Repatriating Money from India: The USD 1 Million NRO Limit Under FEMA Remittance of Assets Rules

Every non-resident Indian who sells a flat in Pune, closes a fixed deposit in Mumbai or inherits a family plot eventually reaches the same question: how much of that money can actually leave the country in one year? The governing number is USD 1 million per financial year - the ceiling the Reserve Bank of India places on remittances out of a Non-Resident Ordinary (NRO) account and out of the sale or inheritance of Indian assets. The rule sits in the RBI's FED Master Direction No. 13/2015-16 (Remittance of Assets), first issued on 1 January 2016 and last updated on 29 June 2026, which operationalises the FEMA (Remittance of Assets) Regulations, 2016, notified as FEMA 13(R)/2016-RB on 1 April 2016.

The USD 1 million cap is frequently misread as a cap on total wealth. It is nothing of the sort: it is a per-year throughput limit that resets every financial year (1 April to 31 March), and it bites only after every rupee of Indian tax on the underlying income or gain has been discharged. This guide traces where the limit comes from under the Foreign Exchange Management Act, 1999, how the Income-tax Act, 1961 taxes the money before it moves, how your country of residence treats it, and the exact paperwork - Forms 15CA and 15CB - that your authorised dealer bank will insist on before it releases a single dollar.

FEMA / DTAA Position

The Foreign Exchange Management Act, 1999 replaced the old FERA regime with effect from 1 June 2000 and switched India from a "control" philosophy to a "management" one. Repatriation of assets by a non-resident is a capital-account transaction, and the enabling framework is the FEMA (Remittance of Assets) Regulations, 2016 (FEMA 13(R)/2016-RB, dated 1 April 2016), read with Master Direction No. 13/2015-16. Under Regulation 4, an NRI or a Person of Indian Origin (PIO) may remit up to USD 1 million per financial year out of balances held in an NRO account, out of sale proceeds of assets, and out of assets acquired by way of inheritance or legacy - in each case after payment of the tax due in India.

It is essential to separate the two limbs of the law. The FEMA limb decides whether and how much foreign exchange may leave India. Section 13 of FEMA 1999 makes any contravention punishable with a penalty of up to three times the amount involved, or Rs 2 lakh where the sum is not quantifiable, plus Rs 5,000 for every day a continuing default persists - so the USD 1 million ceiling is a hard statutory line, not a soft guideline.

A Double Taxation Avoidance Agreement, by contrast, decides nothing about how much money may be remitted. A DTAA allocates taxing rights over the underlying income between India and the country of residence; the act of moving already-taxed money across the border is not itself a taxable event under any of India's 90-plus treaties. A common and costly error is to assume that a treaty makes capital gains "exempt" in India. It does not. India retains the right to tax capital gains arising on Indian assets, and after Budget 2024 the long-term capital gains rate is 12.5% across the United States, the United Kingdom and the UAE treaties alike.

The table below sets the treaty position for the three destinations most relevant to Indian remitters.

The India-USA treaty has been in force since 12 September 1991; the India-UK convention since 26 October 1993; and the India-UAE agreement since 22 September 1993. Note the counter-intuitive detail in the US treaty: under Article 10, portfolio dividends attract 25%, and the lower 15% applies only where the recipient holds at least 10% of the voting stock of the paying company. To claim any of these treaty rates, an NRI must furnish a valid Tax Residency Certificate; the India-UAE treaty additionally requires proof of a UAE establishment before the TRC is honoured.

Tax Treatment in India

Repatriation is the last step; taxation is the first. Money cannot be certified for remittance until the tax on it has been paid, so the arithmetic of the Income-tax Act, 1961 comes before any Form 15CA is filed. The single most important provision is Section 195, which requires the payer (typically the buyer of the property or the bank) to withhold tax at the DTAA rate or the domestic rate, whichever is lower, on any sum paid to a non-resident that is chargeable to tax in India.

