Repatriation means the transfer of funds from an Indian account to a foreign bank account. NRI repatriation should be made in compliance with guidelines set by the FEMA (Foreign Exchange Management Act). NRIs can use NRE/NRO/FCNR bank accounts to hold and repatriate their funds from India to their foreign bank accounts, subject to the regulations of the Reserve Bank of India (RBI). If you want to know in detail about NRI repatriation of funds from India to abroad, then this article is for you. The article also covers the mode of repatriation, documentation, and reporting requirements for NRIs.
Repatriation of Funds: Meaning
Repatriation refers to the transfer of funds (both principal amount and the interest earned on the deposit) from any of the NRI Accounts [NRE/NRO/FCNR] from India to the overseas bank account of the NRI in his/her country of residence.
Types of Incomes that can be Repatriated
Given below are the different sources of income in India, which can be repatriated abroad by NRIs:
- Funds that you held in India before you moved abroad.
- Any funds you received in the form of inheritance in India.
- Income which you made through Indian assets.
- Funds that you transferred to India as overseas remittances. These funds can include money for investments or money you transferred to India for savings.
Repatriation Limits for NRIs
The repatriation guidelines and limitations for each type of account (NRE, NRO or FCNR) you hold in India are given below:
- NRE Account
An NRE account is a rupee-denominated account that can be freely repatriated. There is no limit to repatriate funds from NRE accounts as it is fully and freely repatriable from India. The funds can be repatriated in any currency.
- FCNR Account
An FCNR account is a foreign currency-denominated account that can be freely repatriated. The repatriation limit for FCNR account holders is the balance held in the account, including interest earned, without any limit. However, the funds can only be repatriated in the same currency in which the account is denominated.
- NRO Account
An NRO account is a rupee-denominated account that can only be partially repatriated. The repatriation limit for NRO account holders is up to USD 1 million per financial year for any bonafide purpose, subject to payment of applicable taxes. However, the repatriation of funds from an NRO account is subject to certain conditions, such as proof of tax compliance and a certificate from a chartered accountant.
Repatriation of Sale Proceeds from Investment in Securities/ Mutual Funds by NRI
- On Non-Repatriation Basis
Non-Resident Indians can purchase securities, including shares, convertible debentures, government securities, units of domestic mutual funds, units of money market mutual funds, etc. from an Indian company on non-repatriation basis. However, there are certain restrictions on transfers for sale proceeds abroad.
- On Repatriation Basis
NRIs can also invest on repatriation basis in government securities, units of mutual funds, bonds issued by a public sector undertaking (PSU) in India, and shares in public sector enterprises being disinvested by the Government of India. In this case, the sale or maturity proceeds of an investment and net of taxes can be transferred out of India.
The FEMA (Foreign Exchange Management Act) has set rules that govern NRI repatriation. These rules are given below:
- You will be subject to tax implications in India when you repatriate funds abroad.
- You can repatriate your current income of a year cumulatively in that financial year itself or repatriate the income in subsequent years.
- The funds in your NRO account should hold legitimate dues which are receivable. The account should not have only borrowed funds or funds transferred from another NRO account.
- The yearly repatriation limit of USD 1 million cannot be carried forward to another financial year if not utilized thoroughly.
- There are no limits on funds repatriable from an NRE account.
- You can only repatriate funds from the sale of a maximum of two properties in India.
Documents Required for Repatriation
Given below are the documents required for repatriation from NRO account and NRE/FCNR account repatriation:
1. NRE/FCNR account repatriation requirements
- You need to fill in a request application to the Indian bank to initiate your repatriation process.
- An A2 form, also known as the FEMA declaration form, needs to be filled. You can find this form on the bank website. The form is crucial as it is an application for the purchase of foreign exchange.
- Once these forms are filled and sent to the bank, your repatriation process will be initiated and approved.
2. NRO account repatriation requirements
- You need to send a request to your bank to initiate the repatriation process.
- The A2 form needs to be filled and submitted to your bank.
- You will also need to submit Form 15CA. This is required in order to self-declare the payment details of your account liable for taxes in India.
- Form 15 CB is another form that is mandatory to be submitted. This is an affirmation from a Chartered Accountant, confirming that you have cleared all liable taxes on the funds that you want to repatriate.
- You need to email self-attested copies of the required documents to initiate your repatriation process. Once the request is processed, you will be eligible to repatriate funds from your NRO account.
TDS on Mutual Fund Redemption for NRIs
Given below are two table showing different types of Mutual funds along with their capital gain holding period and TDS applicable on redemption-
|Type of MF||Short Term Period||Long Term Period|
|Equity Funds||Less than 12 months||More Than 12 Months|
|Debt Funds||Less than 36 months||More Than 36 Months|
|Hybrid Fund – Equity Oriented||Less than 12 months||More Than 12 Months|
|Hybrid Fund- Debt Oriented||Less than 36 months||More Than 36 Months|
|Type of MF||Short-Term Capital Gains STCG||Long-Term Capital Gains LTCG|
15% + cess + surcharge
|Up to Rs 1 lakh a year is tax-exempt.Any gains above Rs 1 lakh are taxed at 10% + cess + surcharge|
|Debt Funds||Taxed at the investor’s income tax slab rate||20% + cess + surcharge|
|Hybrid Fund- Equity Oriented||15% + cess + surcharge|
Up to Rs 1 lakh a year is tax-exempt.Any gains above Rs 1 lakh are taxed at 10% + cess + surcharge
|Hybrid Fund- Debt Oriented||Taxed at the investor’s income tax slab rate||20% + cess + surcharge|
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