NRI Repatriation Rules: How Much Money Can Be Taken Abroad?

The answer lies in Indian foreign exchange laws, mainly governed by the Foreign Exchange Management Act, 1999 (FEMA) and regulations issued by the Reserve Bank of India (RBI). These rules are often called NRI repatriation rules. They set clear limits and procedures for sending money outside India.

This article explains the rules in simple language. It covers limits, taxes, property sale proceeds, bank accounts, and practical compliance steps.

What Is Repatriation?

Repatriation means sending money from India to another country. For NRIs, this usually involves transferring Indian income or assets to their country of residence.

Under Indian law, repatriation is regulated to:

• Maintain foreign exchange stability

• Track cross border money movement

• Ensure taxes are paid

• Prevent illegal transfers

All repatriation transactions must comply with FEMA, 1999, RBI Master Directions, and Income Tax laws.

Legal Framework Governing NRI Repatriation Rules

1. Foreign Exchange Management Act, 1999 (FEMA)

FEMA is the main law controlling foreign exchange in India. It distinguishes between:

• Residents

• Non Residents (including NRIs)

RBI regulations allow NRIs to repatriate money, subject to prescribed conditions.

2. RBI Master Directions

The RBI issues detailed operational guidelines through:

• Master Direction on Deposits and Accounts

• Master Direction on Remittance of Assets

These directions explain how banks must process NRI transfers.

3. Income Tax Act, 1961

Even if repatriation is allowed under FEMA, tax compliance is mandatory. Banks usually require:

• Form 15CA

• Form 15CB (CA certificate)

These confirm taxes have been paid or are not applicable.

Types of NRI Bank Accounts and Repatriation

Understanding account types is key to NRI repatriation rules.

1. NRE Account (Non-Resident External)

This is a fully repatriable account.

Key features:

• Funds must be in foreign currency and converted to INR

• Both principal and interest are freely repatriable

• Interest is tax-free in India (subject to conditions)

Repatriation limit:
There is no upper limit on sending money abroad from an NRE account, provided funds are legitimate.

2. NRO Account (Non-Resident Ordinary)

This account holds Indian income, such as:

• Rent

• Pension

• Dividend

• Property sale proceeds

• Inheritance

Repatriation rules for NRO account:

NRIs can repatriate up to USD 1 million per financial year (April–March) under RBI regulations.

This limit includes:

• All eligible balances

• Assets sold in India

• Inherited funds

This is one of the most important aspects of NRE vs NRO account repatriation.

3. FCNR Account (Foreign Currency Non-Resident)

• Maintained in foreign currency

• Fully repatriable

• Principal and interest can be sent abroad without restriction

How Much Money Can an NRI Take Abroad?

The amount depends on the source of funds.

Repatriation of Funds from India for NRIs: Property Sale

Property transactions often involve large sums. FEMA provides specific rules.

If Property Was Bought Using Foreign Funds

If an NRI purchased property using:

• Funds remitted from abroad, or

• From NRE/FCNR account

Then sale proceeds can be repatriated, subject to conditions:

• Maximum of two residential properties for full repatriation of original investment

• Capital gains must be taxed

If Property Was Bought from Indian Income

If bought using funds from an NRO account or Indian sources, sale proceeds go to the NRO account. Repatriation is then subject to the USD 1 million per financial year limit.

Repatriation of Inherited Assets

NRIs may inherit:

• Bank deposits

• Shares

• Property

Under RBI regulations, NRIs can repatriate inherited funds up to USD 1 million per financial year after:

• Producing inheritance documents

• Tax clearance

Tax Compliance Before Repatriation

Under the Income Tax Act, 1961, repatriation does not remove tax liability.

Banks require:

Form 15CA

A declaration of remittance details.

Form 15CB

Certificate from a Chartered Accountant confirming:

• Nature of remittance

• Taxability

• TDS compliance

Without these, banks may refuse outward remittance.

FEMA Rules for NRIs: Key Conditions

Under FEMA, repatriation must satisfy:

• Funds must be from legitimate sources

• Proper documentation must be provided

• Taxes must be paid

• Transfers must go through authorized dealer banks

Violation of FEMA can lead to:

• Penalties

• Investigations

• Restrictions on future transactions

Step by Step Process for NRO Repatriation

1. Submit request to bank

2. Provide Form 15CA and 15CB

3. Submit:

   • PAN card copy

   • Passport and visa

   • Proof of source of funds

4. Bank verifies USD 1 million limit

5. Funds are converted and transferred abroad

Important Points About the USD 1 Million Limit

• Applies per financial year

• Includes all eligible assets

• Cannot be carried forward

• Spouses can use separate limits

Common Misunderstandings About NRI Repatriation Rules

“All money in India can be sent abroad freely”

Not true. Only NRE and FCNR funds are fully repatriable.

“Paying tax means unlimited transfer”

Tax payment does not remove FEMA limits.

“Cash withdrawal and carrying abroad is easier”

Large cash movement may violate customs and reporting rules.

Practical Tips for NRIs

• Maintain clear records of fund sources

• Use NRE account for foreign income

• Plan large property sales over multiple years if needed

• Keep tax filings updated

• Check bank procedures early

Legal References

• Foreign Exchange Management Act, 1999

• RBI Master Direction – Deposits and Accounts

• RBI Master Direction – Remittance of Assets

• Income Tax Act, 1961

Frequently Asked Questions (FAQs)

1. What are NRI repatriation rules?

They are FEMA and RBI regulations that control how NRIs can send money from India abroad.

2. How much can be repatriated from an NRO account?

Up to USD 1 million per financial year.

3. Is NRE account money fully repatriable?

Yes. NRIs can transfer both principal and interest without any limit.

4. Is tax clearance required?

Yes. Forms 15CA and 15CB are generally required.

5. Can inherited property sale proceeds be sent abroad?

Yes, within the USD 1 million annual limit and after tax compliance.

6. Does the limit apply per person or per account?

Per individual NRI.

7. Are there penalties for violating FEMA?

Yes. Monetary penalties and legal action may follow.

NRI repatriation rules aim to balance flexibility and regulation. NRIs can freely transfer foreign earnings held in NRE or FCNR accounts. However, Indian-sourced income in NRO accounts is subject to a USD 1 million annual cap. Tax compliance and documentation remain essential.

Understanding FEMA rules for NRIs helps avoid delays and legal issues. Clear planning, proper accounts, and timely tax filings make repatriation smooth and lawful.