How NRIs Repatriate Up to USD 1 Million a Year From an NRO Account Under FEMA

For a non-resident Indian, the single most important number in cross-border money management is USD 1 million. That is the ceiling the Reserve Bank of India places on how much an NRI or Person of Indian Origin may remit abroad in one financial year (April to March) out of balances held in a Non-Resident Ordinary (NRO) account, the sale proceeds of Indian assets, and property received by inheritance or settlement. The framework is set out in the Foreign Exchange Management (Remittance of Assets) Regulations 2016 and explained in the RBI's Remittance of Assets FAQ. This article walks through the statute, the Indian tax that must be cleared first, how a foreign tax credit interacts with it, and the exact banking mechanics of moving the money.

The USD 1 million window matters because an NRO account, unlike an NRE or FCNR account, is only partially repatriable. Rupee income that accrues in India — rent, dividends, pension, interest, capital gains — is legally required to be credited to an NRO account, and getting it back out is governed by both FEMA and the Income-tax Act 1961. Miss a step and the remittance stalls at the authorised dealer bank; misread the tax position and the funds leave the country with a residual Indian liability attached.

FEMA / DTAA Position

The governing instrument is the Foreign Exchange Management (Remittance of Assets) Regulations 2016, issued under the Foreign Exchange Management Act 1999. Regulation 4 permits an NRI or PIO to remit up to USD 1 million per financial year out of balances in an NRO account, out of the sale proceeds of assets held in India, and out of assets acquired by way of inheritance, legacy or a deed of settlement. The RBI's Remittance of Assets FAQ confirms that the USD 1 million cap covers all such sources aggregated together, not USD 1 million per source, and that it runs on the Indian financial year of April to March rather than the calendar year.

Two conditions attach to the facility. First, the remittance must be for a bona fide purpose and the authorised dealer bank must obtain an undertaking from the account holder confirming the funds are legitimate and that all applicable Indian taxes have been paid or provided for. Second, any remittance in excess of USD 1 million in a single financial year requires prior approval from the Reserve Bank of India — the authorised dealer cannot clear it on its own authority. There is no rollover: an unused portion of one year's USD 1 million allowance does not carry into the next April.

Getting the FEMA classification wrong is not a paperwork inconvenience. Under Section 13 of FEMA 1999, a contravention attracts a penalty of up to three times the sum involved or Rs 2 lakh where the amount is not quantifiable, whichever is higher, and a further Rs 5,000 for every day a continuing contravention persists. That is the statutory reason authorised dealers insist on the undertaking and the tax certificates before releasing a single dollar.

It is worth separating the two legal regimes at the outset. FEMA governs whether and how much money may cross the border; the Income-tax Act and the applicable Double Taxation Avoidance Agreement (DTAA) govern how much tax India keeps before the money leaves. The USD 1 million limit is purely a FEMA construct and is entirely separate from the tax you owe. Clearing FEMA does not clear tax, and clearing tax does not raise the FEMA ceiling.

Tax Treatment in India

Every rupee sitting in an NRO account has already been earned as Indian-source income, so it carries an Indian tax history. Before any repatriation, that income must be assessed and the correct tax discharged. The mechanism is Section 195 of the Income-tax Act 1961, which requires the payer — the bank or buyer crediting an NRO account — to withhold TDS at the rate specified in the Act or the applicable DTAA rate, whichever is lower.

The rates depend on the nature of the income. Long-term capital gains on the sale of Indian property or unlisted shares are taxed at 12.5% without indexation for acquisitions on or after 23 July 2024, following Budget 2024, while property acquired before that date may elect the grandfathered 20%-with-indexation computation. Long-term capital gains on listed equity are taxed at 12.5% above the annual exemption, and short-term gains on listed equity at 20%. Interest earned on an NRO fixed deposit is fully taxable at slab rates, with banks typically deducting TDS at 30% plus surcharge and cess unless a lower DTAA or treaty rate is substantiated.

Non-residents with qualifying investment income can also fall within Chapter XII-A. Under Section 115E, income from specified foreign-exchange-acquired assets and long-term capital gains on such assets are taxed at a concessional flat 20%, a regime our explainer on Section 115E and the flat 20% tax on NRI investment income sets out in full. Whether Chapter XII-A or the general provisions apply turns on how the asset was originally funded and held.

On top of the base rate, high earners face a surcharge. The surcharge slabs run at 10% for total income 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. Critically, the surcharge in the new tax regime is capped at 25% even for income above Rs 5 crore, so 25% is the highest marginal surcharge an NRI on the default regime can face. A health and education cess of 4% then applies on the tax-plus-surcharge total. An NRI can model the combined liability using our NRI income tax calculator, and a landlord repatriating rent can check the net-of-tax position with the NRI rental income tax calculator.

Tax Treatment Abroad

Paying Indian tax is only half the picture. Because the remitting NRI is tax-resident somewhere else, the same income may be taxable again in the country of residence. The DTAA India has signed with that country exists precisely to prevent the income from being taxed twice at full rates, and it works through two levers: a capped withholding rate in India, and a foreign tax credit abroad.

A crucial correction to a common myth: DTAAs do not make Indian capital gains "exempt". India retains the right to tax capital gains arising on Indian assets, and the treaty rate for long-term capital gains sits at 12.5% for the United States, the United Kingdom and the United Arab Emirates alike. What the treaty caps are the passive-income rates. The table below sets out the ceiling rates under three of the most-used treaties.

