Repatriation Of Assets

What is Repatriation?

Ans. Remittance of funds held in India by Non-residents to outside India is popularly termed as “Repatriation”.

What are the types of income and maximum amount of income that NRIs/PIOs are eligible for repatriation?

Ans.

Sr. No

(A)

What can be repatriated

(B)

Limit for repatriation

(C)

i)

Current income like interest, rent, dividend distribution from any type of Mutual Funds and Shares and securities, profits of business as partner/ proprietor

No limit

 

ii)

Capital funds held in NRO a/c from sale proceeds of investment in Mutual Funds, Shares, Immovable property, including inheritance and bank balances

USD 1 million per Financial Year

 

iii)

a)    Proceeds received on sale of immovable property, acquired earlier in foreign exchange.

 

 

 

 

b)    Sale proceeds are more than amount paid in foreign exchange for acquisition of immovable property

Amount paid for acquisition of immovable property or repayment of housing loans through foreign inward remittance or funds held in FCNR a/c or NRE a/c is permitted to be freely repatriated.

However, In case of residential property acquired by way of inward remittance, repatriation of sale proceeds is restricted to not more than two such properties.

Such excess amount/proceeds from sale of more than two residential property is permitted to be repatriated under (ii) above i.e. under USD 1 million per financial year.

 

Please note, repatriation of funds is subject to payment of applicable taxes in India.


Whether NRI can remit outside India beyond the limits specified in above table?

Ans.

Yes. One may have to apply to RBI for special permission to repatriate above USD 1 million. RBI may grant permission for medical purpose, education, home purchase or similar requirements at their discretion.

What documents are required to be submitted to AD Bank by NRI to remit funds from his/her NRO a/c to his/her NRE a/c?

Ans.

NRI is typically required to submit following documents to AD Bank for remittance of funds from his/her NRO a/c to NRE a/c:

  1. Form 15CA – Self Declaration by remitter of funds (NRI)
  2. Form 15CB – Chartered Accountant’s Certificate for certifying the appropriateness of taxes deducted/paid (if applicable)
  3. FEMA Declaration and Transfer Request
  4. Documentary proof of sources of funds and payment of applicable taxes
  5. Signed blank cheque (as per requirements of certain banks)
  6. Any other documentary proof requested by AD Bank

What documents are required to be submitted to AD Bank by NRI to remit funds from his/her NRO a/c to his/her overseas a/c?

Ans.

NRI is typically required to submit following documents to AD Bank for remittance of funds from his/her NRO a/c to overseas bank a/c:

1. Form 15CA – Self Declaration by remitter of funds (NRI)

2. Form 15CB – Chartered Accountant’s Certificate for certifying the appropriateness of taxes deducted / paid (if applicable)

3. Form A2 and Outward Remittance Form

4. Documentary proof of sources of funds and payment of applicable taxes

5. Signed blank cheque (as per requirements of certain banks)

6. Any other documentary proof requested by the AD Bank

 


How can NRI obtain Form 15CA and Form 15CB?

Ans.

1.    Form 15CB:

It is a certificate issued by a Chartered Accountant. A Chartered Accountant shall verify that due taxes have been paid on the amount eligible and intended to be repatriated and shall subsequently issue Form 15CB. 

2.    Form 15CA:

On the basis of Form 15CB, Form 15CA is required to be filled online on the income tax e-filing site (https://incometaxindiaefiling.gov.in/). NRI is required to register himself/herself on the income tax website for the said purpose.

The filled Form 15CA generated from the website shall be printed and signed by NRI and submitted along with Form 15CB and other documents to AD Bank from where the remittance is being made. Alternatively, Form 15CA can be electronically signed through Digital Signature Certificate (DSC) of the remitter (NRI).


Are there any limits for making an outward remittance from NRE a/c?

Ans.

NRE a/c balances are freely repatriable without any limit.


What is the process for making an outward remittance from NRE a/c?

Ans.

NRI may approach his/her AD Bank where he holds NRE a/c to make an outward remittance. This can also be done through netbanking (online).

Can NRI who has registered a mandate-holder in her NRE a/c make an outward remittance from the a/c as well?

Ans.

Mandate holder in NRE a/c can initiate an outward remittance; however, it shall be ensured that the beneficiary of the remittance is the a/c holder.

Set of documents required for following types of transactions when the funds are credited/ repatriated from NRO a/c to NRE a/c or overseas bank account?

Ans.

AD Bank may collect following documents while repatriating the funds from NRO a/c to NRE a/c or overseas bank account:

i.    Proceeds received on sale/redemption of inherited financial asset (eg. Mutual Funds, shares, Fixed Deposits, bank balance):

Ø Copy of Will/ Probate /Succession Letter, if any or other documentary evidence reflecting transfer of such asset as inheritance

Ø Documentary evidence in relation to sale/redemption of asset based on the nature of asset. 

