NRO Account: Rules for CCFE
The non-resident's account for money earned in India, with a USD 1 million a year exit door.
An NRO account is the non-resident's account for rupee money that was earned or held in India: rent, pension, dividends, sale proceeds, a balance left over from resident days. It is a rupee account, the interest is taxable, and the money is not freely repatriable.
It sits in Schedule 3 of the Foreign Exchange Management (Deposit) Regulations, 2016. For CCFE, the NRO account is where most of the limits live, because repatriation out of it is capped and every exception has a condition attached.
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NRO Account at a Glance
- Who can open
- Any person resident outside India (as defined in section 2(w) of FEMA) for bona fide rupee transactions. This is wider than NRE: a foreign national of non-Indian origin can open one too.
- Forms
- Savings, current, recurring or fixed deposit. NRO term deposits follow a minimum tenor of seven days, the same as domestic deposits.
- Joint holding
- With residents on a 'former or survivor' basis, or with other NRIs and PIOs.
- Tax
- Interest is taxable in India, and remittances are made net of applicable tax.
- Restricted nationalities
- Individuals or entities of Pakistan nationality or ownership, and entities of Bangladesh ownership, need RBI's prior approval. Bangladeshi individuals with a valid visa and residential permit may open one.
Credits and Debits
Inward remittance from outside India
Side
Credit
Note
Any permitted currency, through banking channels
Legitimate dues in India
Side
Credit
Note
Rent, dividend, pension, sale proceeds and similar
Transfer from another NRO account
Side
Credit
Note
None
Rupee gift or loan from a resident relative
Side
Credit
Note
Within the limits of the Liberalised Remittance Scheme
Local payments
Side
Debit
Note
None
Transfer to another NRO account
Side
Debit
Note
None
Remittance of current income abroad
Side
Debit
Note
Net of applicable tax
Repatriation of balances, or transfer to NRE or SNRR
Side
Debit
Note
NRIs and PIOs only, within USD 1 million per financial year
| Entry | Side | Note |
|---|---|---|
| Inward remittance from outside India | Credit | Any permitted currency, through banking channels |
| Legitimate dues in India | Credit | Rent, dividend, pension, sale proceeds and similar |
| Transfer from another NRO account | Credit | None |
| Rupee gift or loan from a resident relative | Credit | Within the limits of the Liberalised Remittance Scheme |
| Local payments | Debit | None |
| Transfer to another NRO account | Debit | None |
| Remittance of current income abroad | Debit | Net of applicable tax |
| Repatriation of balances, or transfer to NRE or SNRR | Debit | NRIs and PIOs only, within USD 1 million per financial year |
The USD 1 Million Rule
Apart from current income, NRO balances cannot be repatriated, with one exception: NRIs and PIOs may remit up to USD 1 million per financial year (April-March) under the Foreign Exchange Management (Remittance of Assets) Regulations, 2016, together with their other eligible assets, after tax. The bank needs the tax documentation the CBDT prescribes before it remits.
Since RBI's June 2026 amendment to the Deposit Regulations, an NRO-to-NRE transfer and an NRO-to-SNRR transfer both count against this same USD 1 million facility. Older notes say NRO-to-SNRR transfers are prohibited; that line has been replaced.
Repatriation-limit and eligibility MCQs. No signup.
Special Cases the Exam Likes
- check_circleForeign tourist: a foreign national of non-Indian origin visiting India may open an NRO current or savings account with funds remitted from abroad or from sale of foreign exchange brought in. The balance can be paid out on departure if the account ran for no more than six months and took no local funds other than interest.
- check_circleDeparting foreign employee: a foreign national leaving India after employment may redesignate the resident account as NRO to collect pending bona fide dues, then repatriate them after tax, within USD 1 million per financial year, and close the account.
- check_circleResident becoming non-resident: the existing resident account must be redesignated as NRO.
- check_circleLoans: banks may lend in India against NRO deposits to the holder or a third party, subject to usual norms and margin; not for relending, agriculture or plantation, or real estate. Loans outside India against NRO are not permitted.
- check_circlePower of Attorney: a resident attorney may make local payments and remittances to non-residents within the account's rules.
- check_circlePost offices may also maintain savings accounts for non-residents on NRO terms.
How CCFE Tests This
Two question shapes dominate. First, the limit: 'up to what amount per financial year can an NRI repatriate from NRO?' with distractors like USD 500,000 or 'no tax requirement'. The answer is USD 1 million, subject to tax. Second, the eligibility contrast: who can open NRO but not NRE. Candidates who think NRO is NRI-only miss that any person resident outside India qualifies.
FAQs
How much money can an NRI repatriate from an NRO account?expand_more
Current income can be remitted after tax. Beyond that, NRIs and PIOs can repatriate up to USD 1 million per financial year from NRO balances and other eligible assets, subject to tax and the Remittance of Assets Regulations.
Can a foreign national open an NRO account in India?expand_more
Yes. Any person resident outside India can open an NRO account for bona fide rupee transactions, though Pakistan nationals and entities, and Bangladesh-owned entities, need RBI's prior approval.
Is NRO account interest taxable?expand_more
Yes. Interest on NRO deposits is taxable in India, and any remittance out of the account is made net of applicable tax. NRE interest is the one that is exempt.
Can an NRO account be held jointly with a resident?expand_more
Yes, on a 'former or survivor' basis. NRIs and PIOs may also hold NRO accounts jointly with other NRIs and PIOs.
Next steps
- NRE vs NRO vs FCNRarrow_forward
- NRE Accountarrow_forward
- SNRR Accountarrow_forward
- Remittance of Assetsarrow_forward
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