The US figures carry a nuance worth flagging: under Article 10 of the India-US treaty (effective 12 September 1991), the 25% portfolio dividend rate falls to 15% only where the recipient holds at least 10% of the voting stock of the paying company. The India-UK treaty took effect on 26 October 1993 and the India-UAE treaty on 22 September 1993, and each carries its own tie-breaker and residency-proof conditions.

The second lever is the foreign tax credit. Under Article 24 of the India-US treaty, tax paid in India is creditable against the US liability on the same income, so an NRI resident in the United States typically offsets the Indian TDS against US federal tax rather than paying both in full. A UAE-resident NRI, by contrast, generally faces no personal income tax at home, so the Indian tax is usually the final cost. To claim the treaty rate at source rather than paying the higher domestic rate and reclaiming later, the NRI must furnish a Tax Residency Certificate (TRC) from the country of residence together with Form 10F, invoking Section 90 relief — a process our guide to claiming DTAA relief, the TRC and Form 10F covers step by step. Without a valid TRC, the bank applies the full domestic withholding rate and the treaty benefit is lost at source.

Repatriation Mechanics

FEMA sorts non-resident bank accounts into three types, and repatriability differs sharply between them. Money held in a Non-Resident External (NRE) account and a Foreign Currency Non-Resident (FCNR) deposit is freely and fully repatriable, principal and interest, with no annual cap, because it represents foreign earnings brought into India. NRO balances are where the USD 1 million rule bites, because they hold India-sourced rupee income.

The operative paperwork for an NRO remittance is the Form 15CA / Form 15CB pair. Form 15CB is a certificate signed by a chartered accountant confirming the nature of the remittance and that the appropriate tax has been deducted, and Form 15CA is the online declaration filed with the Income-tax Department that references it. Our glossary entry on the Form 15CA / 15CB certificate explains when the CA certificate is mandatory. The authorised dealer bank will not process the outward remittance until both forms are on file alongside its own undertaking.

The practical sequence for repatriating from an NRO account runs as follows. First, establish the source of funds and confirm it is an eligible category — current income, sale proceeds of an asset, or an inheritance. Second, compute and discharge the Indian tax, applying the DTAA rate where a valid TRC and Form 10F support it. Third, obtain the Form 15CB certificate and file Form 15CA. Fourth, sign the bank's undertaking that the aggregate remittance stays within USD 1 million for the current April-to-March year. Fifth, the authorised dealer converts and remits the funds. Where the total will exceed USD 1 million in a single financial year, step four is replaced by an application for prior RBI approval, which the bank routes on the customer's behalf.

Current income — rent, dividends, pension and interest net of tax — is treated slightly more liberally: it is repatriable without being counted against the USD 1 million limit, provided the authorised dealer is satisfied it is genuinely current-year income and the tax has been paid. Capital transactions such as property sale proceeds and inheritances are what the USD 1 million ceiling is designed to meter. NRIs planning a large transfer can estimate the net dollar amount after Indian tax and conversion using the NRI repatriation calculator before approaching the bank.

FAQ

How much can an NRI repatriate from an NRO account in one year?

Up to USD 1 million per financial year (April to March), aggregated across NRO balances, sale proceeds of Indian assets and inherited or settled assets, under the Foreign Exchange Management (Remittance of Assets) Regulations 2016. Amounts above USD 1 million in a single year need prior Reserve Bank of India approval, and the limit does not roll over between years.

Is the USD 1 million limit separate from tax?

Yes. The USD 1 million cap is a FEMA rule about how much money may cross the border. It is entirely separate from the Income-tax Act liability, which must be discharged first under Section 195 before the authorised dealer bank will release the funds. Clearing tax does not raise the FEMA ceiling, and staying within the ceiling does not waive any tax due.

Do I need a chartered accountant's certificate to remit?

For most taxable NRO remittances you need the Form 15CA / Form 15CB pair — Form 15CB being the CA certificate confirming the tax position, and Form 15CA the online declaration filed with the Income-tax Department. The authorised dealer bank will not process the remittance until both are filed alongside its own undertaking, as required for FEMA compliance.

Are NRE and FCNR balances subject to the same USD 1 million cap?

No. Balances in an NRE account and an FCNR deposit are freely and fully repatriable, both principal and interest, with no annual limit, because they represent foreign earnings brought into India. The USD 1 million ceiling applies only to NRO accounts, which hold India-sourced rupee income.

Does the DTAA make my Indian capital gains tax-free?

No. India retains the right to tax capital gains on Indian assets, and the treaty rate for long-term capital gains is 12.5% for the United States, the United Kingdom and the United Arab Emirates. What the DTAA does is cap passive-income rates and allow a foreign tax credit — under Article 24 of the India-US treaty, for example — so the same income is not taxed twice at full rates in both countries.

What documents secure the lower treaty withholding rate?

To have the bank apply the DTAA rate rather than the full domestic rate under Section 195, furnish a Tax Residency Certificate from your country of residence together with Form 10F, invoking Section 90 relief. Without a valid TRC on file, the authorised dealer applies the higher Income-tax Act rate at source and you must reclaim any excess by filing a return.

What happens if I breach the FEMA limit or misdeclare funds?

Under Section 13 of FEMA 1999, a contravention can attract a penalty of up to three times the amount involved, or Rs 2 lakh where the sum is not quantifiable, whichever is higher, plus Rs 5,000 for every day a continuing contravention persists. This is why authorised dealers insist on the undertaking and the tax certificates before remitting.