The USD 1 Million Scheme Explained: How NRIs Remit Sale Proceeds and NRO Balances Abroad Under FEMA

For a non-resident Indian, the hardest part of owning assets in India is rarely buying them - it is getting the money out again. The mechanism that governs this is the Reserve Bank of India's Remittance of Assets framework, and its headline number is USD 1 million per financial year. Codified in the Foreign Exchange Management (Remittance of Assets) Regulations, 2016, this single ceiling decides how much an NRI or Person of Indian Origin can move abroad from balances sitting in an Indian rupee account or from the proceeds of selling Indian property, shares or deposits. As of June 2026, the cap remains USD 1 million per person per April-to-March year, and understanding how it interacts with tax deduction at source is the difference between a clean transfer and a remittance stuck in compliance limbo.

This guide walks through the statute behind the cap, how the underlying gains are taxed in India under the Income-tax Act 1961, how your country of residence treats the inflow, and the account mechanics - NRO, NRE and FCNR - that make repatriation legal. Every figure here is drawn from RBI Master Directions or the Income-tax Act; where a number cannot be verified, it has been left out.

FEMA / DTAA Position

The legal anchor is the Foreign Exchange Management (Remittance of Assets) Regulations, 2016, read with RBI Master Direction No. 13. Under this framework, an NRI or PIO may remit up to USD 1 million per financial year from balances held in NRO accounts and from the sale proceeds of assets. The phrase "remittance of assets" is deliberately broad: it covers bank deposits, provident fund and superannuation balances, insurance maturity proceeds, and the sale proceeds of shares, securities or immovable property. Because all of these draw on the same USD 1 million ceiling, a single financial year cannot accommodate, say, a USD 700,000 property sale and a USD 500,000 deposit withdrawal without breaching the limit and triggering an RBI approval requirement.

The 2016 Regulations require the remitter to furnish an undertaking confirming that the amount being sent does not represent borrowed funds and is not the product of an inter-NRO transfer engineered to inflate the available headroom. This undertaking, paired with a chartered accountant certificate, is what an authorised dealer bank relies on before releasing foreign exchange. The discipline matters because FEMA contraventions are penal: under Section 13 of FEMA 1999, the penalty can reach up to three times the sum involved or Rs 2 lakh, whichever is higher, with a continuing default attracting up to Rs 5,000 per day.

Where the Double Taxation Avoidance Agreement enters is on the tax-character of the underlying gain, not the remittance itself. A DTAA does not exempt the act of sending money abroad - that is purely a FEMA matter. What the treaty does is allocate taxing rights over the income that produced the funds. The table below sets out the position on the asset classes most NRIs actually remit.

Note the final row: current income such as rent and dividends is freely repatriable and does not count against the USD 1 million ceiling, provided the relevant tax has been paid. This is a common point of confusion - the cap bites on capital, not on recurring income, and an NRI earning rent should not let the ceiling deter ordinary monthly transfers. You can model the rental position using the NRI rental income tax calculator.

Tax Treatment in India

Remittance is a FEMA event; taxation happens earlier, when the asset is sold or the income accrues. For immovable property held longer than 24 months, the gain is long-term and taxed at 12.5% without indexation under the Budget 2024 regime, plus surcharge and a 4% health and education cess. For assets acquired before 23 July 2024, the taxpayer may elect the grandfathered route of 20% with indexation - whichever produces the lower liability. Short-term property gains are added to total income and taxed at slab rates.

The pivotal mechanic for non-residents is Section 195 of the Income-tax Act 1961. Unlike a resident seller, where the buyer deducts 1% TDS, when the seller is an NRI the buyer must withhold tax on the capital gain itself. For a long-term gain the effective deduction is 12.5% plus surcharge and cess; the TDS is then deposited against the seller's PAN. Surcharge follows the standard slabs, and a critical point for high-value sales is that the new tax regime caps the surcharge at 25% - the old-regime 37% top rate does not apply to capital gains, which under the Finance Act are already excluded from the highest surcharge band. The applicable surcharge ladder is below.

Because Section 195 withholds on the gross gain at headline rates, NRIs frequently over-pay at source. The remedy is Section 197: an application to the jurisdictional Assessing Officer for a lower or nil deduction certificate. If granted, the buyer deducts at the reduced rate specified in the certificate, freeing up cash that would otherwise sit with the exchequer until the return is filed and a refund processed. Given that property TDS on a multi-crore sale can run to several lakh, the Section 197 route is often worth the four-to-six week processing time. The NRI tax calculator helps estimate the liability before you decide whether to apply.

Tax Treatment Abroad

The act of remitting USD 1 million does not, by itself, create a tax charge in your country of residence - jurisdictions tax income and gains, not transfers. What matters is whether the underlying gain has already been taxed in India and whether your DTAA grants relief against double taxation. Crucially, on capital gains from Indian property and shares, India retains its taxing rights at 12.5% for long-term gains; no major treaty treats these as exempt. The residence country then typically allows a foreign tax credit for the Indian tax suffered.

The numbers below come from the relevant bilateral treaties and illustrate the withholding ceilings for the income streams an NRI is most likely to repatriate. Capital gains are shown at the rate India is entitled to retain - never as "exempt".

