SNRR Accounts After the 2025 Fifth Amendment: What Non-Residents With Business Interests in India Can Do

On 14 January 2025 the Reserve Bank of India issued Notification No. FEMA 5(R)(5)/2025-RB, the Foreign Exchange Management (Deposit) (Fifth Amendment) Regulations, 2025. In eight paragraphs it rewrites the core of Schedule 4 to the Foreign Exchange Management (Deposit) Regulations, 2016 (Notification No. FEMA 5(R)/2016-RB dated 1 April 2016), the schedule that governs the Special Non-Resident Rupee (SNRR) account. For a person resident outside India who has a business interest in India, the SNRR account is the rupee account built for that business, and the 2025 amendment changes where it can be opened, what it can be used for and how long it can run.

This guide sets out what the amended regulations say, quoting the RBI text, then covers Indian tax, foreign tax credit under India's treaties and repatriation. It is general information drawn from notifications dated 1 April 2016 and 14 January 2025, not advice on a specific transaction.

What changed on 14 January 2025: the short version

The Fifth Amendment makes six changes that matter to SNRR account holders. The table below summarises each against the paragraph of the notification that makes it.

A seventh change, in paragraph 2 of the notification, inserts the words "or its branch outside India" after "authorised dealer in India" in regulation 5(4) of the principal regulations, aligning the main regulation with the new Schedule 4 wording.

FEMA / DTAA Position

The statutory basis

The Deposit Regulations are made under section 6(2) and section 47(2) of the Foreign Exchange Management Act, 1999 (42 of 1999), as the preamble to FEMA 5(R)(5)/2025-RB records. Section 6 of FEMA deals with capital account transactions, and Oquilia's statute brief for section 6 notes the default position: such transactions need RBI permission unless specifically permitted. Schedule 4 is one such specific permission, so the exact wording of paragraph 1 decides what an SNRR account holder may do without approaching the RBI.

Paragraph 1 as substituted

The new paragraph 1 of Schedule 4 reads: "A person resident outside India, having business interest in India, may open a Special Non-Resident Rupee Account (SNRR account), with an authorised dealer in India or its branch outside India for the purpose of putting through permissible current and capital account transactions with a person resident in India in accordance with the rules and regulations framed under the Act, and for putting through any transaction with a person resident outside India."

Three points follow from this text:

1. Location. The amended paragraph adds the authorised dealer's branch outside India; paragraphs 9, 11, 12 and 13 now specify "SNRR account in India".
2. Transactions with residents. These must be "permissible current and capital account transactions" under the FEMA rules; the amendment does not itself widen what is permissible.
3. Transactions with non-residents. The phrase "any transaction with a person resident outside India" is new, allowing rupee settlement between two non-residents through the account.

IFSC units

The Explanation to paragraph 1 permits a unit in an International Financial Services Centre, set up under section 18 of the Special Economic Zones Act, 2005, to open an SNRR account with an authorised dealer in India outside the IFSC for "its business related transactions outside IFSC".

Conditions carried over from 2016

The RBI's 2016 circular on the principal regulations (A.P. (DIR Series) Circular No. 67/2015-16, 5 May 2016) set out the features of the SNRR account that the Fifth Amendment does not touch. The account "shall carry the nomenclature of the specific business for which it is opened and shall not earn any interest"; debits, credits and balances "shall be incidental and commensurate with the business operations of the account holder"; balances "shall be eligible for repatriation"; and opening by individuals or entities of Pakistan or Bangladesh nationality or ownership "will require prior approval of the Reserve Bank of India".

Where the DTAA fits

A DTAA does not govern whether an SNRR account can be opened; that is purely a FEMA question. The treaty becomes relevant when income flows through the account, because it caps the tax India may charge on dividends, interest, royalties and fees for technical services, and it determines how the country of residence gives credit for Indian tax. Treaty benefits generally require a Tax Residency Certificate; Oquilia's treaty data for the India-UAE DTAA, for example, notes that a TRC "requires UAE establishment proof".

Tax Treatment in India

No interest, so no interest tax

Because the 2016 circular states that the SNRR account "shall not earn any interest", there is no interest income on the balance itself to tax. This is a key difference from an NRO account, where interest is taxable in India. The tax questions for an SNRR holder therefore arise from the underlying business receipts credited to the account, not from the account.

Withholding under section 195

Payments by a resident to a non-resident that are chargeable to tax in India are subject to TDS under section 195 of the Income-tax Act, 1961. Oquilia's section brief for section 195 records the rule: withholding applies at the DTAA rate or the rate in the Income-tax Act, whichever is lower. The table below shows the treaty-rate caps held in Oquilia's DTAA data for five common countries of residence.

On capital gains, India retains its taxing right: the Oquilia treaty data records 12.5% for each of these four treaties, the UAE notes state that "capital gains on shares of Indian company taxable in India", and the Singapore notes record that under the 2017 Protocol capital gains are taxable in India for shares acquired on or after 1 April 2017.

