Non-Resident Ordinary (NRO) Account

It is advisable to convert your savings account to NRO account before going overseas. You can visit your bank with Visa and passport and they will convert your existing Savings account to NRO account.

It can be used to deposit Indian earnings like rent, interest, dividends, etc. You can also deposit overseas earnings in NRO account. The account can be opened in the form of Savings, Current or fixed deposit. Remittance from NRE account or remittance received through proper banking channel can be deposited in NRO account. Up to USD 1 Million can be repatriated from NRO account per year. Interest on NRO account is taxable. There is a TDS of 30% from the interest paid.

However, an individual residing outside India and qualifying as a resident of another country can avail the benefit of a lower tax deduction on interest on NRO account under a double tax avoidance agreement. Any individual intending to avail this option can intimate the bank and submit a copy of tax residency certificate from the country where he qualifies as a resident.

It should primarily be used for depositing/managing your earnings in India.

Non-Resident—External (NRE) Account

This account is used to deposit money received from overseas. The account can be opened in the form of Savings, Current or fixed deposit. Interest on NRE deposit is tax free in India. You can fully and freely repatriate your money from NRE Account.

Foreign Currency Non-Resident (FCNR) Account

This account can be opened as term deposits only and is for the period of 1-5 years. You can have this account in any freely convertible currency like Dollar, Pound etc. The interest rates are decided by RBI and are linked to LIBOR rates. Interest income earned from deposits maintained in FCNR account is exempt from tax up to such period the NRI continues to be a non-resident or a resident but not ordinarily resident (RNOR) in India for income-tax purposes.