The USD 1 Million Route: How NRIs Repatriate NRO Balances and Sale Proceeds Under FEMA Remittance of Assets

When a non-resident Indian sells a Mumbai flat, inherits a plot in Pune, or simply wants to move a long-dormant NRO balance abroad, the gateway is a single ceiling: USD 1,000,000 per financial year. That limit flows from the Reserve Bank of India's FED Master Direction No. 13/2015-16 on Remittance of Assets, issued under the Foreign Exchange Management (Remittance of Assets) Regulations, 2016, notified as FEMA 13(R)/2016-RB on 1 April 2016. The window covers balances in Non-Resident Ordinary (NRO) accounts, the sale proceeds of assets held in India, and assets acquired by way of inheritance or legacy.

The USD 1 million route is routinely misread as a tax exemption. It is nothing of the sort. It is an exchange-control permission that sits on top of India's income-tax machinery: Section 195 withholding under the Income Tax Act 1961, treaty relief under the relevant Double Taxation Avoidance Agreement, and the compliance pair of Form 15CA and Form 15CB all bite before a single dollar leaves the country. This guide separates the FEMA layer from the tax layer, country by country, using rates effective for the financial year 2025-26.

FEMA / DTAA Position

Under the Foreign Exchange Management (Remittance of Assets) Regulations, 2016, an NRI or a Person of Indian Origin (PIO) may remit up to USD 1,000,000 per financial year out of the balances standing to the credit of an NRO account, out of the sale proceeds of assets, and out of assets acquired in India by inheritance or legacy. The aggregate ceiling of USD 1,000,000 applies to the financial year running from 1 April to 31 March, not per transaction and not per property.

A crucial distinction that the RBI draws in Master Direction No. 13/2015-16 is between capital and current income. Current income of an NRI, such as rent, dividend, pension, and interest, is fully and freely repatriable and does not consume any part of the USD 1,000,000 limit. Only capital account items, principally sale proceeds and inherited assets moved out of the NRO route, count against the annual cap notified on 1 April 2016.

The table below sets out how the two buckets behave under the 2016 Regulations.

Compliance is not optional. A contravention of the Remittance of Assets framework is punishable under Section 13 of FEMA 1999 with a penalty of up to three times the sum involved in the contravention, or up to Rs 2,00,000 where the amount is not quantifiable, whichever is higher, plus Rs 5,000 for every day a continuing contravention persists. For a repatriation of, say, USD 500,000, a technical breach can therefore cost multiples of the amount moved, which is why the Form 15CB certification described later is treated as non-negotiable by authorised dealer banks.

Tax Treatment in India

The FEMA permission does not switch off Indian tax. Every capital gain accruing to a non-resident on the transfer of an Indian asset is chargeable to tax in India and is subject to withholding at source under Section 195 of the Income Tax Act 1961. Section 195 requires the payer to deduct tax either at the rate prescribed in the Act or at the DTAA rate, whichever is lower, so a valid Tax Residency Certificate can materially reduce the deduction.

For immovable property, the rate of long-term capital gains tax turns on the date of acquisition. Under the post-Budget 2024 regime, long-term gains on property and gold are taxed at 12.5% without indexation. For assets acquired before 23 July 2024, a grandfathered option allows the taxpayer to compute the gain at 20% with indexation, whichever produces the lower liability. Short-term gains on listed equity are taxed at 20% and long-term equity gains at 12.5% above the Rs 1,25,000 annual exemption threshold, per the Budget 2024 rates.

On top of the base rate, a surcharge applies where total income crosses defined thresholds. The slabs are 10% for 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. Under the new tax regime the surcharge is capped at 25% even above Rs 5 crore, whereas the old regime retains 37% at that level. A health and education cess of 4% is then levied on the aggregate of tax and surcharge.

Because the deducted TDS frequently exceeds the final liability, many NRIs end up filing an Indian return purely to claim a refund. Modelling this before you sell is worth the effort: our NRI tax calculator and rental income tax calculator let you estimate the withholding and the net proceeds you can actually remit within the USD 1,000,000 window.

The following table summarises the maximum treaty withholding rates for three common residence countries, drawn from the operative DTAA articles.

Note that no DTAA renders Indian capital gains "exempt". Under each treaty India retains the right to tax gains on the transfer of Indian assets, and the effective long-term capital-gains rate remains 12.5% under the Budget 2024 framework.

Tax Treatment Abroad

Once tax has been paid in India, the residence country's treatment determines whether the NRI suffers double taxation. The India-USA DTAA, effective from 12 September 1991, addresses this through Article 24, which obliges the United States to grant a foreign tax credit for Indian tax paid, so that the same capital gain is not taxed twice. For a US-resident NRI in the top federal bracket, the Indian 12.5% long-term capital-gains charge borne on an Indian property sale is generally creditable against the US liability on the same gain.

The India-UK DTAA, in force from 26 October 1993, adds a residence tie-breaker in Article 4 for individuals who could be treated as resident in both countries in the same year. Where a UK-resident NRI receives portfolio dividends from Indian companies, the treaty caps Indian withholding at 15%, and the UK then applies its own credit method to relieve the double charge on that 15% already suffered in India.

