January 24, 2026 / NRI

Money transfers of non-repatriable earnings and NRO A/c

FAQ on Applicability of Income Tax Provision to NRI's

Table of Contents

Money transfers/repatriation of non-repatriable earnings and NRO Account available balances:

While under the FEMA Act, 1999, NRI’s non-repatriable current earnings, like rental, dividends, insurance, Interest on NRO investment, etc. attributed to the NRO account, is now completely repatriable subject to reasonable tax payment/deduction. NRIs that do not hold an NRO account is also given such facilities.

In every financial year, a non-resident Indian [NRI], as well as a Person of Indian Origin [PIO], may also liquidate up to US$ 1 million out of the sum retained in the NRO account. These amount in NRO accounts liable for repatriation may have been proceeds of selling of immovable property;

Assets gained by inheritance/legacies; NRO investments in a bank or company; the balance of the Provident Fund or Superannuation benefits; the sum of premiums on insurance premium or maturities; proceeds from the sale of stocks, securities; balance retained with partnerships or sole proprietor organizations, etc.

Money transfers shall be permitted for any lawful reason or solely on the grounds of repatriation outside India.

We provide hybrid repatriation advisory services that would include: –

Collection of the Actual Facts Position.
Information and relevant documents (as per Annexure A which is mentioned below)
Chartered Accountants in India Certificate, i.e., 15CA and 15CB certificates, as required by law for taxation purposes.
sufficient follow-up with financial institutions

Non-resident Indians are required to remit specific salaries and principal sums that have not been repatriated to far outside India. These would be the following:

Repatriation of previously non-repatriable money, such as rent, NGO tax; tax on loans/deposits, etc.

The Foreign Exchange Regulations Act, 1973, laid out specific guidelines and procedures for repatriation of almost all income produced in India which was listed as non-repatriable. This included rental profits, corporate interest, the share of joint firms, interest on debts, etc.
The Foreign Exchange Management Act, 1999 did not lay down a specific clause in this regard, although the provisions of the Foreign Exchange Management (Deposit) Regulations, 2000, clearly state ‘remittance outside India of the current income of the account holder net of the applicable taxes.’
Consequently, the Indian Reserve Bank empty circular is dated. 14 May 2002 clarified/advised the banker to allow the repatriation of NRI’s current income, such as rent, dividend, pension, interest, etc., from the NRO account and/or credit of such income to the NRE account and, in the case of NRIs that may not be maintained by the NRO account, RBI directed to obtain the prescribed certificate :
Suitable certificate of the Chartered Accountant certifying the eligibility of the planned remittances and
In fact, certifying that the necessary tax has been compensated/provided for.

Sale of household property funds raised:

Selling proceeds of household properties were, until then, repatriable to the sum of foreign currency equal purchasing price/acquisition rate, given that the NRI had purchased such properties and retained such property for a period of 3 years and had acquired the same proceeds from balances kept in Non-Resident Local (NRE)/Foreign Currency Non-Repatriable (FCNR) or by foreign exchange remittances from abroad.
The requirement for a minimum holding period of 3 years has been removed by the RBI. Any event of selling house land, regardless of the length of the possession, would be liable for repatriation benefits subject only to limitations on repatriation of 2 residential properties.

Balances kept in a non-resident non-repatriable account (NRNR):

By then, the total amount of the deposit kept in the Non-Resident Non-Repatriable (NRNR) account was non-repatriable.
The sum of interest gained from the tax allowance as well as full repatriation.
all balances in the NRNR account were granted the benefit of repatriation.
As a consequence, earnings from deposits reaching maturity on or after 1 April 2002 will be credited to the Non-Resident External Account (NRE) of the owner of the NRI account, which may be held as such or shifted to the Foreign Currency Non-Resident Account or remitted/repatriated abroad.

