Repatriation USD 1 Million Per Year Rule: RBI Master Direction Walkthrough for NRO Account Holders

Most non-resident Indians discover the USD 1 million per financial year limit only when their bank refuses to wire the proceeds of a Bengaluru flat to a New Jersey checking account. The number is not arbitrary, nor is it a tax provision. It sits inside the Reserve Bank of India's Master Direction on Remittance of Assets (FED Master Direction No. 13/2015-16, originally dated 1 January 2016 and updated through 2024), and it applies to balances in Non-Resident Ordinary (NRO) accounts, sale proceeds of immovable property in India, and inheritance assets, all aggregated together.

This walkthrough decodes the rule clause by clause, maps it to the tax architecture of the Income-tax Act 1961, and shows exactly which forms a returning NRI must sign before SWIFT instructions leave the branch. Every figure is sourced from the RBI Master Direction or the Income-tax Department's published guidance. If a number is missing, treat it as deliberately absent.

FEMA / DTAA Position

The Foreign Exchange Management Act 1999 is permission-based. Section 6 of FEMA 1999 requires Reserve Bank approval for any capital account transaction unless that transaction is specifically permitted by a notification or master direction. The USD 1 million per financial year facility is precisely such a permission, granted under Regulation 4(2) of the Foreign Exchange Management (Remittance of Assets) Regulations 2016 and operationalised through the Master Direction.

The entitlement is granular. It covers, in a single bucket per financial year (1 April to 31 March), the following four categories:

Note the wording: it is one USD 1 million cap that absorbs everything in the financial year, not USD 1 million per category. An NRI selling a Mumbai apartment for Rs 6 crore and also drawing Rs 12 lakh of NRO interest the same year cannot ship both abroad in full; the dollar equivalent must squeeze under the single ceiling.

Double Tax Avoidance Agreements do not override this FEMA cap. Treaties allocate taxing rights; FEMA allocates remittance permissions. Even where a treaty fully eliminates Indian tax, for instance the India-UAE protocol on certain capital gains analysed in our DTAA India-UAE treaty-shopping note, the remitter still needs RBI's USD 1 million envelope to move the money out.

NRE and FCNR(B) deposits sit outside this regime entirely. Both are fully and freely repatriable in principal and interest, with no annual cap, because they are funded out of foreign-source remittances in the first place. The USD 1 million ceiling exists because NRO money largely originates in India and the central bank wants to monitor outflows for balance-of-payments reasons.

Tax Treatment in India

Repatriation is a banking event; tax has already done its work upstream. The RBI Master Direction is explicit on this point in paragraph 3(B): the authorised dealer bank must satisfy itself that all applicable taxes have been paid or provided for before processing the remittance. The bridge between the FEMA permission and the tax architecture is the Section 195 withholding mechanism.

Section 195 of the Income-tax Act 1961 mandates tax deduction at source on any sum chargeable to tax in the hands of a non-resident, at the rates specified in the Act or under the relevant DTAA, whichever is lower. The CBDT's Section 195 brief is direct: withholding under DTAA rates or rates in IT Act, whichever is lower. For a typical NRO repatriation the relevant heads and rates are:

The surcharge structure under the new tax regime is capped at 25%, even where the headline old-regime cap of 37% used to apply. Health and education cess of 4% sits on top. Section 87A rebate, where the NRI's total income chargeable in India falls inside the threshold, has been raised to Rs 60,000 in the new regime for FY 2025-26, but most NRIs pay tax on isolated income heads rather than total income, so the rebate is rarely material.

Surcharge on long-term capital gains is capped at 15% under proviso to Section 2 of the Finance Act, regardless of total income. Use our NRI income tax calculator to estimate the post-TDS payable before initiating any 15CA filing.

If the property has been held more than 24 months it qualifies as a long-term capital asset under Section 2(42A), attracting the 12.5% rate post the 23 July 2024 Finance (No. 2) Act amendment. The earlier 20% indexation regime is available only to resident transferors of land/building acquired before that date; the elective option is not open to non-residents under the second proviso to Section 112(1)(c).

Tax Treatment Abroad

Once the rupees land in a foreign account, the destination jurisdiction takes over. The mechanism preventing double taxation is the foreign tax credit (FTC), available under DTAA Article 25 (or its equivalent) and domestic provisions in most receiving countries.

The US case is the awkward outlier; we covered the equity slice in our DTAA India-USA capital gains analysis. For repatriated property gains, the IRS treats the disposition under domestic basis rules from the date of acquisition, not departure from India, which can produce a US capital gain even where the Indian computation shows a smaller figure. FTC under Form 1116 is capped at the proportion of US tax attributable to that income, often leaving a residual US liability.

British residents face cleaner treatment because UK CGT on residential property mirrors the Indian rate band. Canadian and Australian NRIs typically face the largest residual top-up because their domestic capital gains rates exceed India's 12.5%.

Gulf NRIs in the UAE, Oman, Bahrain, Qatar, Kuwait, and Saudi Arabia escape personal-side foreign tax entirely. DTAA does not exempt capital gains in any country, however; India retains the 12.5% taxing right under Article 13 of every Indian treaty in force, and the Income-tax Department collects it via Section 195 before the rupees ever leave.