For capital assets, the rates changed materially on 23 July 2024. Long-term capital gains on listed equity and equity mutual funds are taxed under Section 112A at 12.5% on gains above the Rs 1.25 lakh annual exemption - up from the earlier 10% above Rs 1 lakh. Short-term gains on the same assets are taxed at 20%. For immovable property and gold, long-term gains are taxed at 12.5% without indexation where the asset is sold after 23 July 2024; assets acquired before that date are grandfathered, letting the seller choose the older 20% rate with indexation, whichever produces the lower liability. You can model the after-tax remittable figure with Oquilia's NRO repatriation calculator and cross-check the gain itself in the NRI capital gains and tax tool.

On top of the base tax sits a surcharge and then a 4% health and education cess. The surcharge slabs for FY 2025-26 are set out below.

Two nuances matter here. First, the enhanced surcharge of 37% survives only in the old regime; the new regime caps the surcharge at 25% for every income band above Rs 2 crore. Second, the surcharge on long-term capital gains is itself capped at 15% regardless of total income, so a one-off Rs 6 crore property gain does not drag the gains portion up to a 25% surcharge. The surcharge glossary entry walks through the stacking order of base tax, surcharge and cess with a worked example.

Rental income is the other common NRO inflow. Where an NRI lets out an Indian property, the tenant must deduct TDS under Section 195 before crediting rent, and the landlord may claim the standard 30% deduction under Section 24(a) plus housing-loan interest. The net figure, after tax, flows into the NRO account; Oquilia's NRI rental income tax calculator shows the deduction stack in full. Because rent is current income, not a capital asset, its repatriation treatment is covered in the mechanics section below.

Tax Treatment Abroad

Paying tax in India does not close the file. A US, UK or UAE resident must also declare the Indian income at home, and the mechanism that prevents the same rupee being taxed twice is the foreign tax credit. Under Article 24 of the India-USA treaty and the equivalent relief articles in the UK and UAE conventions, the country of residence gives credit for the Indian tax already paid, up to the amount of its own tax on that income.

The interaction is rate-sensitive. A US resident who pays 12.5% Indian LTCG on an Indian equity gain, and who faces a 15% or 20% US long-term capital gains rate, will claim the 12.5% as a foreign tax credit on IRS Form 1116 and pay only the residual US tax. Where the Indian rate is the higher of the two - for example, 15% Indian interest withholding against a lower marginal foreign rate - the excess Indian credit may be carried forward but is not refunded by the foreign treasury. Oquilia's foreign tax credit calculator illustrates this offset for the three main jurisdictions.

The UAE case is structurally different because the Emirates levied no federal personal income tax as at 2026, so a UAE-resident NRI has no domestic tax against which to credit the Indian tax paid - the Indian tax is simply a final cost. This is precisely why the UAE treaty's lower withholding rates (10% on dividends, 12.5% on interest) carry real value: with no foreign tax to absorb the credit, every percentage point of Indian withholding saved is a percentage point kept. A dual resident must resolve residence under the tie-breaker rule in Article 4 of the relevant treaty before any of this applies.

For Indians still working out which side of the residence line they fall on, the threshold test is the 182-day rule in Section 6 of the Income-tax Act, explained in our companion piece on NRI residential status; a wrong residence call upstream unravels every treaty claim downstream.

Repatriation Mechanics

The account holding the money decides the repatriation route. The three non-resident account types behave very differently, and confusing them is the most common cause of a stuck remittance.

Balances in a Non-Resident External (NRE) account and in a Foreign Currency Non-Resident (Bank) deposit are fully and freely repatriable, principal and interest, with no annual ceiling, because the money entered India in convertible foreign exchange in the first place. The USD 1 million limit is exclusive to the NRO account and to asset sale and inheritance proceeds, where the underlying rupees were earned or accrued in India. A frequent optimisation is to move eligible funds from NRO to NRE after paying tax; Oquilia's NRO-to-NRE transfer calculator shows the documentation and the USD 1 million interaction.