NGO repatriation balance up to US$ 1 million:

NRIs are permitted to repatriate/return abroad up to US$ 1 million per financial year out of the amount kept in the Non-Resident Ordinary Account [NRO], which is, per se, non-repatriable.
This amount was to be made out of valid transactions allowed at the appropriate time under the foreign exchange legislation applicable to the FERA Act, 1973, and the FEMA Act, 1999
NRIs requesting repatriation is required to apply to the authorized dealer in particular ways, along with documentation respecting the origins of the NGO balances and paying the tax in place, as well as the Chartered Accountant’s Certificate of regulatory compliance necessary and payments respectively.

Precautions NRIs Must Take After Returning to India

When an NRI returns to India temporarily or permanently, one of the most overlooked areas is the change in taxability and foreign asset compliance.
Here’s a clear guide every returning NRI should follow

Determine Your Residential Status (MOST Crucial Step)

Residential status depends only on physical presence, not on visa/OCI/passport. You can fall into one of these categories:

Resident & Ordinarily Resident (ROR): Full resident. Global income taxable.
Resident but Not Ordinarily Resident (RNOR): You qualify as RNOR if you were an NRI in 9 out of 10 preceding years OR you stayed in India ≤ 729 days in the last 7 years.
RNOR = tax benefits + limited taxation
Non-Resident (NR)—Only Indian income is taxable.

Why Residential Status Matters

Because TAXABILITY COMPLETELY CHANGES:

ROR

➡ Global income taxable in India.
➡ Foreign assets must be declared.
➡ Stringent compliance applies.

RNOR & NR

➡ Only Indian income taxable.
➡ Foreign income not taxed unless received in India.
➡ Foreign assets not reportable in Schedule FA.

After Becoming ROR → These Become Taxable in India

If you turn ROR, the following are fully taxable:

Salary earned abroad
Rent from foreign property
Dividend/interest/FD income abroad
Capital gains on foreign stocks/ETFs/crypto
Income retained in foreign bank accounts

India taxes these under normal slabs; DTAA relief may apply.

Mandatory Foreign Asset Disclosure (Schedule FA)

Once you become ROR, Schedule FA becomes compulsory. You must declare:

Foreign bank accounts
Insurance policies with cash value
Foreign mutual funds, ESOPs, RSUs
Property outside India
Interest in foreign LLP/company
Beneficial ownership in foreign trusts/entities
Crypto on foreign exchanges

Non-disclosure consequences (Black Money Act, 2015):

INR 10,00,000 penalty per asset
Prosecution (up to 7 years)
Applies even if income is small or NIL
Exemption: No penalty if total foreign asset value ≤ ₹20 lakh (except immovable property).

Update NRI Bank Accounts Post-Return

NRE Account : Tax-free interest only till you are NRI/RNOR. and After becoming ROR, interest becomes taxable, and the account must be converted to a Resident Rupee Account.
FCNR Deposits : Can continue till maturity, even after becoming a resident. & After maturity → convert to RFC/resident account.
FEMA Update Required : Banks must be notified of your change in residential status.

Capital Gains Planning (Important for Returning NRIs)

As soon as you become ROR, global capital gains become taxable. During the RNOR period (limited window): You may restructure/sell foreign assets tax-efficiently, & gains on foreign assets are not taxable in India during RNOR (except income received in India). Consider DTAA country benefits (US, UAE, UK, etc.)

Summary for Returning NRIs

Status	Tax on Global Income?	Schedule FA Required?
NR	No	No
RNOR	No	No
ROR	Yes	Yes (Mandatory)

We also support tax calculation assistance, tax payments, submitting of tax filings, and financial planning in this and many other matters through India Financial Consultancy Corporation Pvt Ltd. (IFCCL) (www.caindelhiindia.com).

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The information / articles & any relies to the comments on this blog are provided purely for informational and educational purposes only & are purely based on my understanding / knowledge. They do noy constitute legal advice or legal opinions. The information / articles and any replies to the comments are intended but not promised or guaranteed to be current, complete, or up-to-date and should in no way be taken as a legal advice or an indication of future results. Therefore, i can not take any responsibility for the results or consequences of any attempt to use or adopt any of the information presented on this blog. You are advised not to act or rely on any information / articles contained without first seeking the advice of a practicing professional.