Repatriation of funds

Repatriation Defined: Repatriation refers to the ability of funds to be transferred across countries by converting to foreign currency. For NRIs, this involves moving money from Indian bank accounts (NRE, NRO, or FCNR) to overseas accounts.

Understanding Different NRI Bank Accounts

Non-Resident External (NRE) Account: This account is for managing income earned outside India. The interest earned is not taxable in India. Funds in the NRE account can be fully repatriated.

Non-Resident Ordinary (NRO) Account: Designed for income earned in India (like rent, dividends, pensions), this account has certain repatriation limits and tax implications.

Foreign Currency Non-Resident (FCNR) Account: Holds fixed deposits in foreign currency and allows for full repatriation.

Tax Implications and Documentation

Taxation: Funds repatriated from NRO accounts are subject to Indian taxes.
Documentation for NRE/FCNR Accounts: Requires a request application and an A2 form (FEMA declaration form).
Documentation for NRO Account: Includes Form 15CA, Form 15CB, Form A2, and a bank request form.

Investment Options and Repatriation

NRIs can invest in various financial instruments in India, with earnings being repatriable. These include stocks through a Portfolio Investment Scheme account, government securities, Public Sector Undertaking Bonds, the National Pension System, and bonds or units issued by Infrastructure Debt Funds.

he Foreign Exchange Management Act has put in place rules which govern the process of repatriation. Here are the rules you should know before repatriating your funds from India(3):
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 utilised 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.

The remitter of funds is required to submit following documents to AD Bank for remittance of funds to NRE a/c or Overseas bank account:

i. Form 15CA:

Undertaking given by the remitter. The form is uploaded online on the Income-tax e-filing website from the remitter’s portal and the said form is required to be e-verified by the remitter.

ii. Form 15CB:

It is a certificate issued by a Chartered Accountant (CA). A CA verifies that due taxes have been paid on the amount eligible and intended to be repatriated and certifies the same in Form 15CB. Form 15CB is uploaded by the CA on his Income-tax e-filing portal and the same is digitally by the CA.

iii. Form A2 and Outward Remittance Form in case of transfer of funds from NRO a/c to overseas bank account

iv. FEMA Declaration and Transfer Request in case of transfer of funds from NRO a/c to NRE a/c

v. Any other documents required by AD Bank