Should We Transfer Money To Nre Account Before Moving Permanently To India

Many Non-Resident Indians have money in India that they want to send abroad to their overseas bank accounts. Outward Remittance or Repatriation is the answer to the question "How can NRIs send money abroad from India?". As we have established earlier under Non-Residents and their Bank Accounts that NRIs can maintain the income generated from India such as rent from property, pension, gains from investments etc. in their Non-Resident Ordinary (NRO) Account. Now, this money can be transferred to their overseas bank Account following the regulations of Reserve Bank of India (RBI). This process of sending the money generated in India to the overseas bank accounts of the NRIs is called Repatriation and the medium through which the funds are transferred is called Outward Remittance. In this article we will understand this medium of repatriation in detail.

Outward Remittance: How can NRIs send money abroad from India?

Repatriation and Outward Remittance

The process of sending money from India to the overseas bank accounts of the NRI is called Repatriation. The medium or channel through which the money is sent overseas is called Outward Remittance. It can be done online, through demand drafts or cheques.

Now, we know that NRIs can't hold Resident India Savings Bank Accounts. They will have the following bank accounts in India:

Non-Resident External (NRE)
Non-Resident Ordinary (NRO)
Foreign Currency Non-Resident (Bank) [FCNR(B)]

Amongst these, both NRE and FCNR accounts are used to park the money earned abroad by an NRI with tax-free interest up to 7.25%* on NRE FDs. The money in these accounts can be easily repatriated using the internet banking facility. Therefore, in this article we will focus more on the NRO Account.

Outward Remittance for NRI: Sending money abroad from India

The NRO Account

The NRO account is opened for the purpose of maintaining the income earned from India such as income from rent, pension, gains from investments etc. The repatriation of the money in the account can be done up to a maximum of 1 million USD per financial year. Note: 30% tax + surcharge + education cess will be deducted at the source of interest earned in India.

Repatriation Highlight: up to a maximum of 1 million USD per financial year.

Now, since NRO is the only account where you maintain your Indian income and it is taxable too. The process of repatriation is different from the other two accounts (NRE & FCNR). Choosing the outward remittance facility under the NRO Account involves a limit (1 million USD per year) and taking care of your taxes. Let's glance through the documentation requirements and the outward remittance process:

Account	Process	Limit
NRO	All the following documents are needed to be submitted at the Bank Branch (in India). You can either submit it when you arrive here or download it online and send the signed copies to bank branch via courier: 1) Form 15CA (The purpose of this document is to ensure that taxes are collected on the funds before they are remitted abroad as it becomes difficult to recover taxes at a later stage) 2) Form 15CB (Certificate of an Accountant) (The Accountant fills the form and shares it with the account holder. The account holder then sends it to the bank via courier) 3) Form A2 (Form for remittance) 4) Request Form from the Bank (for details to debit funds from your account)	USD 1 million

Account

Process

Limit

NRO

All the following documents are needed to be submitted at the Bank Branch (in India). You can either submit it when you arrive here or download it online and send the signed copies to bank branch via courier:

1) Form 15CA (The purpose of this document is to ensure that taxes are collected on the funds before they are remitted abroad as it becomes difficult to recover taxes at a later stage)

2) Form 15CB (Certificate of an Accountant) (The Accountant fills the form and shares it with the account holder. The account holder then sends it to the bank via courier)

3) Form A2 (Form for remittance)

4) Request Form from the Bank (for details to debit funds from your account)

USD 1 million

Note: Click on the forms 15CA and 15CB to download.

Key points to keep in mind while opting for outward remittance through NRO Account:

Form 15CB is not required for remittances below Rs.50,000 (single transaction) and Rs. 2,50,000 (annually)
The exchange rates prevailing at the time of repatriation will be applicable
It can take up to 2 days for the transfer to get completed

NRI Bank Accounts Overview

Double Tax Avoidance Agreement (DTAA)

The interest earned on the money deposited in the NRO Account is liable to taxes. The basic concept behind this is simple: the money deposited in the NRO Account is generated in India, therefore it is taxable in India.

Now, this interest earned on the NRO Account is taxed at 30% along with surcharge and education cess which can be later filed for a refund based on your income tax slab in India.

However, there is an aspect of double taxation that needs to be addressed. The money can be taxable in the country of residence of the NRI and to avoid paying double taxes, there is an instrument called DTAA (Double Tax Avoidance Agreement).

There are various documents required to avail the benefits under DTAA (Double Tax Avoidance Agreement), which are:

Self-declaration cum indemnity format
Self-attested PAN card copy
Self-attested visa and passport copy
PIO proof copy (if applicable)
Tax Residency Certificate (TRC)

Note: According to the Finance Act 2013, an individual will not be entitled to claim any benefit of relief under Double Taxation Avoidance Agreement unless he or she provides a Tax Residency Certificate to the deductor. To receive a Tax Residency Certificate, an application has to be made in Form 10FA (Application for Certificate of residence for the purposes of an agreement under section 90 and 90A of the Income-tax Act, 1961) to the income tax authorities. Once the application is successfully processed, the certificate will be issued in Form 10FB.

If you have any queries regarding the process of repatriation through outward remittance from India to abroad and the tax angle associated with it, ask our tax expert now using the button below. Also, visit our blog and youtube channel for more details.

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Outward Remittance: FAQs

Can I keep an NRI account after returning from overseas?

No. You cannot keep your NRI Accounts (NRE, NRO, FCNR) after returning to India. However, you can continue your NRE and FCNR Deposits till maturity and later convert them into RFC Accounts.

What is the limit for doing outward remittances from an NRE account?

There is no limit for outward remittance from an NRE Account.

Can NRI transfer money to savings account in India?

Yes. An NRI can transfer money to savings accounts of family and friends in India.