The USD 1 Million Per Year Rule: How NRIs Repatriate NRO Balances, Sale Proceeds and Inherited Assets

For an NRI or a Person of Indian Origin (PIO), the single most misunderstood number in cross-border money management is the ceiling of USD 1,000,000 per financial year. Set out in the Foreign Exchange Management (Remittance of Assets) Regulations, 2016 and consolidated in RBI Master Direction No. 13 on Remittance of Assets, this limit governs how balances sitting in a Non-Resident Ordinary (NRO) account, the sale proceeds of Indian property, and assets inherited under a will or deed of settlement can lawfully leave the country. The financial year runs April to March, and the USD 1 million ceiling resets on 1 April each year.

The rule matters because most NRI money that originates in India, whether it is rent collected since 2015, a flat sold in 2026, or a bequest from a resident parent, lands first in an NRO account. Unlike the fully repatriable Non-Resident External (NRE) route, NRO funds are treated as domestic rupee resources and can only be sent abroad within this USD 1 million window, net of Indian taxes and against a prescribed declaration. This article walks through the FEMA position, the Indian tax on each type of receipt, the foreign-tax-credit interaction, and the exact repatriation paperwork under Section 195 of the Income-tax Act, 1961.

FEMA / DTAA Position

Under Section 6 of the Foreign Exchange Management Act, 1999, capital-account transactions are permitted only to the extent the RBI specifically allows; everything else needs prior approval. The Remittance of Assets Regulations, 2016 are the enabling permission for NRIs, and RBI Master Direction No. 13 confirms that an NRI or PIO "may remit an amount up to USD 1,000,000 per financial year" out of the balances held in an NRO account, out of the sale proceeds of assets, or out of assets acquired in India by way of inheritance, legacy or a deed of settlement made by a person who was resident in India. The Reserve Bank of India FAQ on Remittance of Assets states this position verbatim.

The USD 1 million cap is a per-person, per-financial-year figure, not a per-transaction one. A single NRI who sells a Mumbai flat for the rupee equivalent of USD 1.6 million in June 2026 therefore cannot remit the whole amount in one financial year; the balance carries into the year beginning 1 April 2027. Where the property was held jointly by two NRIs, each co-owner has an independent USD 1 million entitlement for their respective share, because the ceiling attaches to the individual account holder. This is distinct from the resident Liberalised Remittance Scheme (LRS) limit of USD 250,000 per financial year under Section 6 of FEMA, which applies to residents sending money out, not to NRIs repatriating their own Indian assets.

The Double Taxation Avoidance Agreement (DTAA) does not change the FEMA ceiling, but it decides how much tax India can withhold before the money is remitted, which in turn fixes the net amount available within the USD 1 million window. India retains the right to tax capital gains arising on Indian assets at 12.5% under its treaties, so an NRI cannot claim the gain is "exempt" merely because a DTAA exists. The treaty instead caps the rate on passive income such as interest and dividends and allows the resident country to grant a credit, as explained under double taxation avoidance. The comparison below uses the India-USA treaty in force since 12 September 1991 and the India-UAE treaty in force since 22 September 1993.

Tax Treatment in India

Every rupee that flows into an NRO account has already borne, or must bear, Indian tax before it can be repatriated, and the paperwork insists on proof of that tax. Interest credited on an NRO savings or fixed deposit is fully taxable and suffers tax deducted at source (TDS) at 30%, plus the applicable surcharge and 4% health and education cess, under Section 195 of the Income-tax Act, 1961. That headline 30% NRO TDS is far higher than the rate a resident faces, which is one reason the NRE and FCNR routes, whose interest is income-tax exempt for non-residents, are preferred for fresh foreign earnings. You can model the effect of the 30% deduction using the NRI tax calculator.

