What Is NRO Account: Meaning, Rules & Comparison With NRE Account

Key Takeaways

• Non-Resident Ordinary is commonly abbreviated as NRO. As its name specifies, NRO accounts are a type of savings or fixed deposit account that is specifically designed for non-residents who still earn income in their home country.
   
• NRO accounts have various features such as a joint account option, repatriation permitted, accepting local and international deposits, and many more.
   
• You need some documents, such as identity proof, address proof, NRI status proof, tax identification, seafarer’s proof, and tax declaration to open NRO accounts.
   

An NRO (Non-Resident Ordinary) account is a type of savings or fixed deposit account that is designed for individuals who have relocated abroad but continue to earn an income in their home country.

For example, Natasha works in Singapore. However, she owns a property in Pune. That property brings in ₹45,000 rent every month. She opened an NRO savings account with a reputable bank to receive this amount.

By year-end, ₹5,40,000 gets credited into her account. This ₹5,40,000 is subject to income tax. This account helps her handle this income legally and withdraw or repatriate it when needed.

Through this blog, we will help you understand the NRO account in detail. Further, we will also discuss rules and regulations related to NRO accounts and their comparison with the NRE account.  

Meaning Of NRO Account

An NRO account is used by individuals who reside abroad but still earn income in India. These earnings may include:

• Rent from the property
   
• Interest from deposits
   
• Dividend from shares
   
• Pension income
   
• Payments for services
   

NRIs (Non-Resident Individuals) and PIOs (Persons of Indian Origin) are eligible to open these accounts.

Funds deposited into the account can come from within the country or be transferred from abroad. However, since these funds are considered local earnings, it is subject to all applicable Indian tax laws.

Key Features Of An NRO Account

NRO accounts come with several unique features. These features are tailored for NRIs handling income in India. The following table highlights the main features of an NRO account along with examples:
 

The above-mentioned table shows features that ensure that NRIs can handle Indian income and obligations with flexibility, ease, and compliance.

Read More – How to Open an NRI Account – A Complete 2025 Guide for NRIs

Rules And Regulations Related To NRO Accounts

NRO accounts come with several operational, legal, and tax-related rules set by the RBI and banks. The following table helps you understand these rules to manage your funds effectively without facing compliance issues:
 

The rules mentioned in the above table ensure transparency and allow NRIs to manage income generated in India without hassle. It is advisable to consult the bank or a tax advisor to ensure all documentation is in place. However, tax treatment depends on the nature of income and applicable DTAA provisions.

Difference Between NRO And NRE Accounts

Although both accounts cater to non-residents, their usage and treatment are quite different. The following table shows the key difference between NRO and NRE accounts:
 

While both accounts serve NRIs, choosing the right one helps you optimise tax, fund accessibility, and financial planning from abroad. However, the principal in NRO is not freely repatriable unlike NRE.

Bonus Tip: Did you know that Bank of Baroda has launched the first Global Women NRE and NRO Savings Account for women NRIs.

Documents Required To Open An NRO Account

When opening an NRO account, the bank will ask you to submit a few documents. The following table lists the main documents required to open an NRO account:
 

Some banks might ask for additional documents based on internal policies. For compliance with international tax reporting rules, banks may require FATCA or CRS declarations. 

FATCA is a U.S. law requiring U.S. citizens, green card holders, and tax residents to report overseas accounts.

CRS is an OECD-led global framework where 100+ countries share non-resident account details to curb tax evasion.

Also Read - Big Update: AU Small Finance Bank Enables UPI for NRE & NRO Accounts

Common Mistakes NRIs Make With NRO Accounts

Many NRIs open an NRO account but often overlook key rules and compliance requirements. This can lead to financial and legal hurdles. The following table highlights the common mistakes NRIs make with NRO accounts:
 

If you avoid these mistakes, then you can manage funds more efficiently. Also, ensure smooth repatriation without legal complications.

Conclusion

You might have understood by now that an NRO account provides a seamless and compliant way for individuals living abroad to manage their income back home. 

Be it rental income, bank interest, dividends, or pension, an NRO account helps you manage funds in rupees while staying compliant.

In contrast to NRE accounts that handle foreign income with tax-free benefits, NRO accounts manage local earnings but involve tax and repatriation limits. However, they are essential for NRIs with ongoing financial ties to their home country.

FAQs

1. Are NRO fixed deposits eligible for senior citizen rates?

No, senior citizen benefits are not applicable for NRIs.

2. Which banks are popular for NRO accounts?

Some popular banks for NRO accounts are, DBS bank, HDFC bank, ICICI bank, and Kotak Mahindra Bank.

3. Can I link my NRO account to UPI apps?

Yes, you can link your NRO account to UPI apps using your international mobile number, as per NPCI guidelines.

4. How to avoid TDS on NRO accounts?

You cannot avoid paying on an NRO account. 

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