Moving money to an NRO account? Here’s when tax or ITR filing applies

Moving money from an Indian savings account to a Non-Resident Ordinary (NRO) account does not automatically attract tax. However, whether you need to pay tax or file an Income Tax Return (ITR) depends on how the income was earned, where it was credited, and your physical stay in India during the financial year.

When Do You Become a Non-Resident?

Under the Foreign Exchange Management Act (FEMA), a person becomes a non-resident the moment they leave India to take up employment, business, or any other activity abroad with the intention of staying overseas for an indefinite period.

Once this happens, your existing Indian savings account should ideally be re-designated as an NRO account. There is no requirement to open a new account—informing the bank is sufficient.

Does Transferring Money Trigger Tax?

Simply transferring funds—such as ₹30 lakh—from your old savings account to an NRO account does not create any tax liability by itself. The transfer is not considered income.

Even if there was a delay in converting the savings account to an NRO account, this procedural lapse under FEMA does not have income tax implications, a situation that is quite common among Indians working abroad.

Salary Credit: The Key Factor

Taxability mainly depends on where your salary was credited:

Salary credited directly to an Indian bank account:

This income becomes taxable in India, even if you are a non-resident.

Salary credited first to a foreign bank account (e.g., Qatar) and later transferred to India:

Taxability depends on your physical presence in India during that financial year.

Role of Physical Stay in India

If you were physically present in India for 182 days or more during a financial year, you may be treated as a resident for tax purposes. In such cases, even salary earned and credited abroad can become taxable in India.

Is Filing an ITR Mandatory?

You are required to file an ITR in India only if your taxable income exceeds the basic exemption limit applicable to you for that financial year.

Bottom Line

Transferring savings to an NRO account does not trigger tax

Tax depends on salary credit location and days stayed in India

ITR filing is required only if taxable income crosses the exemption limit

For Indians working abroad, timely communication with the bank and understanding residency rules can help avoid confusion and ensure compliance without unnecessary tax worries.