Crucially, current income is carved out of the cap. Net rent, dividends, pension and interest - already taxed in India - are freely repatriable from an NRO account and do not count against the USD 1 million ceiling, under the Master Direction No. 13/2015-16. This means a retiree drawing an Indian pension and rental income can remit those flows in full every year, and still keep the entire USD 1 million headroom for a capital event such as a property sale.

The paperwork is non-negotiable. Every foreign remittance of a taxable sum requires a two-form filing on the income-tax portal: Form 15CA (a self-declaration by the remitter) and Form 15CB (a certificate from a chartered accountant confirming that the correct tax has been deducted, issued under Rule 37BB of the Income-tax Rules, 1962). The authorised dealer (AD Category-I) bank will not process the SWIFT transfer until it has both forms and is independently satisfied that tax compliance is complete. For sums below Rs 5 lakh in a financial year, only Part A of Form 15CA is needed and Form 15CB may be dispensed with.

A worked sequence keeps the order clear. Suppose an NRI sells a Bengaluru flat in August 2026 for Rs 4 crore, with a long-term gain of Rs 1.5 crore. The buyer withholds tax under Section 195 at 12.5% plus surcharge and 4% cess; the chartered accountant certifies payment on Form 15CB; the seller files Form 15CA; and the AD bank remits the net proceeds within the USD 1 million window for FY 2026-27. Any excess over USD 1 million waits for the window to reopen on 1 April 2027. Note that the Liberalised Remittance Scheme and its USD 250,000 limit are for residents - an NRI never uses the LRS route.

FAQ

Is the USD 1 million NRO limit per person or per account?

It is per person, per financial year - not per account. Under Master Direction No. 13/2015-16, an NRI or PIO may remit up to USD 1 million in aggregate across all NRO balances and asset-sale proceeds in a single financial year (1 April to 31 March). Holding money across three NRO accounts does not multiply the ceiling; the RBI treats the individual as the unit.

Do I have to pay Indian tax before I can repatriate?

Yes. Repatriation of NRO funds, sale proceeds or inherited assets is permitted only after the applicable Indian tax is paid, evidenced by Form 15CB (a chartered accountant's certificate under Rule 37BB) and Form 15CA. The AD Category-I bank is independently obliged to confirm tax compliance before releasing the remittance, so there is no route that bypasses the Section 195 withholding.

Are NRE and FCNR balances also capped at USD 1 million?

No. Balances in an NRE account and an FCNR(B) deposit are fully and freely repatriable - principal and interest - with no annual cap, because the funds originated in convertible foreign exchange. The USD 1 million ceiling applies only to NRO balances and to sale or inheritance proceeds of Indian-sourced assets.

Does a DTAA make my capital gains tax-free in India?

No. A DTAA allocates taxing rights; it does not exempt Indian capital gains. India retains the right to tax gains on Indian assets, and after Budget 2024 the long-term rate is 12.5% under the US, UK and UAE treaties. The treaty's value is a foreign tax credit in your country of residence, not exemption in India, and you must hold a valid Tax Residency Certificate to claim any treaty rate.

Can I repatriate rental income separately from the USD 1 million cap?

Yes. Net rental income, like dividends, pension and interest, is current income and is freely repatriable from an NRO account after tax, outside the USD 1 million limit, under Master Direction No. 13/2015-16. That leaves the full USD 1 million window available for capital events such as a property sale in the same financial year.

What happens if my property sale proceeds exceed USD 1 million?

The excess is not lost - it simply carries over. You may remit up to USD 1 million in the current financial year and the remainder on or after 1 April of the next financial year, when a fresh USD 1 million window opens. The balance stays in the NRO account in the meantime and can continue to earn interest, taxable in India.

Which forms does my bank need for the remittance?

Two: Form 15CA (your self-declaration) and Form 15CB (a chartered accountant's certificate under Rule 37BB of the Income-tax Rules, 1962). For remittances below Rs 5 lakh in a financial year, only Part A of Form 15CA is required and Form 15CB is not needed. The AD Category-I bank processes the transfer only once both are on record and tax compliance is confirmed.