What is NRO account?

When you become an NRI, your existing Indian savings accounts should be re-designated as NRO accounts. Income arising in India — rent from land or a house, a pension, dividends, or the money from selling inherited property — is credited here.

An NRO account differs from an NRE account. NRE money comes from abroad, is freely repatriable and its interest is tax-free in India; NRO money is Indian income, its interest is taxable in India, and sending it abroad is limited.

Under FEMA rules you can generally repatriate up to USD 1 million per financial year from NRO balances, including property sale proceeds, after taxes are paid. The bank usually asks for Form 145 and, for larger amounts, a CA’s certificate in Form 146.

Why it matters if you live abroad

If you sell or lease family land, the money will almost always land in an NRO account first — having one open and in order saves weeks when the time comes.