NRO to NRE remittance: the USD 1 million per FY scheme, Form 15CA/CB chain, and CA certification

The USD 1 million remittance facility is the single most consequential foreign exchange privilege available to Non-Resident Indians. It is the legal route by which Indian-source rupee balances, sale proceeds of immovable property, dividends, rent, gifts and inheritances move out of an NRO account, either abroad or domestically into a fully repatriable NRE account. The scheme is granted by Regulation 4 of the Foreign Exchange Management (Remittance of Assets) Regulations 2016, notified as FEMA 13(R)/2016-RB on 1 April 2016, read with Section 6(3) of the Foreign Exchange Management Act 1999. The Reserve Bank of India permits up to USD 1,000,000 per financial year per remitter, with a parallel USD 1 million limit available for sale proceeds of immovable property. Running alongside the FEMA layer is the income-tax compliance chain: Section 195 of the Income-tax Act 1961 obliges the Authorised Dealer to deduct tax at source, Rule 37BB of the Income-tax Rules 1962 prescribes Forms 15CA and 15CB, and a chartered accountant's certificate must accompany every chargeable remittance above Rs 5,00,000 in a financial year.

This explainer unpacks the FEMA scheme, the Indian tax overlay, the foreign-country interaction for the USA and the UAE, the documentation chain that Authorised Dealer Category I banks demand, and the routine errors that stall transfers. Every number cited below is traceable to the Reserve Bank or the Central Board of Direct Taxes; if you cannot evidence a fact in writing, your branch will not release the SWIFT.

FEMA / DTAA Position

The architecture rests on three legal pegs. First, Section 6(3) of FEMA 1999 reserves capital account transactions for RBI to regulate. Second, the Foreign Exchange Management (Remittance of Assets) Regulations 2016 grant a class permission: each NRI or Person of Indian Origin may remit up to USD 1 million per financial year out of balances held in an NRO account, current income, or sale proceeds of assets acquired by inheritance, legacy or settlement, without case-by-case RBI clearance. Third, where the remittance source is sale proceeds of immovable property in India, a separate USD 1 million per financial year is available under Regulation 6, subject to the lock-in periods in Regulation 4(3) for property acquired in foreign exchange.

The cap is aggregate across all banks and all entities. If you maintain NRO accounts at three banks, the combined outward remittance from those three accounts in the financial year cannot exceed USD 1 million, even though each bank may see only its own slice. The remitter, not the bank, is the unit of measurement. The class permission is not for residents; residents are governed by the Liberalised Remittance Scheme under Section 5 of FEMA, capped at USD 2,50,000 per financial year per A.P. (DIR Series) Circular No. 90 dated 6 March 2015.

Where the proposed remittance in a financial year exceeds USD 1 million from sale of property, prior Reserve Bank approval is required under Regulation 11 of FEMA 13(R)/2016, routed through the Authorised Dealer Category I bank. Approvals are case-specific and typically take six to ten weeks; see the RBI Master Direction on Remittance of Assets, 1 January 2016 (updated 5 May 2023).

DTAA is silent on the USD 1 million scheme itself because FEMA is a domestic exchange-control statute, not a tax treaty matter. However, the moment the underlying credit to NRO is chargeable to tax in India, the DTAA rates govern withholding under Section 195. The interaction is the genesis of the entire Form 15CA and Form 15CB ritual.

Tax Treatment in India

Outflows from an NRO account are not themselves taxable events. The taxable trigger sits upstream, at the point the underlying income was credited. The bank's withholding rate, captured in the table below, is the rupee equivalent that the AD branch retains before computing the USD-equivalent remittance.

The surcharge cap in the new tax regime is 25%, codified in the Finance Act 2025. The headline 37% slab that historically applied at income above Rs 5 crore survives only in the old regime; the new regime caps surcharge at 25%, a reduction that benefits high-income NRIs whose Indian-source rent or capital gains push them into the upper tranche.

