FEMA Deposit (Sixth Amendment) 2026: NRO balances can now move to NRE or SNRR accounts within the remittance-of-assets limit

On June 18, 2026, the Reserve Bank of India issued Notification No. FEMA 5(R)(6)/2026-RB, the Foreign Exchange Management (Deposit) (Sixth Amendment) Regulations, 2026. In about 600 words of legal text it does two things that matter to non-resident Indians. First, it writes into the deposit regulations, for the first time as a named credit and debit entry, that money in an NRO account may be transferred to an NRE account or a Special Non-Resident Rupee (SNRR) account, within the limit in Regulation 4 of the Foreign Exchange Management (Remittance of Assets) Regulations, 2016. Second, it rewrites the SNRR account itself, so that any person resident outside India may hold one with an authorised dealer in India or with its branch outside India, including a branch in an International Financial Services Centre (IFSC).

This explainer sets out what the notification says, clause by clause, how the transfer sits with Indian income tax and the tax rules of the country where the NRI lives, and what the bank will still ask for before the money moves. RBI lists six earlier amendments to the 2016 Deposit Regulations under the notification: G.S.R. 1093(E) of November 9, 2018, G.S.R. 498(E) of July 16, 2019, FEMA 5(R)/(3)/2019-RB of November 13, 2019, FEMA 5(R)/(4)/2024-RB of May 6, 2024 and FEMA 5(R)(5)/2025-RB of January 14, 2025.

FEMA / DTAA Position

The notification is made under sub-section (2) of section 6 and sub-section (2) of section 47 of the Foreign Exchange Management Act, 1999. Section 6 is the capital-account provision; Oquilia's statute brief summarises it as the rule that a capital-account dealing needs RBI permission unless it is specifically permitted. That is why an express clause matters: a transfer that the regulations name is a permitted transaction, and a bank does not have to fall back on circulars or its own reading of the rules. The amendment comes into force from the date of its publication in the Official Gazette, under clause 1(ii).

The principal regulations are the Foreign Exchange Management (Deposit) Regulations, 2016, Notification No. FEMA 5(R)/2016-RB dated April 1, 2016, published as G.S.R. No. 389(E). The Sixth Amendment changes them in nine numbered places:

The limit that clauses 4 and 5 refer to is the one Oquilia's NRI data tables record as USD 1,000,000 per financial year for repatriation of NRO balances under the Remittance of Assets Regulations. The amendment does not raise that figure, and it does not create a second, separate allowance: an NRO-to-NRE transfer and a direct remittance abroad from the NRO account draw on the same Regulation 4 limit. A reader who moved USD 600,000 from NRO to NRE in a financial year, and then wanted to send money abroad directly from NRO, would have USD 400,000 of that year's limit left.

A double taxation avoidance agreement (see the DTAA glossary entry) does not govern this question. A treaty allocates taxing rights over income; it says nothing about which bank account an Indian-source rupee balance may sit in. The treaty becomes relevant only for the income that built up the NRO balance, and for the interest that the balance earns, which the next two sections cover.

Tax Treatment in India

Nothing in FEMA 5(R)(6)/2026 amends income-tax law. The notification is issued under FEMA sections 6(2) and 47(2) and changes only the Deposit Regulations, so the tax position of every rupee depends on the income it came from, not on the account label. Since April 1, 2026 the Income-tax Act, 2025 has been in force; section references below are to the Income-tax Act, 1961 provisions that applied to the income credited to most existing NRO balances, and readers should confirm the matching provision of the 2025 Act for income from April 1, 2026.

Three points follow from Oquilia's NRI data tables and the TDS glossary entry:

The surcharge row uses the slabs in Oquilia's rate configuration: 10% between Rs 50 lakh and Rs 1 crore, 15% between Rs 1 crore and Rs 2 crore, and 25% above Rs 2 crore in the new regime. The new regime caps surcharge at 25%; the 37% slab above Rs 5 crore survives only in the old regime. The 4% cess is charged on tax plus surcharge.

The practical consequence of the June 18, 2026 change is about future interest, not past tax. Rupees that were taxed when credited to NRO (rent, dividends, pension or NRO deposit interest) remain taxed income. Once the tax-paid balance is moved to NRE under the new clause (k), interest earned on it from then on falls in the NRE column, which Oquilia's tables record as exempt under Section 10(4)(ii). On Rs 10 lakh earning interest at a hypothetical 7% a year, that is Rs 70,000 of annual interest which, in an NRO deposit, would carry TDS of Rs 21,000 at the 30% base rate before cess, and Rs 21,840 once 4% cess is added. A reader can model the difference with the NRO-to-NRE calculator and the NRI tax calculator.

The other income-tax step is documentary. Oquilia's data tables record that a bank will not process NRO repatriation without Form 15CA, and that for amounts above Rs 5 lakh in a financial year Part C of Form 15CA must be backed by Form 15CB, a chartered accountant's certificate that the right tax has been deducted and treaty provisions considered (see Form 15CA / 15CB). Because the transfer now sits within the same Regulation 4 limit, banks may apply the same paperwork to an NRO-to-NRE credit. The forms and their instructions are published on the Income Tax Department's e-filing portal.

