Repatriation Of Funds from Property Sale
You might need to send money to India (inward remittance) for family support, property maintenance, or local investments. Conversely, you might need to transfer funds from India back to your overseas account (outward remittance or repatriation of funds) for international investments, property purchases abroad, or personal use.
Navigating the regulations surrounding these international money transfers can seem complex. This guide simplifies the repatriation process for NRIs, explaining the key rules, RBI regulations on foreign exchange, FEMA guidelines for repatriation, tax implications, and essential documentation like Form 15CA and 15CB.
● Inward Remittance: This involves sending foreign currency from your country of residence to your NRO (Non-Resident Ordinary) bank account in India from your NRE (Non-Resident External) or Foreign Bank account. These are popular inward remittance services used for supporting family, making investments in India, or managing local expenses.
● Outward Remittance (Fund Repatriation): This is the process of transferring funds from your NRO account in India to your NRE (Non-Resident External) or foreign bank account. This repatriation of money to abroad allows you to access and utilize your Indian income and assets internationally.
Effectively managing fund repatriation provides significant benefits:
● Access Your Indian Funds Globally: Use your money held in India for international needs – retirement planning, overseas investments, children’s education abroad, or unexpected costs.
● Integrated Financial Planning: Incorporate your Indian finances, including income and assets, into your overall global financial strategy for better control.
● Investment Flexibility: Repatriate funds from matured Indian investments or sale proceeds of assets (like property) to reinvest in opportunities outside India that may better suit your financial objectives.
| Sr. No (A) | What can be repatriated (Refer Note 1) (B) | Limit for repatriation (C) |
|---|---|---|
| i) | Current Income (earned in past or present year): Income in the nature of dividend, interest, rent, salary etc. | No limit |
| ii) | Repatriation of sale proceeds of immovable property in the nature of commercial, residential, land etc. (Refer Note 2) | |
| A. Property acquired in Forex (i.e. through inward remittances, FCNR balance or NRE balance) | Entire sale proceed is freely repatriable. However, in case of residential property, repatriation of sale proceeds shall be allowed only upto 2 properties. Sale proceeds from 3rd property onwards shall be repatriable under USD 1 Million Scheme | |
| B. Property acquired otherwise than in Forex (i.e. through Rupee funds/inheritance etc.) | USD 1 million per Financial Year | |
| iii) | Repatriation of funds/assets other than (i) and (ii) above: Funds held in NRO account like below: – from sale proceeds/redemption of assets other than above like fixed deposits, shares, mutual funds etc. – Sale proceeds of inherited assets |
USD 1 million per Financial Year |
1. Essential Documentation & Compliance
To ensure a smooth repatriation process, gather the following:
● Proof of Fund Source: Documents verifying the origin of the funds (e.g., property sale deed for repatriation of sale proceeds, rental agreements, investment maturity advice).
● Forms 15CA and 15CB: These are critical for tax compliance when sending money out of India or to your NRE account, particularly from NRO accounts.
○ Form 15CA: A declaration submitted online by you (the remitter).
○ Form 15CB: A certificate issued by a Chartered Accountant (CA) confirming that applicable Indian taxes have been considered and paid on the income being repatriated.
● Bank Account Statements: Recent statements of the account from which the transfer is initiated.
Understanding the tax implications on remittance is vital:
● NRO Account Funds: Income earned and credited to an NRO account is generally taxable in India. Before repatriation, you must ensure all due taxes are paid. The Form 15CB serves as proof of this compliance.
● NRE/FCNR Accounts: Funds in NRE accounts (typically from foreign earnings remitted to India) and FCNR (Foreign Currency Non-Resident) accounts are generally freely repatriable (both principal and interest) without attracting Indian income tax, as they represent funds brought into India from abroad.
The Reserve Bank of India (RBI) and the Foreign Exchange Management Act (FEMA) set the foreign remittance regulations:
● NRO Repatriation Limit: As per current FEMA guidelines for repatriation, NRIs can typically repatriate up to USD 1 million per financial year from their NRO account. This limit covers various remittances, including the repatriation of sale proceeds from assets like property.
● Liberalised Remittance Scheme (LRS): Note that this specific NRO repatriation limit is distinct from the LRS available to resident Indians.
● NRE/FCNR Repatriation: No specific limit applies to repatriation from NRE/FCNR accounts as these funds are considered already freely repatriable.
Banks have specific protocols for processing international money transfers:
● Application: Complete the bank’s designated remittance/repatriation application forms
● Submission: Attach all necessary documents (Proof of Source, Form 15CA/CB, bank statements, PAN card copy, etc.).
● Verification: The bank verifies the documents against NRI repatriation rules and RBI regulations on foreign exchange before executing the transfer. Be sure to inquire about applicable bank charges for international remittance.
● Higher TDS: Tax deducted at Source (TDS) on income earned in India (like rent or interest in NRO accounts) can sometimes be deducted at higher rates for NRIs.
○ Solution: File an Indian Income Tax Return (ITR) to claim any excess TDS refund. Alternatively, apply to the Indian tax authorities for a Lower/Nil TDS certificate if eligible.
● Documentation Hurdles: Gathering all the required proofs can be time-consuming.
○ Solution: Maintain organized records of your Indian income sources and assets. Proactively consult with your bank and a Chartered Accountant familiar with NRI repatriation rules.
● Currency Fluctuations: Exchange rate movements can impact the final amount received overseas.
○ Solution: Monitor foreign exchange rates and consider timing your transfer strategically. Some banks may offer forward contracts to lock in rates.
● DTAA (Double Taxation Avoidance Agreement): India has DTAAs with many countries. If your country of residence has a DTAA with India, it can help prevent the same income from being taxed twice – once in India and again in your country of residence. This is particularly relevant for income taxed in India before repatriation. Consult a tax advisor to understand how the DTAA between India and your country impacts your specific situation and potentially reduces your overall tax liability on remitted funds.