Rates under the Act

Where the Act's rate is the one that applies, the figures in Oquilia's rate configuration (sourced from Budget 2024, effective 23 July 2024) are:

For individual taxpayers, the surcharge bands in the rate configuration are 10% on income above Rs 50 lakh up to Rs 1 crore, 15% above Rs 1 crore up to Rs 2 crore and 25% above Rs 2 crore; under the new regime the surcharge is capped at 25% even above Rs 5 crore. A non-resident individual running other Indian income through an NRO account can model the slab and surcharge arithmetic with the NRI tax calculator, and rent received in India can be checked with the rental income tax calculator.

For FY 2025-26 the new-regime slabs run from nil up to Rs 4 lakh to 30% above Rs 24 lakh. The section 87A rebate of up to Rs 60,000 (income up to Rs 12 lakh) is available only to resident individuals, so a non-resident should not plan on it.

Tax Treatment Abroad

Foreign tax credit in the country of residence

The SNRR account does not change the holder's tax position at home: income taxed in India is generally also reportable in the country of residence, with relief under the treaty. Oquilia's treaty data for the India-US DTAA records that under Article 24 a foreign tax credit is available in the country of residence. The credit is generally measured against the treaty-rate cap, so Indian tax withheld above that cap is recovered, if at all, through an Indian return.

Why the treaty rate matters for credit

Take a US-resident portfolio investor receiving a Rs 1,00,000 dividend from an Indian company. The India-US treaty rate for portfolio dividends is 25%, so Indian tax up to Rs 25,000 is the ceiling for credit purposes. If the shareholder held 10% or more of the voting stock, the treaty rate would be 15%, and Indian tax up to Rs 15,000 would be creditable; anything withheld above that would need an Indian refund claim. The DTAA benefit calculator runs this comparison for a chosen country and income type.

Technical services and the "make available" test

Oquilia's data for the India-US (Article 12) and India-UK treaties records a "make available" clause for fees for technical services, capped at 15% under both treaties. Whether a given contract meets that test is a fact-specific question.

Repatriation Mechanics

SNRR balances are repatriable

The 2016 circular states that "the balances in the SNRR account shall be eligible for repatriation". This puts the SNRR account in the repatriable family alongside the NRE account and FCNR(B) deposits, and outside the restricted NRO regime.

The new regulation 9: transfers between repatriable rupee accounts

Paragraph 3 of the Fifth Amendment inserts a new regulation 9 into the principal regulations: "Notwithstanding anything contained in these regulations, the transfer of funds, for all bona fide transactions, between repatriable Rupee accounts maintained in accordance with these regulations is permitted." This covers bona fide moves between an SNRR account and, for example, an NRE account.

The NRO contrast

The same 2016 circular confirms that NRO balances "cannot be repatriated abroad except for current income of the account holder and up to USD 1 million per financial year" for NRIs and PIOs, and that funds can be moved from NRO to NRE within that USD 1 million facility. The repatriation calculator estimates how much an NRO balance can move abroad in a financial year.

Tax compliance before remittance

An outward remittance of a sum chargeable to tax in India generally passes through the Form 15CA/15CB process on the Income-tax Department's e-filing portal (incometax.gov.in), alongside the section 195 withholding described above.

Tenure and closure

Under the substituted paragraph 8, the account runs concurrently with "the tenure of the contract / period of operation / the business of the account holder". The 2016 circular had added that it "shall in no case exceed seven years"; that clause does not appear in the 2025 replacement text.

FAQ

Who can open an SNRR account after the 2025 amendment?

A person resident outside India who has a business interest in India, under Schedule 4, paragraph 1 as substituted by FEMA 5(R)(5)/2025-RB dated 14 January 2025. An IFSC unit under section 18 of the SEZ Act, 2005 may also open one with an authorised dealer in India outside the IFSC.

Can the SNRR account be opened outside India now?

Yes. The amended paragraph 1 permits the account with "an authorised dealer in India or its branch outside India", and paragraph 2 of the notification inserts the same words into regulation 5(4).

Does an SNRR account earn interest?

No. RBI's A.P. (DIR Series) Circular No. 67/2015-16 dated 5 May 2016 states that the account "shall not earn any interest",; the 2025 amendment leaves this unchanged.

Is there still a seven-year limit on SNRR tenure?

The 2016 circular said the tenure "shall in no case exceed seven years". The substituted paragraph 8 issued on 14 January 2025 says only that the tenure "shall be concurrent to the tenure of the contract / period of operation / the business of the account holder", with no seven-year cap in that text.

Can I move money from my SNRR account to my NRE account?

The new regulation 9 inserted by paragraph 3 of the 2025 notification permits transfers "for all bona fide transactions, between repatriable Rupee accounts". Since the 2016 circular describes SNRR balances as eligible for repatriation, a bona fide transfer to an NRE account falls within that permission.

What TDS applies to payments credited to an SNRR account?

Under section 195 of the Income-tax Act, 1961, tax is withheld at the DTAA rate or the Act's rate, whichever is lower. For example, the India-UAE treaty caps royalties and fees for technical services at 10%, and the India-US treaty caps interest at 15%.

Is capital gains tax waived under a DTAA for SNRR account holders?

No. Oquilia's treaty data records India's taxing right on long-term capital gains at 12.5% for the US, UK, UAE and Singapore treaties. Under the Act, LTCG on listed equity is taxed at 12.5% above Rs 1.25 lakh a year, plus the 4% cess.