NRI Banking: What to know before you transfer money from your NRO account out of India (2024)

FAQs

NRI Banking: What to know before you transfer money from your NRO account out of India? ›

Money cannot be transferred from an NRO to an NRE account or repatriated outside of India until all applicable taxes have been paid in India. When making external remittances from NRO Accounts, Forms 15CA and 15CB must be provided, under Section 195 of the Income Tax Act, 1961.

This account allows you to receive funds in either Indian or foreign currency. However, only Indian currency can be withdrawn as NRO Accounts are kept in Indian currency and cannot be freely repatriated into any foreign currency.

NRO account holders can repatriate up to USD 1 million per financial year from their NRO account balances. This is allowed after applicable taxes have been paid in India and a chartered accountant has provided clearance using Form 15CA and 15CB.

Yes, you can repatriate money from an NRO account for property sale proceeds, but it requires RBI approval if the amount exceeds the repatriable limit of USD 1 million per financial year.

1. Quantum of transfer: The NRO to NRE transfer limit is capped at USD1 million per financial year. 2. Tax compliance: The amount to be transferred should be eligible for remittance and free from any tax liability.

What is the disadvantage of NRO accounts? The major disadvantage of an NRO account is that there is a limit to how much funds you can repatriate in a financial year. You can only remit USD 1 million of your principal amount after paying the applicable taxes.

The money sent from India to the US is not taxable. However, you must declare it to the IRS by submitting Form 3520 if it exceeds US $100,000 for any given year. There are no taxes due on this form; it is merely informational. However, gift taxes in the US can be imposed if the funds are given as a gift.

Taxes Charged for Foreign Remittances from India

TCS is charged based on your purpose for the money transfer. 20% TCS is levied for payments above the limit of Rs. 7 lakhs. However, crucial purposes such as education and medical treatments are offered a concession.

Recipients of foreign inheritances typically don't have a tax liability in the United States. And, if you're sending your own money from a foreign bank account to a domestic one, you won't have to pay taxes on the transfer.

In case you fail to convert your resident savings account to an NRO account there are penalties involved, including: A fine of up to three times the amount in your bank account; or. A fine of ₹2 lakh if the amount is not quantifiable.

Can I transfer money from NRO to normal savings account? ›

There are no restrictions on remitting current income from an NRO account. Non-Resident Indians (NRIs) managing financial affairs in India often operate two different bank accounts - the Non-Resident (External) account (NRE) and the Non-Resident (Ordinary) bank account (NRO).

Money transfer limit for NRIs

There is no ceiling on the money an NRI can send to India. This money, however, needs to be earned through legit means. You also have to pay the required taxes on this money in the country it was earned.

Q5. What are the accounts that a tourist visiting India can open? Answer: An NRO (current/ savings) account can be opened by a foreign national of non-Indian origin visiting India, with funds remitted from outside India through banking channel or by sale of foreign exchange brought by him to India.

Necessary Documents for repatriation of Funds

Two documents are required to remit funds from an NRO account: Form 15CA and Form 15CB. The purpose of these documents is to ensure that taxes are paid on funds before they are remitted abroad.

RBI guidelines:

2. Customer should choose only one AUTHORISED dealer (Bank) at a time to avail the facility of repatriate/transfer to NRE within USD 1 million limit. 3. All documents should be signed by respective account holder(s) who is availing this facility.

Please note, you can only use your NRO debit card in India. There is a daily cash withdrawal limit at ATMs on your NRO debit card. Banks also have a limit on daily purchases on merchant websites and retail outlets. This withdrawal and transaction limit on your NRO debit card varies from bank to bank.

* Please note that the debit cards linked to NRE accounts can be used across the world. However, the debit cards which are linked to NRO accounts are non-chip based and can be used only in India and for domestic online transactions initiated on merchant website(s) based in India.

As per the Reserve Bank of India (RBI), on permanent relocation to India, you cannot continue to hold your NRO/NRE bank accounts. Let us look at the options available to you for these accounts. NRO account: You need to mandatorily convert your NRO account to a resident savings account or close the account.

Q5. What are the accounts that a tourist visiting India can open? Answer: An NRO (current/ savings) account can be opened by a foreign national of non-Indian origin visiting India, with funds remitted from outside India through banking channel or by sale of foreign exchange brought by him to India.

In case you fail to convert your resident savings account to an NRO account there are penalties involved, including: A fine of up to three times the amount in your bank account; or. A fine of ₹2 lakh if the amount is not quantifiable.