NRIs (Non-Resident Indians) often earn income abroad, but they may also possess funds in India derived from passive sources like rent or the sale of investments and property. It is possible for them to transfer these funds overseas, given that they adhere to the regulations established by the Reserve Bank of India (RBI). In this blog, we will explore how can NRIs transfer funds overseas from India seamlessly and efficiently?
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Outward Remittances or Repatriation
Repatriation refers to the procedure of transferring funds from India to the overseas bank accounts of NRIs. This transfer is commonly known as outward remittance. NRIs can choose various methods such as online transfers, demand drafts, or cheques to initiate outward remittances.
It is important to note that NRIs are not allowed to hold Resident Indian Savings Bank Accounts. They need to convert their residents account to NRO account. They can maintain the following types of bank accounts in India:
- Non-Resident External (NRE) Account: NRE account is suitable for holding and managing foreign income earned by NRIs.
- Non-Resident Ordinary (NRO) Account: NRIs can use NRO account to manage income generated in India, such as rent, dividends, or pensions.
- Foreign Currency Non-Resident (Bank) [FCNR(B)] Account: FCNR(B) account allows NRIs to hold foreign currencies in fixed deposits.
How can NRIs Transfer Funds Overseas from India?
Now let’s see the repatriation guidelines with respect to these accounts along with the documents required for repatriation through these accounts.
Repatriation from NRE Account and FCNR Account
One of the key advantages of having an NRE account and FCNR account is that they allow for repatriation of funds, i.e., transferring money from India to overseas accounts, without any restrictions.
Process and Documents Required
Here is the process and a list of documents that are required for NRE and FCNR account repatriation.
- To initiate the repatriation process, it is necessary to complete a request application addressed to the Indian bank.
- Additionally, NRIs must fill out an A2 form, also referred to as the FEMA declaration form. This form can be obtained from the bank’s website and is crucial as it serves as an application for the purchase of foreign exchange.
- Once these forms are duly completed and submitted to the bank, your repatriation process will be initiated and subject to approval.
Repatriation from NRO Account
While the funds in this account are not freely repatriable, the RBI allows an amount of up to USD 1 million per financial year from the NRO account to the NRE account. The fund transfer is subject to the payment of applicable taxes.
Process and Documents Required
Here is the process and a list of documents that are required for NRO account repatriation.
- To initiate the repatriation process, it is necessary to send a formal request to your bank.
- Along with the request, NRIs must fill out and submit the A2 form to your bank.
- In addition, NRIs will be required to submit Form 15CA, which serves as a self-declaration of payment details for their account that is subject to taxes in India. It is essential to provide accurate information in this form.
- Furthermore, Form 15CB is also mandatory. This form needs to be submitted and is an affirmation from a Chartered Accountant, confirming that NRIs have fulfilled all tax obligations related to the funds they want to repatriate.
- To initiate the repatriation process, NRIs are required to email self-attested copies of the necessary documents to their bank. Once their request is processed, they will become eligible to repatriate funds from their NRO account.
Types of Incomes Eligible for Repatriation
Below are the various sources of income in India that NRIs can repatriate abroad:
- Any funds held in India before moving abroad can be repatriated.
- Funds received through inheritance in India are eligible for repatriation.
- Income generated through Indian assets, such as rent or dividends, can be repatriated.
- Funds transferred to India as overseas remittances, including investment funds or savings, can be repatriated.
Limit for NRI Repatriation of Funds Abroad from India
To repatriate funds from India to their country of residence, NRIs must comply with specific prescribed guidelines and limits. These limits vary depending on the type and source of income.
| Type of Income | Limit of Repatriation |
|---|---|
| Income derived from sources such as salary, pension, interest, rent, etc. whether it pertains to the past year or the current year. | There is no limit |
| Capital funds held in FDs, MFs, shares, and other assets, including those acquired through inheritance. | USD 1 million per financial year |
| Capital funds from immovable property purchased in currency other than foreign currency | USD 1 million per financial year |
Repatriation of Sale Proceeds from Investments
Non-Repatriation Basis
NRIs can purchase securities, shares, debentures, government securities, units of domestic mutual funds, etc., from Indian companies on a non-repatriation basis. However, there are restrictions on transferring sale proceeds abroad.
Repatriation Basis
NRIs can invest on a repatriation basis in government securities, mutual funds, PSU bonds, and shares of public sector enterprises disinvested by the Government of India. Sale or maturity proceeds and net of taxes, can be transferred out of India.
FEMA Guidelines for NRI Repatriation
The Foreign Exchange Management Act (FEMA) provides guidelines for NRI repatriation, including:
- Repatriating funds abroad have tax implications in India.
- NRIs can repatriate current year’s income cumulatively within the same financial year or in subsequent years.
- Funds in the NRO account should consist of legitimate dues and not solely be borrowed or transferred from another NRO account.
- The yearly repatriation limit of USD 1 million cannot be carried forward to another financial year if not fully utilized.
- There are no limits on funds repatriable from an NRE account.
- NRIs can repatriate funds from the sale of a maximum of two properties in India.
Contact SBNRI
If you have any queries regarding the process of repatriation through outward remittance from India to abroad and the tax angle associated with it, ask our tax expert now using the button below. Also, visit our blog and YouTube channel for more details.