Where the NRI is a tax resident of a country with which India has a treaty, the lower of the IT Act rate and the DTAA rate applies, provided a Tax Residency Certificate is filed and Form 10F is uploaded on incometax.gov.in. For a US-resident NRI, dividend withholding falls from 20% under Section 115A to 15% under Article 10 of the India-US DTAA, signed on 12 September 1991. For a UAE-resident NRI, interest withholding falls to 12.5% under Article 11 of the India-UAE DTAA, effective from 22 September 1993. Capital gains on shares of an Indian company remain taxable in India at 12.5% LTCG under both treaties; neither treaty exempts capital gains, and bank desks that mark such a remittance "exempt" against the Indian capital-gains box will not clear internal compliance.

Calculate the rupee TDS on a specific NRO credit using Oquilia's NRI tax calculator and the NRI rental income tax calculator before instructing the branch. A mis-stated TDS rate is the most common reason Form 15CB gets returned by the AD for revision.

The Form 15CA and Form 15CB chain is the operational manifestation of Section 195 read with Rule 37BB(2):

• Form 15CA Part A is filed online for chargeable remittances of up to Rs 5,00,000 in the financial year. No CA certificate is needed.
• Form 15CA Part B is filed where the chargeable remittance exceeds Rs 5 lakh and the Assessing Officer has issued an order under Section 195(2), 195(3) or 197 prescribing a lower rate.
• Form 15CA Part C is the standard route for chargeable remittances above Rs 5,00,000 in a financial year. It must be preceded by a Form 15CB chartered accountant's certificate certifying the nature of the remittance, the taxability under the IT Act, the applicable DTAA rate and the TDS already deducted.
• Form 15CA Part D applies where the remittance is not chargeable to tax in India, for instance principal of an inheritance.

The signed 15CB and the 15CA acknowledgement are both uploaded on incometax.gov.in; the acknowledgement number is shared with the AD branch before SWIFT is initiated.

Tax Treatment Abroad

Once funds clear the AD's SWIFT, the host country's residency rules take over. The treatment is asymmetric across the two largest NRI populations.

In the United States, a US citizen or Green Card holder is taxed on worldwide income under Internal Revenue Code Section 61. Indian-source rent flows to Form 1040 Schedule E; Indian-source interest, dividends and capital gains flow to Schedule B and Schedule D. Indian TDS at 30% on rental income, or at the DTAA rate on dividends and interest, is creditable against US tax on the same income under Article 25 of the 1991 DTAA, subject to the per-country limitation under IRC Section 904. The credit is recovered on Form 1116. Where the host-country tax rate is lower than the Indian rate, the excess Indian tax remains a sunk cost; the FTC cannot create a refund.

In the UAE, the absence of personal income tax means the inbound remittance is not taxed on receipt. UAE residents who qualify for the DTAA must furnish a Tax Residency Certificate issued by the Federal Tax Authority. The TRC unlocks the 10% dividend rate and 12.5% interest rate under Articles 10 and 11 of the India-UAE DTAA. Capital gains on the sale of Indian-company shares remain taxable in India at 12.5% LTCG; the UAE treaty preserves India's taxing rights and does not declare exemption.

For other treaty countries, the same logic applies: claim foreign tax credit in the country of residence for tax already deducted in India, after the TRC, Form 10F and PAN have been furnished to the Indian payer. Read the country-specific carve-outs in our NRI vs PIO vs OCI explainer for the residency tests that drive treaty access.

