The way NRIs need to manage their finances differs significantly from Indian residents. In this regard, as proposed by the 2020 budget, individuals who have an income in India of up to INR 15 lakh are considered NRIs if their stay in the country does not exceed 181 days during the financial year. However ,if their income in India exceeds INR 15 lakh, then this period is 120 days. If you meet this criteria and you have an income within the country then, as an NRI, you will surely need a Non-Resident Ordinary (NRO) account to manage these finances.

What is an NRO account?

An NRO account is a means for NRIs to manage their finances within India. It includes both a current, savings, fixed and recurring deposit option which can enable you to manage the capital you accumulate in INR without a hassle. As the interest rates provided on savings, fixed and recurring deposits can vary from one bank to another, make sure you compare the different rates and choose the best one. 

How to get started on opening an NRO account?

Once you have decided on the institution with which you would like to open an account, the process of getting started is quite simple. You will need to,

1. Fill in the application form.
2. Attach 2-3 passport size photographs.
3. Provide proof of residence abroad. You can use a copy of your visa or resident permit which is attested by the relevant official.
4. Furnish a copy of your passport as an identity proof.
5. Include your money remittance details. This can be in the form of cheque drawn on an overseas account or credit card statement that is not over six months old.

What are the benefits of an NRO account?

Maintaining an NRO account has several benefits. It allows you to accumulate your domestic earnings through rent, dividends and other investments through proper channels, thereby safeguarding your income from any leakages. It also makes the process of undertaking fixed and recurring deposits extremely simple; and is covered up to INR 5 lakh by the government in the event of contingencies as per the Budget 2020. In line with this, having an NRO account makes you eligible for loans against the fixed deposits that you maintain, at a considerably low interest rate. This can be extremely useful in the case of an emergency. Finally, since you can hold a joint account with an Indian resident, who is granted power of attorney, there will be someone who can manage it domestically as well.   

Does it have any limitations?

An NRO account also has a few setbacks. It cannot be used to save money you are earning abroad, as the account holds funds only in INR. You should consider opening a Non Resident Rupee (NRE) account to hold funds in foreign currency. You can make transfers from an NRE account into your NRO account as it can receive funds in foreign currency. Apart from this, your NRO account is also liable to tax deducted at source (TDS). However, as an NRI you can claim an exemption on the interest you earn under Section 80TTA of the Income Tax Act.

Opening an NRO account is a good decision if you want to efficiently manage your income earned within India in Indian currency. In addition to this it is also extremely useful when you want to send funds from abroad to be used within the country.