Repatriation Mechanics

The operational sequence sits in paragraph 3 of the Master Direction. From the bank counter's perspective, the file must contain seven items before the SWIFT instruction is released:

1. Application in the bank's prescribed format, citing Regulation 4(2) of the Remittance of Assets Regulations 2016.
2. Form 15CA, the remitter's online undertaking to the Income-tax Department under Rule 37BB. Filed at incometax.gov.in. Mandatory for every taxable foreign remittance from a resident or non-resident.
3. Form 15CB, the chartered accountant's certificate confirming the nature, taxability, and TDS deducted. Required where the remittance exceeds Rs 5 lakh in aggregate during the financial year. Below Rs 5 lakh, only Part A of Form 15CA is needed.
4. PAN of the remitter, without which Section 206AA bites the rate up to 20% even where DTAA would have allowed lower.
5. Tax Residency Certificate (TRC) from the destination country tax authority, plus Form 10F filed online for the financial year, to claim DTAA benefits under Section 90(4) and 90(5).
6. Underlying source documents: sale deed, capital gains computation, FIRC if reinvestment is being unwound, succession certificate for inheritance, employer letter for terminal benefits.
7. Authorised dealer bank's internal sanction, after which the wire is released against existing NRO balance.

The authorised dealer bank reports each transaction to RBI under the R-Returns fortnightly cycle, and the data feeds into the Foreign Exchange Transaction Electronic Reporting System. There is no individual reporting to the remitter beyond the FIRC issued at credit confirmation, but the consolidated USD 1 million counter is tracked at PAN level across banks. NRIs splitting a remittance across multiple authorised dealers cannot circumvent the cap; the income-tax PAN is the unit of measurement.

Sale of immovable property held for 10+ years sits inside the same USD 1 million envelope, despite a persistent myth that it is a separate facility. The Master Direction is unambiguous in paragraph 4(B): the cap aggregates property sale proceeds with NRO balance remittances. The 10-year holding period only unlocks the lock-in waiver for proceeds of property purchased in foreign-exchange-funded sources.

For the practical computation of post-TDS repatriable amount, sale-deed timing, and forex conversion, our NRI repatriation calculator walks through Form 15CA fields in the order the portal asks for them. Rental remitters should pair it with the rental income tax calculator for NRIs to fix the Section 195 deduction before the tenant releases the next rupee credit. NRO remittances of mutual-fund redemption proceeds are now often routed via the gift mode covered in our FEMA piece (NRI mutual fund FEMA rules), where 15CA-D applies for non-taxable internal transfers.

Practical sequencing checklist before initiating any wire:

• Confirm the NRO source-credit narration matches the 15CB nature-of-payment code.
• Re-check residential status under Section 6 of the IT Act for the tax year of remittance, since a returning NRI who triggers RNOR or resident status mid-year cannot use Section 195 rates.
• Reconcile the cumulative USD-equivalent against earlier remittances in the same financial year, using the SBI TT buying rate on the date of each remittance as RBI prescribes.
• File 15CA in the financial year of payment, not of accrual; mismatched years are the most common cause of bank rejection.
• Retain the FIRC, 15CA acknowledgement, and 15CB scan for 8 years, the limitation period under Section 149 of the IT Act for reassessment of foreign-asset matters.

FAQ

Can I repatriate more than USD 1 million in a single financial year if I have multiple property sales?

No. Paragraph 4 of the Master Direction aggregates all eligible heads inside the same USD 1 million envelope per financial year per remitter PAN. Splits across banks, family members' separate accounts, or staggered transfers within the same financial year do not reset the counter. The cap rolls over on 1 April of the next financial year.

Is Form 15CB always required, or is the chartered accountant's certificate sometimes optional?

Form 15CB is mandatory only where the cumulative remittance during the financial year exceeds Rs 5 lakh and the payment is chargeable to tax under the IT Act. Below that threshold, Form 15CA Part A alone suffices. For payments expressly not chargeable to tax, such as gifts to close relatives within the limits of Section 56(2)(x), Part D of 15CA is filed without 15CB.

Does the USD 1 million cap apply to NRE and FCNR(B) accounts as well?

No. Both NRE and FCNR(B) deposits are fully repatriable under the Master Direction on Deposits and the Foreign Exchange Management (Deposit) Regulations 2016, with no annual ceiling on principal or interest. The USD 1 million cap is exclusive to NRO and the listed asset categories.

What surcharge applies on capital gains TDS for an NRI in FY 2025-26?

Long-term capital gains attract surcharge capped at 15% under the Finance Act proviso, irrespective of total income. The new regime overall surcharge cap is 25%, replacing the old 37% slab for total incomes above Rs 5 crore. Health and education cess of 4% is applied on tax plus surcharge.

Can I claim DTAA benefit at the time of TDS, or only when I file my Indian return?

The authorised dealer bank can apply the lower DTAA rate at deduction stage if the NRI furnishes a valid Tax Residency Certificate and Form 10F filed online for the relevant financial year, plus a self-declaration of beneficial ownership. Without these, Section 195 default rates apply, and the NRI must claim the differential as a refund through ITR-2 filing.

Is the 10-year holding rule for immovable property still relevant after the 2024 capital gains amendment?

The 10-year holding rule under FEMA continues to apply to lock-in waivers for foreign-exchange-funded property purchases, but it does not unlock a separate dollar quota beyond the USD 1 million envelope. The Finance (No. 2) Act 2024 amendment is a tax-side change, lowering the long-term capital gains rate to 12.5% without indexation, and is independent of the FEMA repatriation framework.

Do I need to surrender my NRO account once I become a resident again?

Under Regulation 7 of the FEMA (Deposit) Regulations 2016, an NRI who returns to India and acquires resident status under Section 2(v) of FEMA must redesignate the NRO account as a resident savings account within a reasonable period. The Resident Foreign Currency (RFC) account is the parallel destination for NRE/FCNR balances, with full repatriation rights preserved.

Sources and further reading

• Reserve Bank of India, Master Direction on Remittance of Assets (FED Master Direction No. 13/2015-16, updated 2024) at rbi.org.in.
• Income-tax Department, Section 195 and Rule 37BB on Form 15CA/15CB at incometax.gov.in.
• Foreign Exchange Management Act 1999, Section 6, at indiacode.nic.in.