The USD 1 Million Scheme: How NRIs Repatriate NRO Balances and Inherited Assets Under FEMA

For a non-resident Indian, the hardest part of moving money home is rarely earning it - it is getting it back out again. A rented flat in Pune, a father's fixed deposit that matured into an NRO account, a share of an ancestral house sold after probate: each of these sits inside India's exchange-control perimeter, and none of it leaves the country freely. The gateway is the USD 1 million remittance facility, framed by the Reserve Bank of India under the Foreign Exchange Management (Remittance of Assets) Regulations, 2016, which lets an NRI or Person of Indian Origin repatriate up to USD 1,000,000 per financial year (the April-March year) out of eligible Indian assets.

This article walks through how that USD 1 million window actually works: what FEMA permits, how the Income-tax Act taxes the underlying gains before the money moves, how your country of residence taxes the same receipt, and the precise account and certificate mechanics that let your banker release the funds. Every figure below is drawn from the RBI Remittance of Assets FAQ or from India's statutory rates as they stand for FY 2025-26. Where a number cannot be verified, it has been left out.

FEMA / DTAA Position

The controlling instrument is the Foreign Exchange Management (Remittance of Assets) Regulations, 2016, issued under the Foreign Exchange Management Act, 1999 (text on indiacode.nic.in). Under Section 6 of FEMA, a capital-account transaction that moves value out of India needs RBI permission unless it is specifically permitted; the USD 1 million facility is exactly such a specific permission. It allows an NRI or PIO to remit up to USD 1,000,000 per financial year out of three broad pools: balances held in a Non-Resident Ordinary (NRO) account, the sale proceeds of assets held in India, and assets acquired by way of inheritance, legacy or a deed of settlement.

The ceiling is deliberately generous but not unlimited. Where the remittance is on account of legacy, bequest or inheritance and the person receiving it is a citizen of a foreign state, any amount exceeding USD 1,000,000 in a single financial year requires prior approval from the Reserve Bank of India rather than a simple bank-level clearance. Below that threshold, an authorised dealer bank can release the funds against documentation. The RBI Remittance of Assets FAQ sets out three categories of eligible remitters in particular: a person who has retired from employment in India, a person who has inherited assets from someone covered by Section 6(5) of FEMA, and a non-resident widow or widower who has inherited assets from a deceased resident spouse. The full text of these categories appears in the RBI Remittance of Assets FAQ on rbi.org.in.

It is important to separate this facility from the resident-only Liberalised Remittance Scheme. The LRS lets a resident individual send up to USD 250,000 abroad per financial year; an NRI does not use LRS to repatriate Indian assets and instead relies on the USD 1 million route described here. The Double Taxation Avoidance Agreement (DTAA) sits alongside FEMA rather than inside it: FEMA decides whether the money may leave, while the DTAA decides how the underlying income is taxed and which country gives credit. A remittance that clears FEMA is not automatically tax-free, and a gain that is treaty-protected still needs FEMA clearance to move.

Tax Treatment in India

FEMA permission is a foreign-exchange clearance, not a tax exemption. Before any rupee converts to dollars, the Income-tax Act, 1961 taxes the income or gain that created the balance. The single most misread point among NRIs is the DTAA position on capital gains: under the India treaties with the United States, the United Kingdom, the UAE and Canada, long-term capital gains on Indian assets are taxable in India at 12.5 per cent and are never treated as "exempt". India retains its taxing right; the treaty only governs credit in the residence country.

The rate that applies depends on the asset. Following Budget 2024, long-term capital gains on immovable property and gold are taxed at 12.5 per cent without indexation where the asset was acquired on or after 23 July 2024; assets acquired before that date are grandfathered, so a resident-status seller may compute tax at 20 per cent with indexation if that produces a lower liability. Listed-equity long-term gains are taxed at 12.5 per cent above an annual exemption of Rs 1,25,000, while short-term equity gains are taxed at 20 per cent. On top of the base tax sits surcharge and a health-and-education cess of 4 per cent.

Surcharge applies in slabs on the base tax: 10 per cent where total income exceeds Rs 50 lakh, 15 per cent above Rs 1 crore, 25 per cent above Rs 2 crore, and at the very top the new tax regime caps surcharge at 25 per cent while the old regime can reach 37 per cent. For an NRI, the collection mechanism is TDS: under Section 195 of the Income-tax Act, the buyer, tenant or payer must withhold tax at the DTAA rate or the Act rate, whichever is lower, before paying the NRI. That is why rental income and property sale proceeds arrive in your NRO account already net of tax, and why a Section 197 lower-deduction certificate matters so much when the statutory TDS overshoots your real liability.

Tax Treatment Abroad

Once India has taxed the gain, your country of residence taxes the same receipt on its worldwide-income principle, and the DTAA then hands you a foreign-tax credit so the income is not taxed twice at full rates. The credit is the mechanism that makes the USD 1 million repatriation efficient rather than punitive. The exact article and rate cap differ by treaty, and the effective dates below matter because each treaty has been in force for decades.

Take a US-resident NRI. Under Article 24 of the India-US treaty (in force since 12 September 1991), the foreign-tax credit for Indian tax paid is claimed in the United States, so the 12.5 per cent Indian LTCG becomes a credit against the US capital-gains liability on the same sale. The India-US treaty caps portfolio dividends at 25 per cent and drops to 15 per cent only where the recipient holds at least 10 per cent of the voting stock, under Article 10. For a Canada-resident NRI, Article 13 confirms India keeps taxing rights on gains from shares of an Indian-resident company, and the offsetting credit is claimed in Canada under Section 126 of its Income Tax Act.

