Should open NRO account?

Your aunt must open an NRO account to hold her Indian income and convert her old resident account. NRE account is optional. She can repatriate up to USD 1 million/year from NRO, so ₹1–1.5 crore is fully allowed. Her AY 2026–27 ITR should be filed as Non-Resident, regardless of when the NRO account is opened. No issues arise from earlier ITRs filed as Resident unless there was a tax loss to the department.

Whether to open an NRO account depends on whether you have income sources in India or plan to receive money from India.

NRO account (Non-Resident Ordinary):
- For managing income earned in India: rent, dividends, pension, maturity proceeds from Indian investments
- Interest on NRO balance is taxable at 30% (TDS deducted by the bank)
- Repatriation allowed up to USD 1 million per financial year after taxes

NRE account (Non-Resident External):
- For depositing foreign earnings, salary earned abroad, or remittances from outside India
- Interest on NRE balance is fully exempt from tax in India
- Principal and interest are freely repatriable

Which to open:
- Receiving rent from Indian property, dividends, or pension: open NRO
- Only depositing foreign salary and remitting into India: open NRE
- Both situations: hold both accounts simultaneously

One critical compliance point: once your residential status changes to NRI, your existing resident savings account must be redesignated to NRO. Continuing to operate a regular savings account after becoming NRI is a FEMA violation.

For ITR filing as NRI and understanding which income is taxable in India, the [Tax Garden services page](https://taxgarden.in/services) covers NRI tax filing and compliance under DTAA.

Your aunt qualifies as an NRI under the Income Tax Act and therefore will need to change her banking status first by converting her resident savings account to an NRO account. An NRO account is intended for use in managing income derived from sources in India, such as rents, interest, dividends, etc. An NRE account is used to deposit foreign income that is sent by way of remittance to India and earns tax exempt interest with repatriation being available, but is not required to open due to her NRI tax status. A "Resident" account must also be opened at a later date as indicated to the Income Tax department, so any practical issues should be restricted to the late opening of records.