New Delhi, Dec 7 (KNN) A Non-Resident Ordinary Rupee account is a savings account for the Indian NRIs who face troubles in managing their earnings in and outside India. For the citizens of India, who have settled outside of the country for an indefinite period, it becomes a challenging task to manage bank accounts in two countries. They also face trouble in repatriation back to their homeland so they basically opt for retaining a part of their income in India or managing their investments in the country.

NRO accounts help in easy conversions between currencies and serve various tax benefits to the NRIs. This type of account can be jointly opened with a resident of India or a close relative or even an NRI. However, there is a restriction on making such overseas transactions, and one cannot remit more than one million in a financial banking year (April - March). Given below are some Dos and Don’ts while opening an NRO account:

Do’s

   ---  Check for the available Tax Benefits: NRO accounts are known to avail tax benefits to NRIs. The amount of foreign currency that is saved over as income earned by NRIs under NRO accounts is taxable. It is charged on the earned interest and credit balances, alongside being subjected to wealth and gift tax.

        The amount of tax which is charged over an NRO account can be deducted, depending on current TDS rates. NRIs have the option to avail DTAA or Double Taxation Avoidance Agreement facility. This successfully avoids the charges imposed on the interest earned through an NRO account. Therefore, one should check for the available tax deduction options.

   ---  Consider knowing the deposit and withdrawal process: NRO accounts are majorly used for depositing NRI’s cash deposits in international and Indian currency. The withdrawal, however, happens in Indian currency. So, the income originated in India can be deposited only in the NRO account. Besides, having a yearly limit for transferring money, all the credits made to an NRO account has to be made in Indian currency.

        Though an NRO account can be debited for making local payments or to transfer money to other NRO accounts. One should know the terms and conditions of withdrawal and deposit into an NRO account.

   ---  Select a power of attorney: Applicants of NRO accounts are always advised to select a trusted, close relative to hand them over a power of attorney. There might arise situations when an NRI might not be present at the time of the financial crisis of his family. Thereby, it is always advisable to select a power of attorney for your account to be able to take action in your absence on your behalf.

Don’ts

   ---  Do not provide incorrect details: Applicants of an NRO should never furnish incorrect details as your account application may stand a chance of rejection if the particulars provided prove to be incorrect. NRIs must ensure that the critical information of every document like a photocopy of a valid visa, proof of local or overseas address, photocopy of the Indian passport and NRI status proof.

        So, it is always advisable to submit valid documents and have all the details of your documents thoroughly checked. Failing to prove any essential document might lead to the rejection of the account opening form.

   ---  Do not keep a savings account in India: It is illegal for NRIs to have a savings bank account on their name in India as per the Foreign Exchange Management Act (FEMA) guidelines. The NRIs must convert all of their savings frm abroad to a Non-Resident rupee (NRE)/Non-Resident Ordinary Rupee (NRO). Thereby, using a savings account in the homeland can result in paying huge penalties.

   ---  The NRO account holders are thereby advised never to have an active savings bank account, as it might lead to hefty fine when discovered.

NRO accounts are a must for every NRI out there, as not only it provides efficient and smooth conversion of currencies overseas but also is a helping hand to save the income generated frm investments in India. Users who apply for the NRO savings account must always understand all the terms and conditions of the following banks. There are various tax deductions that are included in such transactions along with a certain upper limit to them. The above points, as mentioned, can help NRIs to understand the dos and don’ts before opening an NRO account. (KNN Bureau)