The India-UAE DTAA, effective from 22 September 1993, is a special case because the UAE levies no personal income tax. Treaty benefits therefore hinge on documentation: a UAE Tax Residency Certificate must be supported by proof of a UAE establishment, and the treaty expressly confirms that capital gains on shares of an Indian company remain taxable in India. A UAE-resident NRI cannot use the absence of UAE tax to argue that the Indian 12.5% capital-gains charge disappears; it does not.

Whichever country applies, the mechanics of relief run through Section 195 and the DTAA read together. Under Section 195 of the Income Tax Act 1961, the payer withholds at the lower of the Act rate or the treaty rate, and the NRI then claims a credit for that Indian tax in the residence country under the relevant treaty article. Our DTAA glossary entry explains the credit-versus-exemption methods that different treaties use.

Repatriation Mechanics

The account you hold the money in decides how freely it moves. An NRE account holds foreign-earned income and is fully repatriable without touching the USD 1,000,000 cap, and an FCNR(B) deposit similarly carries no exchange risk and full repatriability. The USD 1,000,000 annual ceiling applies specifically to money leaving an NRO account as capital, per the 2016 Regulations.

The documentary spine of any NRO repatriation is the Form 15CA and Form 15CB pair required under the Income Tax Act 1961. Form 15CB is a certificate from a practising chartered accountant confirming the nature of the remittance, the applicable rate, and that the correct tax has been deducted; Form 15CA is the remitter's declaration filed on the income-tax portal, quoting the Form 15CB particulars. Authorised dealer banks will not release a capital remittance out of the NRO route without this pair.

The end-to-end sequence for a property-sale repatriation typically runs as follows. First, the buyer deducts TDS under Section 195 and deposits it against the seller's PAN. Second, the chartered accountant issues Form 15CB after verifying the gain computation and any DTAA relief. Third, the NRI files Form 15CA online. Fourth, the authorised dealer bank remits up to USD 1,000,000 in that financial year. If the net proceeds exceed USD 1,000,000, the balance waits for the next financial year beginning 1 April, or is moved under a specific RBI approval.

To plan the split across years and to reconcile the FEMA cap with your post-tax proceeds, use the NRI repatriation calculator, which models the USD 1,000,000 limit against your sale value and estimated Section 195 withholding. Getting the sequencing right avoids the Section 13 FEMA penalty of up to three times the amount involved described earlier.

For deeper background on how account type drives repatriation and taxability, our companion pieces on NRE vs NRO vs FCNR(B) rules and FCNR(B) deposits walk through the deposit mechanics in detail.

FAQ

Is the USD 1 million limit per person or per family?

The USD 1,000,000 ceiling under the Foreign Exchange Management (Remittance of Assets) Regulations, 2016 is per person, per financial year. A married couple who are both NRIs and both hold assets in their own names can therefore remit up to USD 1,000,000 each in the same year running from 1 April to 31 March.

Does rental income eat into the USD 1 million cap?

No. The RBI Master Direction No. 13/2015-16 classifies rent, dividend, pension, and interest as current income, which is fully and freely repatriable and stands entirely outside the USD 1,000,000 capital cap. You should still account for the Section 195 TDS on that rental income before remitting it.

Can I skip Form 15CB if TDS has already been deducted?

Generally no. For a taxable remittance out of an NRO account, the authorised dealer bank requires the chartered accountant's Form 15CB certificate and the remitter's Form 15CA declaration under the Income Tax Act 1961, even where the buyer has already deducted TDS under Section 195. The forms confirm the rate applied and any DTAA relief claimed.

Are capital gains "exempt" under the UAE treaty because the UAE has no income tax?

No. The India-UAE DTAA, effective 22 September 1993, expressly confirms that capital gains on shares of an Indian company remain taxable in India, and India's 12.5% long-term capital-gains rate under the Budget 2024 framework continues to apply. The absence of UAE income tax does not create an Indian exemption.

What penalty applies if I breach the FEMA remittance rules?

Section 13 of FEMA 1999 provides for a penalty of up to three times the sum involved in the contravention, or up to Rs 2,00,000 where the amount is not quantifiable, whichever is higher, and a further Rs 5,000 per day for a continuing contravention. This is why banks insist on complete Form 15CA and Form 15CB documentation.

What if my sale proceeds exceed USD 1 million in one year?

Only USD 1,000,000 can be remitted through the ordinary Remittance of Assets route in a single financial year. The balance can be remitted in the following financial year beginning 1 April, or moved earlier under a specific approval from the Reserve Bank of India, as contemplated by the 2016 Regulations.

Which DTAA rate applies to my dividends from Indian shares?

It depends on your country of residence. Under the operative treaties, portfolio dividend withholding is capped at 25% for US residents, 15% for UK residents, and 10% for UAE residents, and Section 195 applies the lower of the treaty rate or the Income Tax Act rate provided you furnish a valid Tax Residency Certificate.