Repatriation Mechanics

NRO is a non-repatriable account in default. The USD 1 million scheme is the statutory carve-out. NRE is fully repatriable. FCNR(B) is held in foreign currency for one to five years and is fully repatriable. The workflow runs in seven steps:

1. Maintain the NRO and NRE accounts at an Authorised Dealer Category I bank, ideally at the same branch so intra-bank journals settle the same day.
2. Compile the source pack: PAN copy, OCI or passport copy, NRO statement for the prior six months, source-of-funds proof (sale deed, share contract notes, rent agreement, gift deed, probated will or succession certificate).
3. Engage a chartered accountant for Form 15CB if the chargeable remittance is above Rs 5,00,000 in the financial year.
4. Upload Form 15CB on incometax.gov.in. File Form 15CA Part C referencing the 15CB acknowledgement number.
5. Submit Form A2 (FEMA declaration of purpose code) to the AD branch with the 15CA and 15CB acknowledgements. Form A2 is mandated by A.P. (DIR Series) Circular No. 50 dated 11 February 2016.
6. The bank converts INR to USD or other freely convertible currency at the TT selling rate of the day. Where the destination is NRE in the same bank, the conversion is recorded but funds stay within the bank ledger.
7. The AD files the R-Return with RBI on the next reporting cycle, capturing the purpose code.

Three situations cause the most friction. First, sale of immovable property: the USD 1 million cap applies separately under Regulation 6(b); if the property was acquired in foreign exchange, the seller must hold for the lock-in period before the proceeds become eligible. Walk the numbers through our NRI repatriation calculator. Second, gift from a resident relative: the credit to NRO is treated as a current-income source and is generally permitted within the USD 1 million envelope. Third, inheritance: Regulation 4(2)(a) covers remittance of legacies, and the NRI heir must produce a probated will or succession certificate. Refer to our NRO vs NRE comparison for the joint-holding rules that decide whether the inheritance can be staged through a single account.

The full statutory text of FEMA 1999 is reproduced at indiacode.nic.in; the master directions are catalogued at rbi.org.in. Branches cite both when in doubt; you should keep both PDFs to hand.

FAQ

What documents must I keep ready before instructing the bank?

A complete source pack always includes PAN, OCI or passport copy, NRO statement for the prior six months, the source-of-funds document, Form A2, Form 15CA acknowledgement, and where the chargeable remittance exceeds Rs 5,00,000, the signed Form 15CB. The bank will not initiate SWIFT without all of these.

Does the USD 1 million cap reset on 1 April every year?

Yes. The cap operates on the Indian financial year running from 1 April to 31 March. A remittance of USD 1 million on 30 March followed by another USD 1 million on 5 April is permissible because the two transactions fall in different financial years. The aggregate test is across all NRO accounts and all banks of the same remitter within the same financial year.

Is Form 15CB required when the underlying income has already suffered TDS?

Yes, if the chargeable remittance exceeds Rs 5,00,000 in the financial year. Rule 37BB(2) makes the certificate mandatory irrespective of whether TDS has already been deducted. The CA's certificate verifies the rate, the section invoked and the residual taxability; it is not a duplicate of the bank's TDS workings.

What happens if the remitter is dual taxed despite the DTAA?

Claim foreign tax credit in the country of residence on the prescribed form (Form 1116 in the United States; SA106 schedule in the United Kingdom). The credit is capped at the host-country tax payable on the same income; any excess Indian tax remains a sunk cost.

Are gifts from a non-relative resident remittable under the USD 1 million scheme?

A gift from a non-relative is taxable in the NRI's hands under Section 56(2)(x) if the aggregate value exceeds Rs 50,000 in the financial year. After tax is paid on the credit to NRO, the balance is remittable under the USD 1 million scheme. The bank will ask for the gift deed and a self-declaration that Section 56(2)(x) has been complied with.

Does the scheme apply to OCI cardholders who become tax residents of India?

No. Once an OCI cardholder qualifies as resident under Section 6 of the IT Act 1961 and Schedule III of FEMA, the NRO account must be redesignated as a resident rupee account, and the USD 1 million scheme ceases to apply. The Liberalised Remittance Scheme at USD 2,50,000 per financial year takes over. Time the redesignation carefully if a large remittance is planned around the residency-status change.