Repatriation of Funds for NRIs: A Comprehensive Guide
- Rajarshi Guha
- Feb 2, 2024
- 3 min read
Repatriation of Funds for NRIs: A Comprehensive Guide
Repatriation, in simple terms, refers to transferring funds from an Indian account to a foreign bank account. For Non-Resident Indians (NRIs), this process is governed by guidelines set forth in the Foreign Exchange Management Act. Understanding the nuances of NRI repatriation is crucial, especially considering the diverse sources of income and the associated tax implications.
Types of Income Sources for NRIs that Can Be Repatriated
NRIs can repatriate various types of income earned in India, including:
Funds held in India before moving abroad.
Inheritance received in India.
Income generated through Indian assets such as rent from properties, mutual funds, or other investments.
Funds transferred to India as overseas remittances for investments or savings.
However, it’s important to note that returns on investments made through funds in an NRO account are not permitted to be repatriated.
Limits and Tax Implications
There is a repatriation limit of USD 1 million in a financial year for income from the sale of any movable or immovable assets in India. Income from inheritances, rent from property holdings, or the sale of property is taxed before becoming eligible for repatriation.
Returns on investments through funds in an NRO account, on the other hand, cannot be repatriated. Tax implications in India apply when repatriating funds abroad, and understanding these implications is vital to avoid surprises during the process.
Rules Governing NRI Repatriation
The Foreign Exchange Management Act has established specific rules governing the repatriation process for NRIs. Key rules include:
Tax Implications
: NRIs will be subject to tax implications in India when repatriating funds abroad.
Cumulative Repatriation
: NRIs can repatriate their current income cumulatively in the financial year itself or in subsequent years.
Legitimate Dues in NRO Account
: Funds in an NRO account should have legitimate dues that are receivable, and the account should not solely consist of borrowed funds or funds transferred from another NRO account.
Repatriation Limit
: The yearly repatriation limit of USD 1 million cannot be carried forward to another financial year if not fully utilized.
No Limits on NRE Account:
There are no limits on funds repatriable from an NRE account.
Property Sale Limit
: Funds can only be repatriated from the sale of a maximum of two properties in India.: Funds can only be repatriated from the sale of a maximum of two properties in India.
Documents Required for Repatriation
Different sets of documents are required for repatriation from an NRO account and NRE/FCNR account.
NRE/FCNR Account Repatriation Requirements:
Request Application
: Fill in a request application to the Indian bank to initiate the repatriation process.
A2 Form (FEMA Declaration Form):
Fill the A2 form, available on the bank’s website, crucial for the application for the purchase of foreign exchange.
Once these forms are filled and submitted to the bank, the repatriation process will be initiated and approved.
NRO Account Repatriation Requirements:
Request to Bank
: File a request with your bank to initiate the repatriation process.
A2 Form:
Fill and submit the A2 form to your bank.
Form 15CA:
Submit Form 15CA to self-declare the payment details of your account, liable for taxes in India.
Form 15CB:
Submit Form 15CB, an affirmation from a Chartered Accountant, confirming clearance of all liable taxes on the funds for repatriation.
Email Documents:
Email self-attested copies of the required documents to initiate the repatriation process.
Once the request is processed, you’ll be eligible to repatriate funds from your NRO account.
NRI Assist Services
We provide assistance for the repatriation process for your NRO/NRE Account with qualified CA, Lawyers to complete the process in a short period of time. We become the single point of contact to coordinate with your bank & other agencies for the hassle free repatriation. Currently we are serving clients in Delhi-NCR & Kolkata, West Bengal.