NRI Bank Accounts and FEMA Basics - NRO, NRE and Repatriation

NRE, NRO and FCNR accounts

An NRE account holds foreign earnings converted into rupees and is freely repatriable. An NRO account holds income earned in India, such as rent, dividends or sale proceeds, and is subject to repatriation limits. An FCNR(B) deposit is held in a foreign currency.

Who is a non-resident under FEMA

FEMA treats a person as resident outside India based on the purpose and length of stay abroad, not just citizenship. This differs from the residency test under the Income-tax Act, so a person can be non-resident for one purpose and resident for the other.

Repatriation

From an NRO account, an NRI can generally remit up to USD 1 million per financial year, with tax compliance and the required certificates (Forms 15CA and 15CB). Rules are issued by the Reserve Bank of India and change from time to time, so confirm the current position before remitting.

Investments and property

NRIs can buy residential and commercial property in India, but not agricultural land, plantation property or a farmhouse, except by inheritance. Gifts and inheritance have their own reporting rules.

Frequently asked questions

Can an NRI keep a resident savings account after moving abroad?

No. Resident accounts should be redesignated as NRO accounts when you become non-resident.

Is interest on an NRO account taxable?

Yes, tax is deducted at source at the prescribed rate, and relief under a tax treaty may be available.

Who can help with the paperwork?

A chartered accountant for tax and remittance certificates, and an advocate for documents, property and disputes.

Discuss with Advocate Aayush Agarwal

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