NRI Repatriation

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NRI repatriation allows NRIs to freely move their foreign earnings invested in India to their country of residence. NRE Bank account is designed for this.

When an NRI invest its foreign earnings in India on repatriation basis, it means the funds can be transferred back to the NRIs country of residence by converting them from India Rupee to the foreign currency at any time.

The opposite of repatriation is non-repatriation. In the case of investment on non-repatriation basis, the funds cannot be transferred back to the NRIs country of residence nor can they be converted to any foreign currency.

Separate NRI Bank account types are available for investments on a repatriable and non-repatriable basis.

The Non-Resident External (NRE) and Foreign Currency Non-Resident (FCNR) bank accounts are designed for investment on a repatriation basis. Any funds held in these accounts can be converted into foreign currency and transferred to your overseas account at any time. These accounts are also called NRI repatriable account.

The Non-Resident Ordinary (NRO) bank account is designed for investment on a non-repatriation basis. The NRO accounts are commonly used to manage NRIs earning in India from sources like rent, pension, dividends etc. This account is also called NRI non-repatriable account.


NRI Repatriation Limit

There are no repatriation limits on the funds held in NRE and FCNR bank accounts and are freely repatriable.

The funds held in NRO bank account are subject to certain limits as per below:

  • The principal amount held in NRO is not repatriable.
  • The interest earned on NRO balances is freely repatriable.
  • The income earned in India in nature of rent, salary, dividend, pension, etc. and proceeds from the sale of financial assets viz. equity stocks, initial public offering (IPO), mutual funds and proceeds from the sale of immovable property in India is repatriable up to USD 1 million per financial year. Any repatriation above the mentioned limit is subject to RBI approval.

NRI Repatriation of Funds from India

Apart from the repatriation limits, there are certain NRI repatriation rules applicable as per below:

  • The repatriation of funds from NRO account is allowed only after payment of applicable taxes on income earned in India and on the sale proceeds of the investments done by NRI.
  • The repatriation of funds from NRO account can be done to any NRE account of the NRI or the overseas bank account of the NRI but not to the third party.
  • The repatriation limit of USD 1 million is applicable across all the NRO bank accounts held by NRI.
  • The repatriation limit of USD 1 million from the NRO account allowed per financial year has to be utilized in one financial year only. There is no carry forward permitted if the limit if unutilized.

Documents required for NRI repatriation of funds

An NRI can repatriate funds from NRE, NRO and FCNR bank accounts. To process the repatriation, an NRI is required to furnish the list of below generic documents. Note: There can be a slight variation in requirements from bank to bank.

  1. Documents required in case of repatriation from NRE/FCNR account
    • Request to Bank for repatriation - An NRI needs to fill up the request form to notify the bank about the remittance.
    • A2 Form known as 'FEMA declaration' or form for outward remittance. [Sample form from RBI website A2 Form]. Each bank has its A2 form with its logo and specific instructions if any. The A2 form is required to apply for the purchasing of foreign exchange. An NRI is also required to mention the NRI repatriation purpose code for which the funds are required to be repatriated.

    The forms are available on the bank website. NRIs can download the form and send the duly filled up form to banks via courier for processing. Alternatively, many banks are also offering online repatriation services to NRIs.

  2. Documents required in case of repatriation from NRO account
    • Request to Bank for repatriation.
    • A2 Form.
    • Form 15CA - This form is required to be filled by the NRI remitting the funds as a self-declaration furnishing the details of the payment that are liable to taxes.
    • Form 15 CB - This is a certificate from Chartered Accountant declaring that applicable taxes on the funds to be remitted have been paid.
    • Supporting documents to prove the source of funds.

    An NRI needs to upload or scan and email the self-attested copies of all these documents to the banks for processing the repatriation request. The banks may also ask for physical copies to be courier if required.


NRI repatriable Investment options

A repatriable investment is the one wherein the investments are made by NRI from NRE accounts. NRIs can invest in Indian equity on a repatriation basis however for this NRIs will need to route through the PIS route wherein each transaction will be reported to RBI. Apart from this, the government has specified various other investment options for NRI on a repatriation basis without any limit.

  • Government dated securities;
  • Treasury bills (T-bills);
  • Units of domestic mutual funds;
  • Bonds issued by a Public Sector Undertaking (PSU) in India.
  • Shares in Public Sector Enterprises being disinvested (partial dilution) by the Central Government.
  • Bonds/ units issued by Infrastructure Debt Funds.
  • Listed non-convertible/ redeemable preference shares or debentures
  • Perpetual debt instruments (with an overall ceiling of 24%) and Debt capital instruments issued by banks in India to augment their capital.
  • Initial Public offerings.
  • National Pension System. (This option is available for NRIs between 18 to 60 years)

NRI Repatriation of Immovable Property

NRIs are allowed to buy and sell immovable residential property in India without any prior approval from RBI. Though there are no restrictions on the number of properties that can be bought or sold by NRI, the repatriation of sale proceeds from these properties is subject to certain restrictions as per below:

NRI Repatriation of Immovable Property

Type of property held by NRI

Rules applicable on repatriation of sale proceeds

Bought as a resident Indian

  • The repatriation is allowed up to USD 1 million per financial year post payment of applicable capital gains and taxes.
  • Property has to be held for 10 years.
  • In case the property is sold before 10 years, the funds need to be held in the NRO account till completion of 10 years from property purchase date, post which the funds can be repatriated.
  • The repatriation is restricted to the sale of 2 residential properties.

Inherited by NRI

  • Repatriation allowed up to USD 1 million per financial year post payment of applicable capital gains and taxes.
  • Inheritance proof is required to be submitted for repatriation.

