What is an NRO account and how does it differ from an NRE account for property investment?

An NRO (Non-Resident Ordinary) account is used by NRIs to manage income earned within India, such as rent, dividends, or property sale proceeds. Unlike an NRE account, funds in an NRO account are only partially repatriable and interest earned is taxable in India.

Key Features of an NRO Account

• Holds both Indian-sourced and foreign income
• Interest earned is subject to TDS (tax deducted at source)
• Repatriation limited to USD 1 million per financial year, subject to conditions
• Can be held jointly with an Indian resident relative

NRE vs NRO for Property Investment

• NRE account: only foreign income, fully repatriable, tax-free interest
• NRO account: Indian income like rent or sale proceeds, taxable interest, limited repatriation
• Rental income from Indian property must be credited to an NRO account
• Property sale proceeds are typically credited to NRO before repatriation formalities

Practical Use in Real Estate

• Use NRO accounts to collect rent, manage property expenses, and pay local taxes
• Repatriation requires Chartered Accountant certification (Form 15CA/15CB)

In summary, an NRO account is essential for managing India-sourced income like rent or sale proceeds, while an NRE account suits foreign remittances with full repatriability. NRIs typically need both accounts to manage property investment efficiently.