Ø NRO Bank statement reflecting deposit of proceeds into the account on sale or redemption of asset.

Ø Form 15CA and Form 15CB as applicable

        ii.   Proceed received on sale of inherited immovable property (excluding agricultural land):

Ø Copy of Will/ Probate /Succession Letter, if any

Ø Registered Sale Deed/Agreement for Sale

Ø NRO Bank statement reflecting deposit of sale proceeds into the account

Ø Tax Exemption Certificate, if any

Ø Form 15CA and Form 15CB as applicable

        iii.   Proceeds received on sale of immovable property (excluding agricultural land)

Ø If immovable property was acquired in foreign exchange then Foreign Inward Remittance Certificate (FIRC) or other documents evidencing acquisition/repayment of loan in foreign exchange as amount equivalent to investment in forex is freely repatriable.

Ø Purchase deed/ Allotment Letter/Possession Letter/Gift Deed as applicable

Ø Registered Sale Deed/ Agreement for Sale

Ø NRO Bank statement reflecting deposit of sale proceeds into the account

Ø Tax Exemption Certificate, if any

Ø Form 15CA and Form 15CB as applicable

       iv.    Proceeds received on sale of agricultural land:

Please note, NRI can either inherit agricultural land or he can continue to hold, own and transfer such agricultural land if such was acquired by him when he was resident in India. Further, NRI can transfer such land only to a Person resident in India.

Accordingly, based on case to case, following documents may be collected by the AD Bank:

Ø Purchase deed if agricultural land was purchased when he was resident of India or copy of Will/ Probate /Succession Letter if such land was inherited to NRI

Ø Registered sale deed/ Agreement for Sale. (AD Bank can also ensure that the buyer is Resident of India under FEMA laws)

Ø NRO Bank statement reflecting deposit of sale proceeds into the account

Ø Tax Exemption Certificate, if any

Ø Form 15CA and Form 15CB as applicable

         v.   Proceed received on sale of property which does not belong to NRI customer but was transferred through Court discretion

Ø Copy of Probate/Court’s discretion and document evidencing transfer of property based on court discretion

Ø Registered Sale Deed/ Agreement for Sale or other documentary evidence in relation to sale of asset/property.

Ø NRO Bank statement reflecting deposit of sale proceed into the account

Ø Tax Exemption Certificate, if any

Ø Form 15CA and Form 15CB as applicable

If a client has inherited royalty payments of a book written by his father (as and when the book sells) will this fall under assets or be considered as a current income for client.

Ans.

Definition of current income is not explicitly covered under FEMA regulations. However, current account transaction is defined under FEMA which includes net income from investment. 

 

In case of inheritance, asset/property is transferred to legal heir. In the given question, copyright of the book is transferred to the son on demise of his father.

 

On combine reading of above, it may be considered that, royalty income is received by the son from an investment (copyright), owned by him after his father’s demise. Accordingly, royalty income received by the son may fall within the purview of income received from investment and therefore may be considered as current income.    

 

Can a customer deposit 4800 USD in 2/3 banks and thereby skip submitting the Currency Declaration Form?

Ans.

A person coming to India from abroad can bring foreign exchange without any limit. However, if aggregate value of foreign currency alone exceeds USD 5,000 or its equivalent, it should be declared to Customs Authorities at the Airport in Currency Declaration Form (CDF) on arrival in India.

 

RBI may penalize if there is any contravention or deficiency in compliances, monitoring mechanism of the AD Bank. Accordingly, AD Bank should take appropriate actions while depositing foreign currency into customer’s bank account.

 

Whether 15CA mentioning amount in foreign Currency equivalent should be acceptable

Ans.

Amount in Form 15CA is auto-populated from Form 15CB. Further, Form 15CB is issued by a CA to certify that appropriate taxes have been paid/ deducted on sources of funds earned/received in India. Accordingly, amount of remittance in Indian Rupees and tax deduction/payment details thereon should be mentioned in Form 15CA.

 

If remittance is to be made overseas in foreign currency, prevailing exchange rate and notional Foreign Currency Equivalent can be used while filing Form 15CB/Form 15CA and NRI customer can submit an outward remittance form (request letter) to the AD bank stating the amount of remittance to be made in foreign currency.

 

However, AD Bank should restrict the remittance in foreign currency equivalent to Indian Rupees mentioned in Form 15CA based on the exchange rate prevailing on the date of the transfer.

TDS deduction/paid which is point 13 on 15CA/CB, is declared by the CA but generally does not matches with AD Bank’s internal team, is it justified to challenge the CA on the taxation point

Ans.

Basically, it is CA’s obligation to ensure that appropriate taxes have been paid/ deducted on the sources of funds intended to be repatriated and certify the same in Form 15CB.

 

However, AD Banks play an important role in repatriation of funds and are subject to RBI rules/regulations. Accordingly, in case of mismatch, they may request NRI customer to seek clarity from their CA for basis of tax deduction/payment and after satisfaction, may proceed with the repatriation.