Bought in the capacity of NRI

  • The sale proceeds should be credited to the NRO bank account.
  • The repatriation is allowed up to USD 1 million per financial year post deduction of taxes/capital gains as applicable. The repatriation cannot exceed:
    • the amount of foreign exchange remitted by the NRI to India for the purchase of the said property.
    • the funds paid through Foreign Currency Non-Resident (FCNR) Account in buying the property.
    • the amount paid through the NRE account at the time of purchase.
  • The repatriation is restricted to the sale of 2 residential property

 

ProStocks Non-PIS NRO Trading

 

Answered on

Frequently Asked Questions

  1. 1. What is NRI repatriation?

    An NRI can invest his foreign earnings in India with an objective to take the money back to his country of residence by converting them from India Rupee to the foreign currency at any time. This type of investment is known as an investment on a repatriation basis by NRI.

    Reserve Bank of India (RBI) has permitted Non-Resident External (NRE) and Foreign Currency Non-Resident (FCNR) bank accounts for this purpose.

    RBI has permitted NRIs to invest in a range of investment options on a repatriation basis. This includes Stocks, Mutual Funds, Bond, and IPO etc.

     

  2. 2. Can NRI repatriate funds from NRO accounts?

    NRO bank accounts are non-repatriable accounts by their legal nature. However, RBI has permitted repatriation from NRO account up to USD 1 million per financial year subject to certain documentation requirements.

    The principal amount in the NRO bank account is not repatriable; however, the interest earned is freely repatriable post deduction of taxes. The limit of USD 1 million applies to other balances accumulated in NRO accounts by way of Indian income or from the sale of the financial asset or immovable property.

     

  3. 3. How much money can an NRI repatriate out of India?

    An NRI can freely repatriate the funds held in NRE account without any limit. However, the funds in the NRO account can be repatriated to the extent of USD 1 million per financial year. To repatriate more than USD 1 million, exceptional approval is required from RBI which may be granted if the need for funds is justified and acceptable to RBI.

     

  4. 4. Can NRI transfer funds from NRE/NRO accounts to a third party?

    The transfer from the NRE/NRO account to the third party is permitted by a few banks. Please check with your bank if they provide this service.

     

  5. 5. What is form A2?

    Form A2 is a FEMA declaration cum application for the purchase of foreign exchange for remittance purposes. The remitter needs to fill up the details on the amount of remittance, beneficiary detail and the NRI repatriation purpose code to indicate the reason for repatriation. In case of any doubt in code, these can be clarified with the bank.

     

  6. 6. What are the forms 15CA and 15CB?

    Form 15 CA is a self-declaration by an NRI to furnish the information in respect of payments with tax liability. Form 15CA is a mandatory document required by a bank processing the remittance request.

    Form 15CB is a certificate from a chartered accountant declaring that applicable tax payment on the funds requested for repatriation has been obliged.

     

  7. 7. How to obtain Form 15CA and Form 15CB?

    The forms 15 CA and 15 CB can be obtained online from the income tax website by submitting the required details in the respective forms.

    To obtain form 15CA an NRI needs to register themselves on the income tax website and select Form 15 CA under the option of Prepare and Submit Online Form (Other than ITR). Once the details have been submitted, an acknowledgment of Form 15CA is generated which is required to be printed, signed and submitted to the bank. 

    Earlier form 15 CB, was a manual certificate that was required to be obtained by approaching a chartered accountant (CA). Recently the procurement of Form 15CB has become online wherein an NRI needs to add their CA under their profile by entering their membership no. Once this is done the CA will update the details from his end on behalf of the NRI certifying that the required taxes have been either deducted at source or paid by the NRI.

     

  8. 8. Why are forms 15CA and 15CB important?

    NRI repatriation from NRO accounts is allowed post the applicable taxes have been either deducted at source or have been paid by an NRI. Forms 15CA and 15CB provide all the necessary information and declaration towards tax payment which is required by any bank before proceeding for repatriation and hence Form 15CA and 15 CB are important.

     

  9. 9. Are Forms 15CA and 15 CB mandatory?

    As a general rule, form 15 CA and form 15 CB are must-have documents for a repatriation process. While Form 15CA is mandatory in case of all remittances, Form 15CB is mandatory for remittances greater than Rs. 5 lakhs. There are certain types of remittances as mentioned in rule 37BB of Income Tax Act which is liable to tax in which case no information is required to be furnished in the forms.

     

  10. 10. Can an NRI repatriate funds from the sale of property in India?

    An NRI can repatriate the funds from the sale of 2 residential properties in India.

    The proceeds from the sale of these can be repatriated based on certain conditions driven by how the property was procured by the NRI.

    • In case the property was procured in the capacity of resident Indians, the repatriation to the extent of USD 1 million per financial year is permissible. The condition is the property should have been in possession for 10 years. However, if the property is sold before 10 years the proceeds should be held in the NRO account till completion of 10 years post which repatriation can be allowed.
    • In case the property was inherited by an NRI, an NRI is required to furnish inheritance proof for enabling the repatriation up to USD 1 million.
    • In case the property was bought in the capacity of NRI, the repatriation to the extent of USD 1 million per financial year is permitted but cannot exceed the amount of foreign exchange remitted by NRI to India or funds paid through FCNR account/NRE account for purchasing the property.

     


1 Comments

Sanjeev Sondhi
1. Sanjeev Sondhi  May 29, 2020 22:33 I Like It. | I Don't Like It. | Report Abuse Reply
Very informative and useful. Thanks to author for such a wonderful way to explain the complex point.








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