Repatriation of money refers to the capacity of funds to be transferred freely across countries by converting into foreign currency; in other words, the process of converting or exchanging foreign currency into a person’s native currency. When an Indian resident becomes an NRI (Non-Resident Indian), managing financial matters gets strenuous. The biggest hurdle is organising the management of finances in India and abroad.
What if an NRI needs to transfer funds from their revenue in India to their account abroad? In this essay, we’ll go over all the rules for NRI money repatriation based on the kind of bank account they have.
SUMMARY:
1. An NRI or PIO can avail the facility of repatriation of money in India through a NRE/NRO account.
2. Funds lying in an NRE account can be repatriated without any limit.
3. The RBI regulates transfer of money held in domestic and foreign accounts and deposits held in India.
4. Compliance with RBI regulations is mandatory.
5. Repatriation of money is subject to applicable taxes in India.
Repatriation: Understanding the Process
Repatriation of money transfers funds from India to an NRIs (non-resident Indian) abroad bank account in that NRIs home country. Now, let’s first establish where the revenue created in India is stored in the case of a non-resident Indian before we discuss the complete process of moving money abroad and how it can be done (NRI).
A resident Indian (R) who later becomes a non-resident Indian (NRI) is required to change their R account into an NRE or NRO account. What exactly are NRE and NRO accounts, then?
Let’s understand.
Repatriation from an NRE account- The advantage of having an NRE account is that there is no higher transaction limit, and you can repatriate all overseas earnings. You can store money in an NRE account in India without worrying about paying taxes because the money is tax-exempt, saving you money. As an outcome, most NRIs choose to save money in an NRE account in India.
Necessary Documents
• Passport of the NIR
• ID Card
• Visa/PIO (Persons of Indian Origin) / OCI Card (Overseas Citizens Of India)
• Recent Bank Account Statement
• NRE Letter from the NRIs bank (stating that the person is holding an NRE account with that Bank.
• A2 Form- It’s an application form in which the remitter has to fill up the information required, such as the amount of remittance, beneficiary details, etc.
- Repatriation of money from an NRO account
This rupee-denominated account is maintained to deposit all the Indian earnings of the NRI, such as dividends, rents, pensions, and other similar incomes.
There are specific rules to Repatriate from NRO Account :-
- NRO accounts were non-repatriable until May 2012. The RBI loosened the restrictions and allowed the repatriation of money from NRO accounts on May 7th, 2012.
- Tax obligations apply to money in an NRO account. Repatriation of money from NRO accounts is only feasible once the tax has been taken.
- The remainder of the cap cannot be rolled over to the following year if an NRI repatriate less than USD 1 million in a calendar year.
- Income from the sale of immovable property (such as land or a house) and revenue based on rent, wages, dividends, pensions, and other sources are remittable up to USD 1 million every fiscal year.
- The equity shares, returns from investments in mutual funds, etc., are non-repatriable when invested out of NRO funds.
Necessary documents
- Application form from the foreign account bank of NRI.
- Passport of NRI
- ID Card
- Visa / PIO (Persons of Indian Origin) / OCI (Overseas Citizen of India)
- 15 CA / CB certificate from a chartered accountant that declares the remitter has paid all the taxes incurred.
- A2 form
- Repatriation of money from an FCNR Account:
FCNR stands for Foreign Currency Non-Resident Bank Account, which permits full repatriation of funds at any time. These accounts are sustained as only term deposits. Interest earned on FCNR funds is tax-free.
The advantage of having an FCNR account is that funds are protected against foreign exchange risk. FCNR accounts are safe from exchange rate fluctuations, and as it only deposits in foreign currency; therefore, no conversion is required.
Necessary Documents :-
• A valid passport and a recent passport-size colour photograph
• Address proof of country of residence
• PAN Card or Form 60
• Proof of NRI status
• Valid PIO / OCI card
Repatriation of money from NRE/NRO accounts involves the following steps :-
| Accounts | Process | Limit |
|---|---|---|
| NRE | 1. ONLINE: Online banking for international transfers (sending money to your overseas account from your NRE account) 2. COMPLETE THESE TWO FORMATS OFFLINE. (If you reside outside India, you can download them online, sign them, and send them via courier to the bank branch in India.) -Bank Request Form: Enter the beneficiary bank information and the amount to be returned in foreign currency or INR (the beneficiary’s name can be the same or different) -Form A2 (Form for remittance) | No Limit |
| NRO | You must present the required document at the bank branch (in India). The documents can either be submitted in person. Online downloaded, signed copies too, can be sent by courier to the bank branch: Formula 15CA (This document’s goal is to make sure that taxes are paid on the money before it is sent abroad because it is challenging to recoup taxes later.) Print the acknowledgement after completing the form online at NSDL. Formula 15CB (Certificate of an Accountant) (The accountant completes the paperwork and gives it to the account owner. The account holder then sends it by courier to the Bank. -Form A2 (Form for remittance) -Request Form from the Bank (for details to debit funds from your account) | USD 1 million |
Conclusion: – Repatriation of income earned in India is simple if you follow the steps outlined above and certify that you have paid all applicable taxes on the funds in your NRO Account. A Chartered Accountant will assist you with tax certification by filling out Form 15CA (which you can also fill out) and Form 15CB (which must be filled out by an Accountant).
Repatriation through your NRE account is quicker and unrestricted. However, you must know the restrictions if you transmit money from an NRO account back to your home country. The fact that your NRO account’s $1 million limitation is only valid for one fiscal year is crucial to keep in mind. Therefore, if you transfer less than this sum, you won’t be able to use the remaining funds in the following fiscal year.
