“Synopsis”
Non-Resident Indians (NRIs) often manage income, investments, and family needs between India and abroad. Whether sending money home, repatriating funds, or investing, it’s important to comply with FEMA (Foreign Exchange Management Act). This blog explains how NRIs can legally remit funds, what limits apply, which accounts to use, and what documents are required written simply and clearly for easy understanding.
Understanding FEMA Rules for NRIs
The Foreign Exchange Management Act (FEMA) governs how money flows in and out of India. For NRIs, FEMA ensures that remittances and repatriations are lawful, tax-compliant, and properly documented.
1. Remitting Money To India – Inward Remittance
Who can remit?
Any NRI or PIO (Person of Indian Origin) with foreign income can remit funds into India.
Which account to use?
Funds should be sent to an NRE or FCNR account in foreign currency.
Purpose of Remittance
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Family maintenance
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Investments
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Education expenses
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Personal savings
Is There a Limit?
There is no limit on inward remittances through proper banking channels.
Required Documents
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Valid passport and visa
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Proof of income source
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KYC documents at the bank
2. Repatriating Money From India – Outward Remittance
Sending money from India to another country is allowed but comes with specific rules under FEMA.
If You Have an NRO Account
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Maximum repatriation: USD 1 million per financial year
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Tax must be paid on the income in India
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Submit Form 15CA & 15CB (certified by a CA)
If You Have an NRE or FCNR Account
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No restrictions on repatriation
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Principal and interest are freely repatriable
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No Indian tax applies on these funds
3. Common Remittance Scenarios & Limits
Gifting to Family Overseas
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Allowed up to USD 250,000 per year under Liberalised Remittance Scheme (LRS)
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Only to “close relatives” as per FEMA
Repatriating Sale Proceeds of Property
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Allowed up to USD 1 million per year
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Requires sale deed and tax payment proof
Sending Money for Overseas Education
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Covered under LRS
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Must show admission letter and course fee
Investment in Foreign Shares or Property
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Limit: USD 250,000 per year
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Can use after-tax funds from NRO account
Key FEMA-Compliant Accounts for NRIs
NRE (Non-Resident External) Account
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For foreign income only
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Fully repatriable
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Interest is tax-free in India
NRO (Non-Resident Ordinary) Account
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For Indian income (rent, dividends)
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Interest is taxable
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Repatriation capped at USD 1 million/year
FCNR (Foreign Currency Non-Resident) Account
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For fixed deposits in foreign currency
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Fully repatriable
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Ideal for NRIs who want to avoid currency risks
Important Forms for Outward Remittance
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Form 15CA – Declaration by the sender that tax has been deducted
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Form 15CB – Issued by a CA, confirming payment of tax
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A2 Form – Standard bank form required for all forex transactions
Tips to Stay FEMA-Compliant
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Avoid moving money from NRO to NRE without proper documentation
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Keep all proofs of foreign income sources
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Always file 15CA/CB for large transfers
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File an ITR in India if your income exceeds the basic limit (₹2.5 lakh) even as an NRI
FEMA Penalties for NRIs
Violating FEMA rules can lead to:
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Penalty up to 3x the remittance amount
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Seizure of funds or accounts
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Prosecution in extreme cases
Conclusion
With more NRIs investing, gifting, and supporting families in India, following FEMA rules ensures you avoid legal trouble and plan your finances wisely. Whether bringing money into India or taking it out, knowing the right accounts, limits, and documentation helps you stay on the right side of the law and protect your hard-earned money.
