Over the last many years, the Reserve Bank of India (RBI) has, as part of its liberalization program made it easier for Non Resident Indians (NRIs) to remit funds to and from India. Today, this is where we stand as far as remittances are concerned as per the Foreign Exchange Management Act (FEMA):
What is freely repatriable?
Freely repatriable is the money that can be transferred from India to abroad without any permission from the Reserve Bank of India.
> All money that is brought in from abroad into the NRE account or FCNR account can be freely repatriated back.
> All current account incomes earned in India are freely repatriable, irrespective of whether the income was credited to the NRE, FCNR or NRO account. Current account incomes include interest, rental income, dividends etc. So, as per FEMA, you can deposit rent, interest and dividends into NRE, NRO or FCNR accounts and these can be freely repatriated.
> Capital account incomes earned in India are freely repatriable to the extent of funds remitted from abroad for buying those capital assets. According to FEMA, if you purchased capital assets like property, land, shares, mutual funds etc using funds from abroad, either directly or through NRE/FCNR accounts, you can freely repatriate the sale proceeds to the extent of the funds from abroad.
That is, if you purchased a house for Rs 1 crore using funds from abroad or the balance in NRE/FCNR and you sold it for Rs 1.5 crore, you would be able to deposit up to Rs 1 crore of sale proceeds in NRE or FCNR accounts and also repatriate the same. The balance would have to be deposited in the NRO account.
What is not freely repatriable? - Any balance in the NRO account can be repatriated to the extent of USD 1 million per financial year provided you submit a CA's certificate to the banker that shows that all taxes have been paid.
What is not repatriable at all? - You cannot remit more than USD 1 million per financial year from the NRO account. Having said that, if you have a genuine need to repatriate above this limit, you can make a specific application to RBI for increasing the repatriation limit.
Practical hurdles
While these rules seem fairly easy to understand, they become difficult to implement. A lot of NRIs have faced issues with their banks with respect to current account remittances from the NRO Account. For example, you earn USD 20000 in the financial year from rental income and you credit the proceeds to your NRO account.
You also credit proceeds from the sale of another house, say USD 1.5 million into the NRO account. As per the rules above, USD 20000 is freely repatriable and of the remaining USD 1.5 million, you will be able to remit USD 1 million by submitting a CA certificate. However, this becomes operationally difficult for the banks to implement and they insist that only USD 1 million in total will be allowed to be repatriated after receiving the CA certificate.
There are also instances where NRIs have purchased property using funds from abroad but the bank has not permitted sale proceeds to be credited into the NRE account. Each bank seems to have its own policy on dealing with such scenarios. It would make it easier for NRIs if all banks followed a standard procedure.
(The author is a chartered accountant and a finance writer. She also blogs at http://blogs.economictimes.indiatimes.com/moneyhappyreturns/ .)
source
http://economictimes.indiatimes.com/news/nri/forex-and-remittance/budget-2012-make-repatriation-procedures-clear/articleshow/12057381.cms?curpg=2
What is freely repatriable?
Freely repatriable is the money that can be transferred from India to abroad without any permission from the Reserve Bank of India.
> All money that is brought in from abroad into the NRE account or FCNR account can be freely repatriated back.
> All current account incomes earned in India are freely repatriable, irrespective of whether the income was credited to the NRE, FCNR or NRO account. Current account incomes include interest, rental income, dividends etc. So, as per FEMA, you can deposit rent, interest and dividends into NRE, NRO or FCNR accounts and these can be freely repatriated.
> Capital account incomes earned in India are freely repatriable to the extent of funds remitted from abroad for buying those capital assets. According to FEMA, if you purchased capital assets like property, land, shares, mutual funds etc using funds from abroad, either directly or through NRE/FCNR accounts, you can freely repatriate the sale proceeds to the extent of the funds from abroad.
That is, if you purchased a house for Rs 1 crore using funds from abroad or the balance in NRE/FCNR and you sold it for Rs 1.5 crore, you would be able to deposit up to Rs 1 crore of sale proceeds in NRE or FCNR accounts and also repatriate the same. The balance would have to be deposited in the NRO account.
What is not freely repatriable? - Any balance in the NRO account can be repatriated to the extent of USD 1 million per financial year provided you submit a CA's certificate to the banker that shows that all taxes have been paid.
What is not repatriable at all? - You cannot remit more than USD 1 million per financial year from the NRO account. Having said that, if you have a genuine need to repatriate above this limit, you can make a specific application to RBI for increasing the repatriation limit.
Practical hurdles
While these rules seem fairly easy to understand, they become difficult to implement. A lot of NRIs have faced issues with their banks with respect to current account remittances from the NRO Account. For example, you earn USD 20000 in the financial year from rental income and you credit the proceeds to your NRO account.
You also credit proceeds from the sale of another house, say USD 1.5 million into the NRO account. As per the rules above, USD 20000 is freely repatriable and of the remaining USD 1.5 million, you will be able to remit USD 1 million by submitting a CA certificate. However, this becomes operationally difficult for the banks to implement and they insist that only USD 1 million in total will be allowed to be repatriated after receiving the CA certificate.
There are also instances where NRIs have purchased property using funds from abroad but the bank has not permitted sale proceeds to be credited into the NRE account. Each bank seems to have its own policy on dealing with such scenarios. It would make it easier for NRIs if all banks followed a standard procedure.
(The author is a chartered accountant and a finance writer. She also blogs at http://blogs.economictimes.indiatimes.com/moneyhappyreturns/ .)
source
http://economictimes.indiatimes.com/news/nri/forex-and-remittance/budget-2012-make-repatriation-procedures-clear/articleshow/12057381.cms?curpg=2
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