How to Convert your Fixed Deposit into an NRO Account After Moving Abroad?

Before moving abroad, Non-Resident Indians are advised to convert their resident savings accounts into NRO Savings Accounts. As an NRI, you cannot hold resident savings accounts, however, you can convert your bank account into an NRO Savings Account and enjoy lucrative interest rates. You can also deposit earnings from India into an NRO Savings Account. This usually includes money earned as rent from property in India or interest earned on investments.

While most NRIs tend to convert their resident savings accounts, they may have Fixed Deposits in India. One might wonder what they can do once their Fixed Deposit matures. In such cases, NRIs can choose to convert their regular Fixed Deposit into an NRO Savings Account (Non-Resident Ordinary). There are 3 types of non-resident accounts namely- NRE Savings Account (Non-Resident External), FCNR Account (Foreign Currency Non-Resident), and NRO Savings Account (Non-Resident Ordinary).

Let us understand each of these NRI Accounts, their tax implications, interest rates, and more.

NRE Savings Account (Non-Resident External) -

A Non-Resident External Account can be freshly opened by an NRI after they move abroad. Interest earned on these accounts is not taxable in India. If you are moving abroad, you can redesignate your already existing resident savings account as an NRE Account, however, you can also redesignate your existing resident savings account or fixed deposit into an NRO Savings Account. Money from an NRE Savings Account is freely repatriable unlike funds from NRO Savings Accounts.

NRO Savings Account (Non-Resident Ordinary) -

Your existing Savings Account or Fixed Deposit can be converted into a Non-Resident Ordinary Savings Account after you move abroad. However, interest earned on an NRO Savings Account is taxable in India. Tax is deducted as TDS on the interest income from NRO Accounts at 30% and the interest income is taxable at slab rates. As a Non-Resident Indian, you can seek relief under India’s Double Tax Avoidance Agreement. In such cases, your tax rate may become lower than 30%.

FCNR Account

An NRI can open a Foreign Currency Non-Resident Account if they wish to save their income earned abroad in the currency of their resident country. The interest earned on these accounts is not taxable in India.

SBM Bank India offers a range of banking solutions for NRIs that not only help them manage their funds better but also help them gain lucrative returns. The bank offers great interest rates on NRE Savings Accounts, NRO Savings Accounts as well as FCNR Accounts. Apart from these 3 accounts, the bank also offers various investment opportunities for NRIs who are looking to expand their financial portfolios. From converting your already existing resident accounts into NRI Accounts to starting new, SBM Bank India is there with you every step of the way.