Steps to convert NRO savings account to a resident savings account and its benefits

With more and more citizens moving abroad for job purpose or studies, some choose to close their savings account than converting them into one of the NRI banking accounts. An Indian resident, moving abroad for whatever purpose, can turn their regular savings account into a Non-resident Ordinary Account (NRO). Through this conversion, the NRI can make deposits of their earnings in the NRO account from their savings, investments, rent, etc. All are done in the Indian currency form.

What are the benefits of holding an NRO account?

Choice: An NRO account offers several opportunities to NRIs. As for depositing and withdrawing money, you can do so either with a current or savings account. Regular dealings with not much of transactions would see a person opening NRO savings account. This is because you earn interest on the savings account. NRO saving account also provides an additional benefit where you can claim deduction up to INR 10,000 on the interest earned while filing returns. For investment purposes, you can opt for NRO recurring or NRO fixed deposit services.

Taxation: When it comes to the tax of NRO account, there is no relief. The entire interest earned on NRO account is taxable in the hands of the person. So, no part of the income would be considered tax free, and any amount would be included in the tax return of the individual. However, there is no worry for the non-residents as they can make use of necessary exemptions which is around INR 2.5 lakh for calculation purpose.

Tax deduction: NRO account holders need to make sure that they undertake additional work to reap the benefits of various tax provisions. The interest earned from the NRO savings account is usually deducted by 30 per cent, which is high. There are conditions under which lower rates are applicable. However, you need to check with the bank on the same. This makes filing tax returns and getting refund essential for the individuals.

Steps to convert regular savings account to NRO account:

Of all the NRI banking services, NRO is famous. For the conversion purpose, you need to carry out some steps –

• Inform the bank where you have your regular savings account that you have shifted abroad and wish to convert it into an NRO account.
• Fill the conversion form which contains your KYC details, new address details, point of contact, etc. You can obtain the form either from bank branch or on the bank’s website.
• Attest the form once filled. Submit the attested form with documents like vis permit, PIO card, passport copy, etc.
• If the savings account is a zero-balance account, you would need to change it to a savings account with a minimum average balance.
• The customer must submit all the documents and listed forms to the bank branch holding the account. If the account holder is outside the country, attest the forms and documents from the Indian Embassy and then submit it to the bank branch.

The bank then verifies the documents. Then, the bank renames the account NRO savings account, where the account number will remain the same.