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Key Takeaways: The complexities involved in transferring money between an NRO and NRE account can seem baffling. Is the transfer tax-compliant? Are any laws being broken? Can funds be freely transferred from an NRO account to an NRE account? Here are the answers you seek.
What is an NRO account?
Non-Resident Ordinary (NRO) accounts help you manage Indian rupee income sources like rent, dividend, or other income such as profit accrued through an investment or property sale in India. Here, both the non-resident and resident Indians can be joint account holders. The account also allows you to receive income in any currency, Indian or foreign.
However, you can only withdraw funds in Indian rupees from an NRO account. The funds available in an NRO account are not freely repatriable to any other currency or country either as these are used typically for income/profit that is accrued in India. The interest earned in this account is also taxable.
Can NRIs transfer funds from an NRO account to an NRE account?
Yes, you can transfer funds from an NRO account to an NRE or Non-Resident External account. The Reserve Bank of India allows the transfer of funds up to USD 1 million a year from an NRO to an NRE account.
Here is a list of documents you will require if you are planning NRO to NRE transfer of funds:
Reasons for transferring funds from an NRO account to an NRE account
There are several reasons why you may need to transfer money to an NRE account. You might need to transfer your income in Indian currency and withdraw to meet investments and expenses in your preferred currency abroad. You might want to keep an NRO account only for collecting the Indian income and manage all investments in an NRE account that allows you the flexibility of full repatriation when you need the funds. If you need to access the funds in your NRO account in any other currency, then transferring it to your NRE account might be the best bet.
An NRE account offers other benefits too:
Final Note: If you want access to your Indian funds at any time in any currency, then transferring funds from an NRO to NRE account makes sense. However, to manage your India expenses, you may want to keep funds in an NRO account itself.
Whether you are looking to open an NRO or NRE savings account or seamlessly transfer funds, DBS Treasures can help you. If you need assistance, feel free to reach out to us here.