How to Transfer Money between NRO and NRE Accounts?

How to Transfer Money between NRO and NRE Accounts?

If you are a Non-Resident Indian (NRI) and have both Non-Residential Ordinary (NRO) and Non-Residential External (NRE) accounts, you may need to transfer money between these accounts at some point. Transferring money between NRO and NRE accounts is a common practice for NRIs, as it allows them to manage their finances in India and abroad. In this article, we will discuss how to transfer money between NRO and NRE accounts.

What is NRO and NRE Account?

NRO and NRE accounts are two types of bank accounts that NRIs can hold in India. NRO account is a bank account that holds the income earned by NRIs in India, such as rent, dividends, and interest. On the other hand, NRE account is a bank account that holds the income earned by NRIs outside India, such as salary, pension, and interest. The main difference between NRO and NRE accounts is that NRO account is subject to Indian taxes, whereas NRE account is tax-free.

How to Transfer Money from NRO to NRE Account?

To transfer money from NRO to NRE account, you need to follow these steps:

1. Obtain a tax clearance certificate: Before you can transfer money from NRO to NRE account, you need to obtain a tax clearance certificate from a chartered accountant. This certificate certifies that you have paid all the necessary taxes on your NRO account.

2. Convert your funds to INR: You need to convert your funds in NRO account to Indian Rupees (INR) before transferring them to NRE account. This can be done through the bank where you have your NRO account.

3. Transfer the funds: Once you have obtained the tax clearance certificate and converted your funds to INR, you can transfer the funds to your NRE account. This can be done throughonline bankingor by visiting the bank in person.

How to Transfer Money from NRE to NRO Account?

To transfer money from NRE to NRO account, you need to follow these steps:

1. Convert your funds to INR: You need to convert your funds in NRE account to Indian Rupees (INR) before transferring them to NRO account. This can be done through the bank where you have your NRE account.

2. Transfer the funds: Once you have converted your funds to INR, you can transfer the funds to your NRO account. This can be done through online banking or by visiting the bank in person.

3. Pay taxes: You need to pay taxes on the funds transferred from NRE to NRO account, as NRO account is subject to Indian taxes.

Conclusion

Transferring money between NRO and NRE accounts is a simple process, but it requires some paperwork andtax compliance. By following the steps outlined in this article, you can transfer your funds between these accounts smoothly. As an NRI, it is important to manage your finances effectively, and transferring money between NRO and NRE accounts is one way to do that.