Capital gains are the largest single component of most repatriations, and Budget 2024 rewrote the rates with effect from 23 July 2024. Long-term capital gain on immovable property is taxed at 12.5% without indexation under Section 112, though property acquired before 23 July 2024 may instead use the grandfathered 20% rate with indexation, whichever produces the lower liability. Long-term gains on listed equity and equity mutual funds are taxed at 12.5% under Section 112A above the annual exemption of Rs 1,25,000, while short-term equity gains are taxed at 20% under Section 111A. For an NRI selling a house, the buyer must deduct TDS on the full sale consideration, so a lower-deduction certificate under Section 197 is usually essential to avoid tax being withheld on the gross price rather than the gain.

Surcharge stacks on top of these base rates once income crosses defined thresholds, and the surcharge schedule is progressive: 10% between Rs 50 lakh and Rs 1 crore, 15% between Rs 1 crore and Rs 2 crore, and 25% between Rs 2 crore and Rs 5 crore. In the new tax regime the top surcharge is capped at 25% even above Rs 5 crore, whereas the old regime still reaches 37% at that level. Importantly, the surcharge on capital gains under Sections 111A and 112A and on dividend income is capped at 15% regardless of the total income, which materially lowers the effective rate on a large one-off property or share sale. A 4% cess applies on the aggregate of tax and surcharge in every case.

Rental income from Indian property is taxed under the head "income from house property" after the standard 30% deduction under Section 24(a), and the tenant of an NRI landlord must deduct TDS at 30% under Section 195 before paying rent. Because rent is treated as current income rather than a capital asset, its post-tax balance is freely repatriable and does not consume the USD 1 million ceiling, a distinction examined further under rental income tax for NRIs. Filing an Indian return remains the only way to reclaim excess TDS, since the 30% deduction is almost always higher than the NRI's actual slab liability on net rent.

Tax Treatment Abroad

Because India taxes the source of the income first, the NRI's country of residence must decide whether to tax the same receipt again and, if so, whether to allow a credit for the Indian tax paid. Under Article 24 of the India-USA DTAA, a US-resident NRI is entitled to a foreign tax credit for Indian income tax against their US federal liability, so the 12.5% Indian capital-gains tax on an Indian property sale is generally creditable rather than additive, subject to US foreign-tax-credit limitation rules. The mechanics of claiming this offset are set out under foreign tax credit.

The credit is never automatic and rarely a perfect wash, because the two countries measure the same gain differently. The United States taxes worldwide income of its citizens and residents on a calendar-year basis and applies its own cost-basis and holding-period rules, which can produce a US taxable gain different from the Indian figure computed to 31 March. Where the US rate on a long-term gain exceeds the 12.5% Indian rate, the resident pays the difference to the US Treasury; where the Indian tax is higher, the excess may not be fully creditable in the year and can create a carry-forward under US rules. An NRI must file Form 67 on the Indian portal before claiming relief in India for the reverse situation.

The UAE presents the opposite arithmetic. Because the UAE levies no personal income tax on individuals as of 2026, a UAE-resident NRI has no foreign liability against which to claim an Indian credit, so the Indian tax withheld is effectively the final tax on Indian-source income. To access the treaty's lower rates on interest (12.5%) and dividends (10%), the UAE resident must furnish a Tax Residency Certificate together with Form 10F on the Indian income-tax portal, and the India-UAE treaty specifically confirms that capital gains on shares of an Indian company remain taxable in India. Residents of jurisdictions such as the United Kingdom, Canada, Singapore and Australia should read their own treaty article on elimination of double taxation, as the credit method and its limitations vary by country.

Repatriation Mechanics

The practical repatriation of NRO funds turns on two forms and one declaration. Before any remittance above the small-value threshold, the remitting bank requires Form 15CA, an online declaration by the account holder, and Form 15CB, a certificate from a chartered accountant confirming the nature of the remittance and that the correct tax has been deducted, both filed under Rule 37BB read with Section 195. The bank also takes an undertaking that the cumulative remittances in the financial year do not exceed USD 1,000,000. You can estimate the deliverable amount after tax and conversion using the NRI repatriation calculator.

