish their PAN Number to the deductor, failing which TDS gets deducted at the maximum marginal rate or 30% plus applicable surcharge and cess, whichever is higher. However, this does not apply to NRE FD Accounts, which are tax-free and repatriable.
Non-repatriation
You cannot freely transfer the principal amount earned on NRO Fixed Deposit to foreign accounts. However, the interest earned can get transferred. You can transfer the money to your country of residence (up to USD 1 million annually) while paying income tax in India and filling out the repatriation form.
Suitability
If NRIs want to park their Indian earnings, the NRO Account and FD is the most suitable option. If you want to park funds in foreign currency with full repatriability, an NRE FD is an appropriate option.
You can also invest in the Foreign Currency Non-Resident or FCNR Account to deposit funds in foreign currency, earn competitive interest, and avoid currency exchange costs. You can withdraw money from NRE and NRO Fixed Deposits and Bank Accounts only in Indian Rupees.