Is there a requirement of checking the origin of funds before allowing a transfer (If the fund in Bank account is due to multiple transfer etc. from other bank)

Ans.

Primarily, it is the NRI remitter’s responsibility to comply with the rules and regulations under Indian laws.

 

AD Banks play an important role in repatriation of funds and as a responsible channel for repatriation and are subject to RBI rules/regulations. AD Bank may check and ensure that there is no contravention of the law. RBI do check the compliances by the AD Bank and failure may cause penal actions by RBI. Accordingly, it is practically advisable to check the origin of the funds based on internal policies of each AD bank. 

 

In case of part payment transfer through other AD Bank and rest through us what should be our stand?

Ans.

Remittances from NRO a/c to NRE a/c or overseas bank account can only be done through a single AD Bank in a particular Financial Year. This is basically for AD bank to track that remittance from NRO a/c is not made beyond USD 1 Million per FY.

 

If remittance is made partly through other AD Bank then it amounts to contravention on the part of the remitter (NRI). However, conservatively, AD Bank should always seek clarity from NRI customer in this relation and also get a declaration signed from the NRI customer stating that he/she has not made any remittance from other AD bank during a particular FY.

 

If AD Bank is aware that part remittance has already been made through other AD Bank then they should advise the NRI customer to make other remittance for that FY from that AD Bank only.      

Can transfer happen to third party NRE a/c from NRO a/c of remitter (NRI)?

Ans.

The answer is no but it is not explicitly provided in FEMA regulations.

 

Generally, AD Bank allows transfer of funds from NRO a/c to remitter’s own NRE a/c within the overall ceiling of USD 1 Million per FY and thereafter the funds can be freely transferred from NRIs NRE a/c to NRE a/c of the third party.

For movable property cases (Like interest , Dividend, Share Sale proceeds etc from other banks) do we have to check regarding PIS conversion of customer’s resident portfolio or not? i.e. Whether we should allow conversion only after the account is converted to PIS and then stocks sold.

Ans.

The existing demat account cannot be converted into portfolio investment scheme (PIS) account. On becoming non-resident, one cannot continue to operate his/her regular demat account. The existing demat account, which holds shares that were purchased while he/she was a resident Indian, will have to be closed and would need to transfer the shares to a new demat account which is linked with a NRO bank a/c. One can continue to hold these shares on non-repatriation basis or sell them even after becoming non-resident. 

 

NRIs were earlier allowed to make investment under PIS on non-repatriation basis, however the same has now been discontinued. NRIs are now allowed to purchase/sell shares or convertible debenture of an Indian Company through stock exchanges under the PIS on repatriation basis. For this purpose, the NRI has to open a NRE bank a/c under the PIS scheme for routing investments.

Mr. A is an NRI and who had acquired a residential property in India for Rs. 10 Crore in the year 2015 out of inward remittance from USA bank. Mr. A now wishes to sell such property for Rs. 6 Crore in the year 2019. Is repatriation of sale proceeds of Rs. 6 Crore permissible under FEMA? Will it fall under USD 1 Million Scheme?

Ans.

Yes, it is permissible as per FEMA. In the event of sale of residential property, the bank may allow repatriation of sale proceeds outside India, provided the funds used for acquisition of said property were out of funds held in Foreign Currency Non-Resident Bank Account or out of funds held in Non-Resident External Account.  In the given scenario, since Mr. A acquired a residential property in India out of inward remittance from USA bank, the same shall be freely repatriable outside India and shall not be subject to USD 1 Million Scheme.

 

In the above FAQ s, what would be your answer if Mr. A wishes to sell such property for Rs. 15 Crore in the year 2019? Will it fall under USD 1 Million Scheme?

Ans.

In the given scenario, out of the sale proceeds of Rs. 15 Crore, Rs. 10 Crore (acquisition cost out of inward remittance from USA bank) shall be freely repatriable outside India without any limit. For repatriation of funds over and above the acquisition cost of Rs. 10 Crore i.e. Rs. 5 Crore, Mr. A can repatriate the same outside India subject to USD 1 Million Scheme.

In the above FAQ s, would your answer remain same if Mr. A had already repatriated the sale proceeds of two other residential properties outside India?

Ans.

No. As per FEMA, in case of residential property acquired by way of inward remittance, the sale proceeds are freely repatriable subject to not more than two such properties. Accordingly, sale proceeds over and above two such properties is permitted to be repatriated under USD 1 million per financial year.

In the above FAQ u, would your answer remain same if Mr. A now wishes to sell a commercial property?

Ans.

No. As per FEMA, the restriction of two properties applies only to residential property and hence there are no restrictions on repatriation of sale proceeds from sale of commercial immovable property acquired out of inward remittance or Foreign Currency Non-Resident Bank Account or out of funds held in Non-Resident External Account.