NRI can avail the benefit of transferring funds (other than borrowed funds) from NRO A/c to the extent of US 1 million (since 2005 per person per year to NRE A/c or out of India).
Requirements:
- Taxes due on funds supposed to be transferred should be paid.
- Simple procedure has to be followed for the transfer. The funds shall not be from any borrowed sources or from transfers from any other NRO accounts.
- Where the remittance is made in more than one instalment, the remittance of all instalments shall be made through the same authorised dealer (bank).
A person who desires to make a remittance of assets exceeding USD 1 000 000 (US Dollar One million only) per financial year in the following cases, may apply to the Reserve Bank if the remittance is:
- On account of legacy bequest or inheritance to a citizen of foreign state resident outside India and;
- By a Non Resident Indian NRI or Person of Indian Origin PIO out of the balances held in NRO accounts/ sale proceeds of assets/ the assets acquired by way of inheritance/ legacy.
- The Remitter shall have to prove that hardship will be caused to such a person if remittance from India is not made.
Advantages of Fund Transfer from NRO A/c to NRE A/c or outside India:
- NRE Account Interest is Tax Free.
- TDS would not be applicable on the interest income from NRE Account.
- The balances in the NRE Account are fully repatriable to the country of residence without any limits and formalities.
- Repatriation can be done at the ease of Account holder to avail the benefit of comfortable exchange rate.
The circular of Government for transfer of funds from NRO to NRE or abroad is just relaxation given to NRI. It is not an obligation of the government to allow such transfer. However, the transfer of money from NRE to abroad is an obligation of the government.
Repatriation of Current Incomes:
- As per section 5 of FEMA, any person can enter into Current Account transactions (as defined under section 2 ( without seeking any prior approvals, unless restricted by RBI.
- Therefore, there is no limit (Of 1 million or any limit) up to which Current incomes ( interest, business profession income, etc can be transferred directly outside India or from NRO to NRE bank account by an NRI.
- Appropriate taxes must have been paid or deducted from such incomes to execute the transfer.
