Most people persevere with depositing money in their savings account even after receiving an NRI (Non-Resident Indian) status. However, the law doesn’t allow you to do so. The moment your residential status changes to NRI, a lot of things change right from your bank’s savings account to your property. While most people simply ignore this fact and end up paying penalty for breaking the rules assigned by the Indian government, there are also some who choose to go by the law and thus do the needful.
A bank account is one of the primary things that have to be changed once you become an NRI. Since keeping a savings account for NRIs is considered illegal, people who have changed their residential status to NRI should also get their savings account converted into an NRO account. It is similar to the savings account and can be used by the Non-Resident Indians (NRIs) to deposit all income received from India such as property rentals, interest on investments, monthly pension, insurance premium payments or EMIs on loans which you have applied for while in India also has to be certified from NRO account.
To convert your savings account to an NRO account, the first thing you are required to do here is to inform your bank on status change within a stipulated period of time, which is not more than 3 months in a majority of banks. After which the bank will designate your savings account as NRO account, whilst the payment will continue as it is. Alternatively, you can even choose to close your current savings account and open a fresh account, if you want to change your bank. Note that if you continue to use your
savings account and get not it is converted after becoming an NRI, you will be penalized by the bank if came into notice. As per the current stats, up to one million dollar funds from the NRO account is so far repatriable however with a condition that you have acquired a clearance certificate from Chartered Accountant that agrees to the payment of taxes as per your Income Tax Slab in India. Anyone willing to deposit funds from abroad should have an NRE account, where the repatriable fund limit is zero/nil.
What should you do when you become an NRI?
Soon after obtaining an NRI residential status, people should follow the below steps to convert their savings account into NRO account, you need to inform your bank about your status change or else visit your bank’s branch for necessary paperwork related to your new account. Once done with that, submit your KYC details again and update your account. Don’t forget to reissue the cheques from a new account in all your investments and liabilities. In case it is auto debit then change the bank permission to NRO or NRE account.
6 Important Things to Know About Opening an NRO Account
1.NRO is a non-resident’s bank account in India that helps them access their funds and investments already made in India. People who have recently acquired an NRI status can convert their savings account into an NRO account. Banks also give them the facility to open a separate NRO account after closing the former savings account.
2.These accounts can have a joint holder (who is an India resident), can receive foreign remittances and come with maximum fund repatriations limit.
3.Anyone willing to open an NRO account or get it converted from the savings account should provide a documentary proof that he/she is not a non-resident Indian as stated in the Indian tax laws. Note that one an individual receives an NRI status; he/she cannot hold any bank account with Indian resident status.
4.In addition to the documentary proof of the NRI status, one needs to furnish a proof of identity, proof of overseas address, and two photographs.
5.As a proof of overseas address, an applicant can furnish his/her employment details, dependent visa status, or a copy of the resident permit in the foreign land. In case the applicant is a student, the form of student’s status would also work. It should also be noted that all proofs must be duly attested by the Indian embassy, notary or from an Indian bank having its branches in the overseas country as well.
6.If an applicant wants to mention the local Indian address for easy communication from the bank along with the proof of foreign address, the proof of such address should also be submitted with proper attestation.
Benefits of Opening an NRO account:-
People who keep using their savings account despite their NRI status should put an end to this practice for two reasons. One, they can be penalized if came under the notice and second they will also be refrained from getting the below-mentioned benefits:-
1.Low-cost and hassle-free money transfers.rn2.Handpicked offers for Non-Resident Indians both in India and abroad.rn3.With an NRO account, you qualify got complimentary checkbook and ATM Card facility.rn4.You can get DTAA (Double Taxation Avoidance Agreement) benefit on your NRO accounts by submitting a self-declaration form in the given format, Form 10F, self-attested copy of a PAN card, and an income tax citizenship certificate for the present FY.rn5.Earn a higher post-tax return on the basis of reduced TDS rates by using DTAA facility on your NRO Savings Account.rn6.Minimum monthly account balance as low as Rs. 10,000 only.rn7.An NRO account also provides joint holders facility wherein you can add any member who is an Indian resident or NRI.