Best NRO Scheme in India

NRO Fixed Deposit

The NRO, or Non-Resident Ordinary Account, is designed for NRIs, or Non-Resident Indians, to maintain funds that already existed before they became NRIs and the funds they earned domestically, such as rent, Indian salaries, dividends, and so forth. Interest earned is taxable under the Income Tax Act of India. This type of fixed deposit scheme offers numerous advantages as well.

Features and Benefits of NRO Fixed Deposit

The features and benefits of NRO fixed deposit are explained below:

Features

NRO fixed deposit has the following features:

• Non-Resident Indians who regularly receive money from sources in India are eligible to open this account.
• According to the Income Tax Act of 1961, the interest accrued on this account is taxable.
• Although capital investments cannot be repatriated, interest can be deposited into a foreign account.
• NRO account holders are permitted to register a joint account with their Indian-citizen relatives who reside in India.
• NRO accounts are kept in Indian Rupees and cannot be converted into foreign money or repatriated.
• In comparison to offers from savings or current accounts, customers can receive higher rates of interest and returns on rupee income.
• The bare minimum that must be placed into an NRO account is INR 1 lakh.
• The investment made is in Indian currency only, and the interest rate varies from bank to bank.

Benefits

The benefits enjoyed by an investor on an NRO fixed deposit are:

• An NRI may receive periodic income from India, such as dividends or rental income. Such earnings can be deposited in an NRO account, where they can use the money to manage their rupee expenses.
• An NRI can easily invest in bonds and mutual funds in India using an NRO account.
• An NRI may use an NRO fixed deposit as security. Additionally, these loans frequently have cheaper interest rates than unsecured loans.
• NRIs may open an NRO account with a relative in the country. The joint account holder can effectively manage the NRI’s financial obligations in India.
• NRO FDs provide favourable remittance rates and excellent interest rates.
• If an NRI sells any investments or assets, they can deposit the proceeds in an NRO account. They can send the funds to their own country (up to USD 1 million annually). The NRI can complete the repatriation form and must pay income tax in India.

NRO Fixed Deposit Rates

Due to their relative safety and dependability in a climate of significant economic risk, fixed deposits are among the most welcomed investment options offered to customers. There are numerous reasons for fixed deposits being so popular. A few of these are

• Although they are less than other investment options, returns are guaranteed.
• The returns offered are determined by compound interest.
• Fixed deposit risk is lower than most, and as a result, returns are relatively low.
• Although fixed deposits have tax advantages, their interest is not taxable. Although some fixed deposit programmes permit early withdrawals by consumers, the majority do not. Even if early withdrawal is permitted, the interest rate is minimal. A fee will be charged if consumers remove funds before maturity in circumstances where it is prohibited.

Even when the market is doing well, interest rates on fixed deposits remain unchanged, which is again not ideal for investors.

NRO FD Interest rates for a Deposit of less than INR 1 crore

The rate of interest offered by different banks on a deposit of INR 1 crore or less in the NRO fixed deposit are given in the following table:

Bank Name	NRO Interest Rates	Senior Citizen NRO Interest Rates
Axis Bank	2.75% to 5.50%	3.50% to 7.25%
Bank of Baroda	290% to 5.30%	4.50% to 7.30%
Bank of India	4.00 to 5.90%	4.00 to 5.90%
Bank of Maharashtra	3.00% to 5.00%	3.00% to 5.50%
Bharatiya Mahila Bank	5.00% to 7.25%	5.50% to 7.75%
Canara Bank	3.00% to 5.30%	3.00% to 5.80%
CitiBank	2.75% to 3.90%	N.A
DBS Bank	3.00% to 5.50%	3.00% to 5.50%
Dena Bank	2.90% to 5.30%	3.40% to 6.30%
Deutsche Bank	2.00% to 6.50%	2.00% to 6.50%
Dhanalakshmi Bank	3.50% to 5.80%	3.50% to 6.30%
HDFC Bank	2.75% to 5.50%	3.25% to 6.25%
IDBI Bank	3.00% to 5.70%	3.00% to 5.70%
Indian Bank	4%	4%
Indian Overseas Bank	3.50% to 5.45%	4.00% to 5.95%
IndusInd Bank	3.00% to 5.50%	3.50% to 6.00%
Jammu and Kashmir Bank	5.00% to 7.35%	N.A
Karnataka Bank	3.50% to 5.65%	3.90% to 6.05%
Kotak Mahindra Bank	2.75% to 4.50%	2.75% to 4.50%
Lakshmi Vilas Bank	3.75% to 6.10%	3.75% to 6.60%
Punjab and Sind Bank	3.50% to 5.50%	4.00% to 6.00%
Punjab National Bank	3.00% to 5.30%	3.75% to 6.05%
Saraswat Bank	3.25% to 5.85%	3.25% to 6.35%
South Indian Bank	3.50% to 5.70%	4.00% to 6.20%
State Bank of Hyderabad	2.90% to 5.40%	3.40% to 6.20%
State Bank of India	2.90% to 5.40%	3.40% to 6.20%
State Bank of Mysore	2.90% to 5.40%	3.40% to 6.20%
State Bank of Travancore	2.90% to 5.40%	3.40% to 6.20%
Tamilnad Mercantile Bank	3.75% to 5.75%	3.75% to 5.75%
Yes Bank	5.00% to 7.00%	N.A

Documents Required to Procure NRO Fixed Deposit

The documents required for opening an NRO fixed deposit account are given as follows:

Proof of Identity,

A few of the documents that account for identity proof, are

• Passport
• PAN Card
• Aadhaar Card
• Driving License

Proof of Address

A few of the documents that account for address proof are:

• Aadhaar Card
• Voter ID
• Utility Bills

Any one of the documents as mentioned above must be carried as a proof for both the categories.

Tax Applicable on NRO Fixed Deposit

Although there won’t be any taxes applied to the principal amount of NRO Fixed Deposits, the interest made on them will be subject to taxes under the 1961 Income Tax Act. The applicable tax on NRO accounts is fairly substantial at 30%, along with the appropriate cess and surcharge.

If the interest earned is more than INR 10 lakhs, a 10% extra surcharge will be applied.