Repatriation of Income Earned in India

The term Repatriation can be defined as transferring the income or funds to Non-Resident External (NRE) Account or overseas bank account by the Non-Resident Indian (NRI) or Person of Indian Origin (PIO). The accounts in which the money is transacted to are owned by the NRIs or PIOs themselves. The funds are from the balances that they hold in their Non-Resident Ordinary Rupee accounts or NRO Accounts. Repatriation of Income means remitting NRO Fund Accounts abroad by the NRI or PIO. The various facts and information related to such transfer of funds has been discussed here.

What are the sources of funds and assets held by NRIs or PIOs in India?

  • Funds and assets inherited by them.
  • The funds or assets that have been held by them before they migrated from India.
  • Income accrued on the held funds or assets in India.
  • Any assets or funds that have arisen out of the remittances or payments made to India, specifically for investment purposes.

With the increase in globalization, the Government of India has liberalized its policies related to remittances or repatriation of income or assets, over the years.

What and how much Repatriation of Income is permitted by NRIs or PIOs from India?

The permissible limit for repatriation of income from India depends upon the following key areas. These limits are-

  • Current Income: Income accrued as salary, interest, dividend, rent, pension, investment, distributed deposits, property and/ or profits from a partnership or proprietorship business have been permitted for transfer as repatriation of income.
  • Sale Proceeds of Assets: The NRIs or the PIOs are permitted to transfer an amount not exceeding One Million USD in each financial year. These funds have to be from the-
  1. Sale proceeds of assets other than the immovable property.
  2. Balance in the NRO account.
  • Sale Proceeds of Immovable Property: The following are kept in mind while making repatriation of income earned from sale of the immovable property. These key points are-
  • Property acquired in Foreign Exchange:
  • Property purchased for residential purpose through a home or housing loan. For the repayment of the loan in foreign exchange is permitted to be repatriated.
  • Any amount paid in foreign exchange for the acquisition of immovable property can be repatriated to the amount equal to the investment in foreign exchange.
  • When sale proceeds are more than the amount of the purchased property on loan or amount paid for the acquisition of the immovable property, then any excessive balance left is repatriated as per the set limit of One Million USD in a financial year.
  • Property acquired from sources other than in Foreign Exchange: Any proceeded sale can be repatriated or made up to One Million USD in a particular Financial Year.

What are the documentary evidences, required during repatriation of income?

The remitter who is carrying forward the repatriation of income is required to submit some necessary documents while making such a transaction. These documents are-

  • An undertaking by the remitter in Form 15CA duly signed physically or digitally has to be submitted online on the website of taxation department.
  • Certificate in Form 15CB has to be obtained from a Chartered Accountant. This is to confirm that applicable taxes on the repatriation of income have been paid fully.
  • The form for Outward Remittance or Form A2 has to be duly filed.
  • A transfer request or FEMA Declaration is to be made by the remitter.
  • Any other required document to be submitted to the AD Bank.

What is special approval from RBI required for repatriation of income?

In certain cases where a person is facing hardship in making remittance or repatriation of income, the Reserve Bank of India may approve the same beyond the specified limits. It may permit or grant such transactions for various purposes like for education, medical expenses or treatment etc.

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    Author: Anil Agrawal
    EZYBIZ India Consulting LLP, New Delhi. The firm is business and tax consultancy firm providing consultancy in Taxation, Regulatory, Transfer pricing, Valuation, Corporate funding and Business set up matters. He may be reached at 9899217778 or anil@ezybizindia.in.