There was a time when one was not able to transfer money from NRO Account to NRE Account. In fact, the only way one could really get credit of money into an NRE account was from funds remitted abroad or from another NRE account.
NRE Account is a Non Resident External Account, while NRO Account is Non Resident Ordinary Account.
How to transfer money from NRO Account to NRE account?
Today, you can freely transfer money from NRE Account to NRO. However, to do vice versa there are some norms.
Here are steps to transfer the amounts
1) You first need to make a FEMA declaration.
The declaration is basically a document that says you are eligible for transfer from NRO Account to NRE account and it is not in contravention of certain provisions of the FEMA law. If there is no compliance the bank has the right not to transfer the said funds.
2) Filling form 15CA
The biggest hassle is the filing of form 15 CA. You first have to login to the income tax website. You have to than use the PAN card as the password and your login password, which you use to file your income tax returns. You have a sub option under: prepare and submit inline. All the necessary instructions to fill the form are available. You fill and submit and than take a print-out of the same for your record, which is to be given to the bank.
3) Evidence of sources of funds
You have to show the sources of funds that are available into the NRO account.
4) Obtain form 15CB from the Chartered Accountant
You than need to submit form 15CB, which your Chartered Accountant is likely to guide you on.
There are a few important things that you should note:
The first is that when you are transferring money from an NRO Account to an NRE account, you should use only one authorized dealer for the set limit of 1 million dollars.
Why to transfer money from NRO Savings to NRE Savings Account?
There are various reasons to transfer money from NRO to NRE Savings Account. The first and the biggest reason is that amounts in an NRE account do not attract tax. Let us give an example. If you have balance of say Rs 50,000, in your NRO savings account, there will be a TDS of 30 per cent on the interest amount.
On the other hand there is no TDS that would be applicable on the balances in a NRE account. In fact, whatever balances that you have in a NRE account, should be transferred immediately to NRE FDs.
There is no tax on NRE fixed deposits as well. Apart from this the fulll balances in the NRE account are fullly repatriable. So, it makes good sense to move money from NRO Account to NRE account.
Please follow the above guidelines to do so.