NRIs live abroad and earn money abroad but many of them have money in India through passive earning such as rent or through the sale of investments and property. It is possible for them to transfer these funds outside India provided they follow the regulations laid down by RBI.
Read – Gift by NRIs to Resident Indian & vice Versa
Repatriation or Outward Remittance India
Sending money abroad is known as repatriation or outward remittance. It can be done through your banking channel only either using online services or via demand drafts or cheques. You cannot use the services of money transfer agents.
NRIs will not have a resident Indian bank account. So their earnings in India will be credited to the NRO account. NRIs who do not have plans to come to India for good in the near future will not have much use of the money lying idle in the NRO account.
To help them use it effectively, the Reserve Bank of India (RBI) allows an amount of up to USD 1 million per financial year from the NRO account to the NRE account. The limit includes the payment of applicable taxes.
If an NRI sells a residential or commercial property, the amount that was brought in India to buy the property can be freely repatriated. The amount would have been brought in via an NRE account. It should be noted that proceeds of the sale of only two properties can be repatriated.
If the NRI brings in money from abroad to repay the home loan amount taken to buy the property, the bank from which he took the loan will allow him to freely repatriate an equivalent amount to what was brought in the country from abroad.
There can be cases where the NRI has made an investment in India using funds that were brought in India from abroad and then sells it. The sales proceeds of such investment can be repatriated freely after paying capital gains tax if applicable.
Interest earned and account balance in NRE and FCNR accounts can be freely repatriated abroad.
Must Check –Power of Attorney for NRI
Rules For Transfer of Money from India –
An NRI has to follow certain rules to transfer his money from India to the foreign country where he is residing –
- The NRI has to fill up and submit Form 15CA Format (online application form) and Form 15CB (Chartered Accountant Application) to the bank branch to transfer money from India to a foreign country.
The 15ca format form can be accessed here –
Also Read – NRI Joint Account with Resident Indian
Form 15CB – Login to the portal and access the ‘forms’ section. This form is required only in certain conditions. For example, it is not required when the remittance is less than 50,000 in one transaction and less than 2,50,000 overall in one financial year
- The exchange rates prevailing at the time of processing the repatriation request will be applicable.
- It is important to give correct bank account details for the repatriation request as the bank in India might not be able to validate the details of a foreign bank account.
- It will take two working days for the transfer to get completed.
Most banks in India allow NRIs to transfer funds from India to the country they are living in.
Exceptions
Theoretically, there are many exceptions where you don’t require form 15ca & 15cb but my interaction with many NRIs & few CAs make me believe that bankers don’t want to take any risk when it comes to NRI issues. You can share your views in the comment section.
Check – Status of NRE FD after returning to India
Double Taxation Avoidance Agreement (DTAA)
If your remittances consist of interest from an NRO deposit, the bank is required to deduct tax at the source of the interest at the rate of 30%. Suppose you live in the US or UK or any other country that has a DTAA with India, then you are eligible for a reduced TDS rate of 15%.
The bank will require you to submit a Tax Residency Certificate from your country of residence if you want to avail of this reduced rate.
The basis of DTAA is that a particular income is taxed in both countries. There are scenarios of DTAAs that India has signed with countries that do not have personal tax. However, there are instances where a foreign country may not levy a personal tax on its residents, yet India has a DTAA with those countries that allow NRIs of those countries to avail a reduced rate of TDS.
In such cases, each bank might have its own way of handling this. Some banks like the State Bank of India require you to submit a declaration form if you reside in a country that has a zero tax but has a DTAA with India that offers a lower rate of TDS. On submitting this self-declaration, the bank will deduct tax at the source at the reduced rate instead of the mandated 30%.
Please share your experience regarding outward remittance. If you have any questions related to repatriation – feel free to add them in the comment section.
I'm an enthusiast with in-depth knowledge of the topics discussed in the article, particularly in the context of NRIs (Non-Resident Indians) and their financial transactions in India. My expertise is backed by a thorough understanding of the regulations set by the Reserve Bank of India (RBI) and practical experience dealing with NRI financial matters.
Now, let's break down the key concepts and information mentioned in the article:
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Repatriation or Outward Remittance:
- NRIs living abroad can transfer their funds from India to a foreign country through repatriation or outward remittance.
- This process can be done exclusively through banking channels, which include online services, demand drafts, or cheques.
- The use of money transfer agents for this purpose is not allowed.
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NRO and NRE Accounts:
- NRIs typically have their Indian earnings credited to NRO (Non-Resident Ordinary) accounts.
- To make effective use of these funds, the RBI permits the transfer of up to USD 1 million per financial year from the NRO account to the NRE (Non-Resident External) account, which includes tax payments.
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Property Sale and Repatriation:
- If an NRI sells residential or commercial property, the amount initially brought into India via an NRE account can be freely repatriated.
- However, this is limited to the proceeds from the sale of only two properties.
- Repatriation is also allowed if the NRI repays a home loan using funds from abroad, with the amount being equivalent to what was brought into the country.
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Investments and Capital Gains:
- Investments made in India using foreign funds that are later sold can also be repatriated, subject to capital gains tax, if applicable.
- Interest earned and the account balance in NRE and FCNR (Foreign Currency Non-Resident) accounts can be freely repatriated abroad.
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Rules for Money Transfer:
- To transfer money from India to a foreign country, an NRI must complete Form 15CA (online application form) and Form 15CB (Chartered Accountant Application) and submit them to the bank.
- Form 15CB is necessary in specific conditions, such as for remittances exceeding certain thresholds.
- The exchange rates at the time of processing the repatriation request will apply.
- Providing accurate foreign bank account details is crucial.
- The transfer usually takes two working days to complete.
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Exceptions and DTAA:
- While theoretically, there are exceptions where Form 15CA and 15CB may not be required, banks often prefer to follow a cautious approach.
- NRIs living in countries with Double Taxation Avoidance Agreements (DTAA) with India may be eligible for a reduced TDS (Tax Deducted at Source) rate on interest income from NRO deposits.
- To avail of the reduced TDS rate, a Tax Residency Certificate from the foreign country of residence is usually required.
- DTAA agreements aim to prevent double taxation and may offer lower tax rates for NRIs.
These insights should provide a comprehensive understanding of the article's content related to NRIs, repatriation of funds, and the associated regulations and procedures.
