NRO vs NRE: What Happens to These Accounts After Death:
For NRIs and HNIs, managing Indian income and global wealth often includes maintaining NRO (Non-Resident Ordinary) and NRE (Non-Resident External) accounts. But what happens to these accounts after the account holder passes away?
Understanding the treatment of these accounts post-death is important for proper financial planning, smooth asset transfer, and avoiding legal hassles for your loved ones.
Table of Contents
What Are NRO and NRE Accounts?
✅ NRE Account
- Used to park foreign income
- Funds are fully repatriable
- Interest is tax-free in India
- Maintained in Indian rupees
✅ NRO Account
- Used for managing income earned in India (like rent, dividends, pension)
- Funds are partially repatriable
- Interest is taxable in India
- Also maintained in Indian rupees
What Happens to These Accounts After the Account Holder’s Death?
The treatment of NRE and NRO accounts after death depends on nominations, account type, and bank process.
✅ If a Nominee Is Registered
The bank will transfer the account balance to the nominee after verifying documents such as:
- Death certificate
- Proof of identity of nominee
- KYC of nominee
The nominee can either:
- Close the account and repatriate funds
- Convert it to a resident or NRO account depending on their status
✅ If No Nominee Exists
In the absence of a nominee, the legal heirs need to go through a more formal process. This may include:
- Succession certificate or legal heir certificate
- NOC from other legal heirs
- Probate of will (if applicable)
Example: Ajay, an NRI in Singapore, passed away without naming a nominee. His two sons in India had to apply for a succession certificate to access his NRO and NRE account balances.
Account Conversion After Death
🔄 If the Nominee is Also an NRI
They can request the bank to transfer funds to their own NRE/NRO account or close the account and repatriate the amount.
🔄 If the Nominee is a Resident Indian
The bank may ask to convert the NRE/NRO account into a Resident Rupee Account in the nominee’s name before transferring the balance.
Tip: Always check with the specific bank—each may have slightly different internal procedures.
Tax Implications on Inherited NRE/NRO Funds
✅ No Inheritance Tax in India
There is no estate duty or inheritance tax in India. However, resident countries of the nominee (like the US or UK) may have separate tax rules.
✅ TDS on NRO Account Interest
Until the account is closed, TDS (tax deducted at source) applies on NRO interest.
It’s a good idea for heirs to file returns and claim refunds, if eligible.
✅ Capital Gains Tax Applies if Assets Are Sold
If the nominee sells inherited investments or property linked to the NRO account, capital gains tax rules apply.
Proactive Steps to Take Now
✅ Appoint a Nominee
This one step can avoid legal stress for your heirs. You can do it online or by visiting your bank branch.
✅ Maintain a Clear List of Accounts
Keep your family informed about where your accounts are held and who to contact in case of an emergency.
✅ Write a Will
Mention these accounts clearly in your will to support faster inheritance and reduce legal hurdles.
✅ Inform Your Bank
Update your bank with your current contact details and residency status. This helps smooth communication.
Real-Life Scenario: Avoiding Complications
Ravi, an NRI in Dubai, had nominated his wife on all accounts and mentioned his Indian bank assets clearly in his will. When he passed away unexpectedly, his family was able to complete the closure of his accounts within weeks—without court visits or complications.
Compare this with Rajan, who hadn’t updated his bank nominee in years. His siblings ended up in a long legal battle to access the funds in his NRO account.
FAQ -Most Frequently Asked Questions
1. Can a nominee operate an NRO or NRE account after the account holder’s death?
No, a nominee cannot operate the account. They can only claim the funds after submitting the necessary documents and following the bank’s claim process.
2. What documents are required to claim an NRO/NRE account after the account holder’s death?
Typically required: Death certificate, claimant’s ID/address proof, account details, relationship proof, and succession certificate or probated will (if legal heir).
3. Is TDS applicable on funds withdrawn by legal heirs from an NRO account?
Yes, TDS may apply on interest income in NRO accounts even after the original holder’s demise, unless exempted or clarified under inheritance.
4. Can legal heirs repatriate funds from a deceased person’s NRO account to a foreign country?
Yes, up to USD 1 million per financial year can be repatriated, subject to documentation and compliance with RBI/FEMA guidelines.
5. What happens if there is no nominee or will mentioned for an NRE/NRO account?
In such cases, the legal heirs need to obtain a succession certificate or a court order to claim the funds.
Related Posts You May Like
👉 Nominee vs Legal Heir: Who Gets Access to NRI Bank Accounts After Death?
Understand the legal difference between nominees and legal heirs, and who has the rightful claim to NRE/NRO account funds.
👉 How to Repatriate Funds from NRO Account After Account Holder’s Death
A practical guide for legal heirs and nominees to transfer funds from an NRO account post-demise.
👉 NRI Inheritance Tax in India: Rules, Exemptions & Legal Process
Learn the tax implications on inherited assets in India and how NRIs can navigate them legally.
👉 Estate Planning for NRIs: Secure Your Indian Assets for Future Generations
Plan your estate the right way with tips on wills, nominations, and asset protection across borders.
👉 Claiming NRE & NRO Account Funds: Step-by-Step Guide for Legal Heirs
Step-by-step process to claim NRI bank accounts, required documents, and RBI compliance.
Final Thoughts
Your NRE and NRO accounts are not just financial tools—they’re part of your legacy.
Planning today ensures that your family can access your assets without stress or delay tomorrow.
Add a nominee, write a clear will, and talk to your bank or advisor about what happens after death.
Peace of mind is the real wealth.