The UAE case is different because there is no personal income tax on individuals there, so the foreign-tax-credit mechanic is largely moot, but the treaty still matters: claiming the 12.5 per cent Indian LTCG rate and the 10 per cent dividend cap requires a valid Tax Residency Certificate proving a UAE establishment, per the treaty notes. Across all four treaties, the practical rule is identical - India taxes first at 12.5 per cent on long-term gains, the residence country taxes second, and the credit closes the gap. To size the Indian slice before you remit, our NRI income-tax calculator and the NRI rental-income tax calculator let you model the withholding at the DTAA rate.

Repatriation Mechanics

The account you hold the money in decides how freely it moves. Funds in a Non-Resident External (NRE) account and a Foreign Currency Non-Resident (FCNR) deposit are fully and freely repatriable, principal and interest, because they represent foreign earnings brought into India. Funds in an NRO account - rent, dividends, pension, sale proceeds of Indian assets, inherited balances - are the ones that fall under the USD 1 million per financial year ceiling. This distinction is the whole reason the USD 1 million facility exists; without it, NRO balances would be trapped in India.

The tax gateway for any outward remittance is the Form 15CA/15CB pair filed on the income-tax portal. Form 15CB is a certificate from a chartered accountant confirming that the applicable tax has been deducted or paid and identifying the DTAA rate applied; Form 15CA is the remitter's own declaration, filed online on incometax.gov.in, that references the 15CB. The authorised dealer bank will not release funds under the USD 1 million route without this pair, alongside proof of the source of funds - a registered will or succession certificate for inherited assets, or the sale deed and capital-gains computation for asset sales.

A realistic sequence looks like this. An NRI inherits a Bengaluru flat, obtains probate, and sells it; the buyer withholds tax under Section 195 at the applicable rate and the net proceeds land in the seller's NRO account. To remit, the NRI has a chartered accountant issue Form 15CB, files Form 15CA online, and instructs the bank, which converts up to USD 1,000,000 in that financial year and sends it abroad. If reinvestment in another Indian residential property is planned, Section 54 of the Income-tax Act can exempt the long-term gain where the proceeds are reinvested within the statutory timelines, which reduces the tax withheld before the money ever needs to move. You can model the net figure with our NRI repatriation calculator, which applies the USD 1 million ceiling and the DTAA withholding in one place.

Two timing points are worth planning around. First, the USD 1 million limit resets every April, so a large inheritance can be split across two financial years - remit part in March and the balance in April to move up to USD 2,000,000 across the boundary without RBI approval, provided each year stays within its own cap. Second, the FEMA clearance and the tax clearance are separate gates: Form 15CA/15CB handles the Income-tax Act side, while the bank's own FEMA due diligence handles the exchange-control side, and both must be satisfied before conversion.

For the surrounding rules on where NRIs may hold money, see our explainer on NRE vs NRO vs FCNR(B) accounts and, for the withholding detail, the guide to Section 195 TDS and the lower-deduction certificate.

FAQ

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

Up to USD 1,000,000 per financial year (April to March), under the Foreign Exchange Management (Remittance of Assets) Regulations, 2016. The ceiling covers NRO balances, sale proceeds of Indian assets, and inherited or legacy assets combined, and it resets every 1 April.

Do inherited assets above USD 1 million need RBI approval?

Yes. Where the remittance is on account of legacy, bequest or inheritance to a person who is a citizen of a foreign state, any amount exceeding USD 1,000,000 in a financial year requires prior approval from the Reserve Bank of India, per the RBI Remittance of Assets FAQ, rather than a routine bank-level clearance.

Is capital gain on Indian property exempt for a treaty resident?

No. Under the India treaties with the USA, UK, UAE and Canada, long-term capital gains on Indian assets are taxable in India at 12.5 per cent and are never "exempt". The DTAA only lets your residence country give a foreign-tax credit for the Indian tax paid; India keeps its taxing right.

What forms are needed before the bank releases the money?

Form 15CB, a chartered accountant's certificate confirming tax deduction or payment and the DTAA rate applied, and Form 15CA, the remitter's online declaration referencing it. The authorised dealer bank also needs proof of source - a will or succession certificate for inheritance, or the sale deed for asset sales.

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

No. NRE (rupee) and FCNR(B) (foreign currency) balances are fully and freely repatriable, both principal and interest, because they represent foreign funds brought into India. Only NRO balances and Indian-asset proceeds fall under the USD 1,000,000 per financial year ceiling.

How is tax withheld when an NRI sells Indian property?

Under Section 195 of the Income-tax Act, 1961, the buyer must withhold tax at the DTAA rate or the Act rate, whichever is lower, before paying the NRI seller. Where the statutory TDS exceeds the real liability, the NRI can apply for a lower-deduction certificate so less is withheld up front.

Can Section 54 reduce the tax before repatriation?

Yes. Section 54 of the Income-tax Act exempts long-term capital gain on a residential property where the proceeds are reinvested in another residential house within the statutory timelines, which lowers the tax deducted and therefore the net amount you need to route through the USD 1 million window.