Tax Treatment Abroad

Moving a balance between two Indian accounts is not, on its own, an income event in India. For the residence country, the tax point is the interest and the income behind the balance, under that country's own law. Oquilia's treaty tables for three of the largest NRI corridors give these India-side caps:

Section 195 lets the payer withhold at the DTAA rate or the Act rate, whichever is lower, so a US-resident NRO depositor who furnishes treaty documents may see interest TDS at 15% rather than the 30% base rate. India keeps its taxing rights on long-term capital gains at 12.5% under all three treaties in Oquilia's tables, so a capital gain that built up the NRO balance is never treated as treaty-exempt.

For a US resident, the treaty notes record that Article 24 gives a foreign tax credit in the country of residence. The Indian tax withheld on NRO interest can therefore be credited against US tax on the same interest, up to the US limit, and Oquilia's foreign tax credit calculator lays out that arithmetic. When the money moves to NRE, the India-side tax on future interest falls to nil under Section 10(4)(ii), which also means there is no Indian tax left to credit: the US, UK or other residence country may still tax that interest in full under its own law.

For a UAE resident, Oquilia's country data records that the UAE levies no personal income tax, so Indian tax on NRO interest is the final tax and there is nothing to offset it against abroad. For that reader the NRO-to-NRE route removes the only tax layer on future interest. For UK residents, Oquilia's country notes flag that the 2025 UK reforms to the remittance basis mean earlier planning around NRE deposits needs revisiting; the treaty interest cap stays at 15%. In every country, the reader's own adviser should confirm how the residence country treats NRE interest, because the Section 10(4)(ii) exemption is an Indian rule only.

Repatriation Mechanics

Before the notification of June 18, 2026, NRO balances reached an NRE account through bank practice built around the Remittance of Assets Regulations; Oquilia's data tables describe it as being treated as repatriation, subject to the annual USD 1 million cap, TDS and Form 15CA/15CB. After the Sixth Amendment, the same movement is an express credit in Schedule 1 para 3(k) and an express debit in Schedule 3 para 3(B)(v). Five steps follow from the text and from the account rules recorded in Oquilia's NRO account and NRE account entries:

1. Confirm the source. Only tax-paid money can move, and the bank will ask how the NRO balance was built (rent, sale proceeds, pension, dividends or deposit interest).
2. Check the year's headroom. Add every NRO remittance abroad and every NRO-to-NRE or NRO-to-SNRR transfer made since April 1 of the financial year; the total cannot cross USD 1 million.
3. File Form 15CA and, above Rs 5 lakh, Form 15CB. The bank will not release the funds without them, per Oquilia's data tables.
4. Instruct the transfer. Clause 5 of the notification allows the debit to "NRE or SNRR account", so the receiving account must be in the same holder's eligible name under each schedule.
5. Keep the record. Once in NRE, the funds are fully repatriable, so the audit trail of the NRO-to-NRE step is what proves later that the money was repatriable when it leaves India.

The SNRR changes are the second half of the notification. Clause 3 substitutes Regulation 5(4) so that "any person resident outside India" may open an SNRR account, and clause 6 makes its purpose permissible current and capital account transactions with residents, plus "any bona fide transaction with a person resident outside India". Clause 7 deletes paragraphs 2, 5, 6, 7 and 8 of Schedule 4, and clause 9 adds paragraph 16: where two non-residents transact through SNRR accounts and the dealing may not be subject to FEMA compliance, the AD bank acts on the holder's mandate, which must state the purpose of the transfer.

Oquilia's repatriation calculator estimates the net amount after TDS, and the FEMA glossary entry explains how current and capital account transactions differ. The FEMA text itself, and every earlier amendment listed by RBI, is on the RBI FEMA notifications page.

FAQ

What did FEMA 5(R)(6)/2026-RB change for NRO accounts?

The notification dated June 18, 2026 added clause (v) to para 3(B) of Schedule 3, allowing an NRO account to be debited for transfer to an NRE or SNRR account within the limit in Regulation 4 of the Remittance of Assets Regulations, 2016. It also added clause (k) to para 3 of Schedule 1, allowing the NRE account to take that credit.

How much can I move from NRO to NRE in a year?

The limit is the Regulation 4 limit, which Oquilia's data tables record as USD 1 million per financial year. Transfers to NRE or SNRR and direct NRO remittances abroad share that single limit, and only tax-paid balances qualify.

Is the transfer from NRO to NRE taxable in India?

The notification amends only the Deposit Regulations, not income-tax law. Tax arises on the income that built up the NRO balance, with NRO interest subject to TDS at 30% plus surcharge and 4% cess, or the lower DTAA rate under Section 195.

Will interest on the transferred money be tax-free?

Interest on an NRE account is exempt under Section 10(4)(ii) in India, so interest earned after the transfer falls in that column. The country of residence may still tax it under its own law; Oquilia's country data records that the UAE levies no personal income tax.

Do I still need Form 15CA and 15CB?

Oquilia's data tables record that banks do not process NRO repatriation without Form 15CA, and that Form 15CB from a chartered accountant is needed above Rs 5 lakh in a financial year. Because the transfer sits within the same Regulation 4 limit, expect the bank to ask for them.

Who can now open an SNRR account?

The substituted Regulation 5(4) allows any person resident outside India to open, hold and maintain an SNRR account with an authorised dealer in India or its branch outside India, including a branch in an IFSC, as defined by section 3(g) of the IFSC Authority Act, 2019.

Does a DTAA make capital gains in my NRO balance exempt?

No. Oquilia's treaty tables show India retains taxing rights on long-term capital gains at 12.5% under the US, UK and UAE treaties. A treaty may lower the rate on interest, to 15% for US and UK residents and 12.5% for UAE residents, but it does not exempt the gain.