The three non-resident accounts behave very differently, and choosing the right one before money arrives saves both tax and paperwork. The table below summarises the position confirmed in RBI Master Direction No. 13 and the deposit-account Master Direction.

An NRI who expects to sell Indian assets should understand that current income and capital receipts are treated separately. Current income such as rent, dividends, pension and interest, net of Indian tax, is freely repatriable from an NRO account and does not count towards the USD 1 million ceiling, which is reserved for capital items like sale proceeds and inherited principal. Where an NRI has already paid tax on funds, the balance in an NRO account can also be transferred to an NRE account within the same USD 1 million annual limit, again supported by Forms 15CA and 15CB, as detailed under the NRO account and NRE account definitions.

Inherited assets carry one extra evidentiary layer. To remit inheritance proceeds within the USD 1 million limit, the NRI must produce the will or, where there is no will, a succession certificate or legal-heir certificate, alongside the chartered accountant's Form 15CB confirming that any capital-gains tax on a subsequent sale has been settled. The RBI FAQ confirms that a foreign national of non-Indian origin who has retired from employment in India, who has inherited from a person resident in India, or who is a non-resident widow or widower of an Indian citizen may likewise remit up to USD 1,000,000 per financial year, subject to payment of applicable taxes. Where a remittance exceeds this ceiling in genuine hardship, the regulations allow an application to the RBI for consideration, but there is no automatic entitlement beyond USD 1 million.

FAQ

Does the USD 1 million limit apply per person or per family?

The ceiling is per individual account holder, per financial year. If a property was jointly held by a husband and wife who are both NRIs, each may remit up to USD 1,000,000 in respect of their own share, effectively allowing USD 2 million between them in the same April-to-March year, as confirmed by RBI Master Direction No. 13.

Is capital gain on my Indian property exempt under the DTAA?

No. India retains the right to tax capital gains on Indian assets, and the long-term rate is 12.5% under Section 112 after Budget 2024. A DTAA does not make the gain exempt; it only allows your country of residence to grant a credit for the Indian tax, for example under Article 24 of the India-USA treaty in force since 1991.

Can I repatriate rent without touching the USD 1 million limit?

Yes. Rent is current income, and its balance net of the 30% TDS under Section 195 is freely repatriable from an NRO account without consuming the USD 1 million capital ceiling. The tenant must first deduct tax at source, and you recover any excess by filing an Indian return.

What is the difference between NRE and NRO for repatriation?

NRE balances are fully repatriable with no annual cap and the interest is income-tax exempt for non-residents, whereas NRO balances are repatriable only up to USD 1 million per financial year and the interest is taxed at 30% TDS. FCNR(B) deposits, held in foreign currency, are also fully repatriable, as noted under FCNR deposit.

Which forms do I need to send money out of my NRO account?

You need Form 15CA, an online self-declaration, and in most cases Form 15CB, a chartered accountant's certificate under Rule 37BB and Section 195, plus a bank undertaking that your cumulative remittances stay within USD 1,000,000 for the financial year. The bank will not process the SWIFT transfer without these.

How is NRO interest taxed, and can I reduce the 30% deduction?

NRO interest is fully taxable and suffers TDS at 30% plus surcharge and 4% cess under Section 195. If your actual slab rate is lower, you can apply for a lower or nil deduction certificate under Section 197, or claim a treaty rate such as the India-UAE 12.5% on interest by furnishing a Tax Residency Certificate and Form 10F, as explained under TDS.

Can inherited money be sent abroad, and what proof is required?

Yes, within the same USD 1,000,000 per financial year limit. You must produce the will, or a succession or legal-heir certificate where there is no will, together with Form 15CB confirming that any capital-gains tax on a later sale has been paid, per the RBI Remittance of Assets FAQ.