Non Resident Indian (NRI) Repatriation Services
NRI having immovable assets in India which they had acquired when they were residents. They may also have inherited such assets or received them as gifts. If an NRI doesn’t plan to return to India and visits the country infrequently, he may find the management of these assets difficult. In that case, he may be eager to dispose them and repatriate the proceeds. Returns from investments made in financial instruments may also need to be repatriated. We will focus on sharing some rules governing repatriation of money by NRIs.
Selling real estate
An NRI can sell his residential or commercial property in India to anyone—a resident Indian, an NRI or a PIO (person of Indian origin). However, agricultural land, plantation property and farm houses can only be sold or gifted to an Indian citizen resident in India.
The bank that the NRI deals with will allow repatriation of funds obtained from sale of immovable property provided a few conditions are met. Any money that was brought in from outside for the purchase of the property can be repatriated. So an equivalent of the amount that came in through normal banking channels, or was paid out of a foreign currency non-resident (FCNR) account or out of a non-resident external (NRE) account, can be repatriated. Sales proceeds of only two residential properties can be repatriated.
If the NRI had taken a home loan to buy the property, his bank will allow him to freely repatriate an amount equivalent to what he brought in from abroad to repay the loan.
If the property was acquired out of the NRI’s rupee resources or the loan was repaid by close relatives of the NRI in India, the sales proceeds are credited into the NRI’s non-resident ordinary (NRO) account. Each financial year an NRI is allowed to repatriate an amount of up to $ 1 million from the balance in his NRO account.
To be able to repatriate proceeds, the NRI must produce documentary evidence supporting his acquisition or inheritance of the property. He must also produce a certificate from a chartered accountant in a specified format (discussed below).
There is no lock-in period either on the time for which a property must be held by an NRI, or on repatriation of proceeds.
If the NRI sells a property that was gifted to him, the proceeds can be repatriated via the NRO account channel. Rental income of NRIs must also be credited and repatriated via the NRO account.
Investments in financial instruments
Interest earned and balances held in NRE and FCNR accounts are not taxed and can be freely repatriated abroad.
The RBI allows NRIs to transfer money from NRO to NRE account, subject to the overall ceiling of $1 million per financial year, and after applicable taxes have been paid.
Proceeds of investments made by an NRI in Indian financial instruments can be repatriated provided the investment was made from funds brought in from abroad, i.e., the money was remitted from abroad via banking channels, or the purchases were made out of money in NRE or FCNR accounts. Capital gains tax, if applicable, will have to be paid before repatriation.
Fill form 15 CA and 15CB
Whenever money is being remitted by an NRI, from India to outside India, Form 15CA has to be submitted online at the income tax department’s web site. Usually, a certificate from a chartered accountant provided in Form 15CB is also required before uploading Form 15CA online. In Form 15CB, a chartered accountant certifies details of the payment, TDS rate and TDS deduction applicable as per Section 195 of the IT Act, whether DTAA (double tax avoidance agreement) is applicable, and other details of the remittance. Banks will not remit the money until this certificate is provided.
Form 15CB is not required when a single remittance does not exceed Rs. 50,000 and total remittance in a financial year does not exceed Rs. 2,50,000. In this case only Form 15CA has to be submitted. Form 15CB is also not required if lower TDS has to be deducted and a certificate is received under Section 197 from the assessing officer (AO). In all other cases, if remittance is taking place outside India, the person making the remittance will have to take a chartered accountant’s certificate in Form 15CB and submit it along with Form 15CA online.
From 1 June 2015, any remittance of funds to an NRI (an NRI transferring funds from NRO to NRE account, and remittance of even non-taxable funds like long-term capital gain on equity shares) will require the remitter to provide a certificate from a chartered accountant in Form 15CB and filing of Form 15CA at the IT Department’s web site. Earlier, CBDT regulations required these forms only for taxable transfers, while bank personnel asked for these forms even for non-taxable transfers. This created confusion. This confusion was cleared by Finance Bill 2015 which said that these forms have to be filled for all remittances (taxable or non-taxable)