For a US-resident NRI, Article 24 of the India-USA treaty (effective 12 September 1991) provides a foreign tax credit in the United States for tax paid in India, preventing the same gain being taxed twice. The portfolio-dividend rate is 25% under Article 10, dropping to 15% only where the recipient holds at least 10% of the voting stock - a parent-subsidiary threshold most individual investors will not meet. A UK-resident NRI relies on the tie-breaker rule in Article 4 of the India-UK treaty (effective 26 October 1993) where dual residence arises, and claims credit at home for Indian tax. For UAE residents, the India-UAE treaty (effective 22 September 1993) requires a Tax Residency Certificate supported by proof of a UAE establishment before treaty rates can be invoked, and it confirms that capital gains on shares of an Indian company remain taxable in India.

The practical lesson is that the DTAA reduces, but rarely eliminates, the Indian tax bite on capital. An NRI who assumes the Gulf's zero personal income tax extends to Indian-source gains is mistaken - the gain is taxed in India under Section 195 first, and only then does the residence country's treatment apply. Always secure a Tax Residency Certificate and file Form 10F to claim treaty benefits at the lower of the DTAA rate or the Income-tax Act rate, as Section 195 read with the treaty permits.

Repatriation Mechanics

The account architecture is where the USD 1 million scheme becomes operational. Sale proceeds and rupee income flow into a Non-Resident Ordinary (NRO) account, which holds India-source funds and is the gateway for the remittance-of-assets cap. From the NRO account, an NRI repatriates up to USD 1 million per financial year after tax, supported by Form 15CA and, where the remittance is taxable and exceeds Rs 5 lakh, a chartered accountant's Form 15CB certifying that tax has been correctly deducted.

By contrast, a Non-Resident External (NRE) account holds foreign earnings converted to rupees and is fully and freely repatriable - both principal and interest - without counting against the USD 1 million ceiling. NRE interest is also exempt from Indian income tax for as long as the account holder qualifies as a non-resident. The Foreign Currency Non-Resident (FCNR) deposit holds funds in foreign currency, insulating the saver from rupee depreciation, and is likewise freely repatriable. The contrast between these accounts is summarised below.

The sequencing for a property sale therefore runs: the buyer deducts TDS under Section 195, the net proceeds are credited to the NRO account, the seller obtains Form 15CB from a chartered accountant, files Form 15CA online, and instructs the authorised dealer bank to remit within the USD 1 million annual envelope. For NRIs returning to India permanently, a separate path opens - NRE and FCNR balances can be moved into a Resident Foreign Currency account on change of residential status, a process worth planning before you land. Where the proceeds come from selling residential property, remember the long-standing rule that repatriation of sale proceeds of immovable property is limited to two such properties; the repatriation calculator helps map the ceiling against your specific transaction.

A final compliance reminder: the USD 1 million is a per-person, per-financial-year figure that resets each 1 April. Unused headroom does not roll over, so high-value sales are often staged across two financial years to remit within the cap without seeking RBI approval. Keep documentary evidence - sale deed, tax challans, 15CB - for at least the period the Income-tax Department can reopen an assessment, because the authorised dealer bank and the department both reserve the right to call for the trail.

FAQ

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

It is per person, per financial year running April to March. Each NRI or PIO holds an individual eligibility of up to USD 1 million drawn from NRO balances and asset sale proceeds combined. A married couple holding assets jointly can each draw on their own limit, but inter-NRO transfers between spouses engineered to inflate one person's headroom are not permitted and must be declared in the undertaking the 2016 Regulations require.

Do I need Form 15CA and 15CB for every remittance?

Form 15CA, the remitter's declaration, is generally required. Form 15CB, a chartered accountant certificate, is required where the remittance is taxable and exceeds Rs 5 lakh in the financial year. Certain specified-list payments carry relaxations, but for sale proceeds of property a 15CB is the norm because the tax deducted under Section 195 has to be certified before the authorised dealer bank releases foreign exchange.

Can I remit more than USD 1 million in a year?

Amounts beyond USD 1 million per financial year require prior approval of the Reserve Bank of India. The cap aggregates every remittance-of-assets category - deposits, provident fund balances, insurance maturity proceeds and the sale proceeds of shares, securities or immovable property - into a single annual ceiling, so staging a large sale across two financial years is the usual way to stay within it.

How is TDS deducted when I sell property and repatriate?

Under Section 195, the buyer must deduct tax at source on the capital gain before paying you. For a long-term gain the effective TDS is 12.5% plus applicable surcharge and 4% cess, deposited against your PAN. If your actual liability is lower, apply to the Assessing Officer under Section 197 for a lower or nil deduction certificate so the buyer withholds at the reduced rate.

Will I be taxed again abroad on money I remit?

The remittance itself is not a taxable event abroad - the underlying income or gain may be. Under the relevant DTAA, your country of residence typically grants a foreign tax credit for Indian tax already paid. For instance, Article 24 of the India-USA treaty allows a credit in the United States for tax suffered in India, so the same gain is not taxed twice.

Does the scheme apply to inherited assets?

Yes. Sale proceeds of assets acquired by inheritance or legacy are covered under the Remittance of Assets Regulations 2016, subject to the same USD 1 million annual ceiling. You must hold documentary evidence of the inheritance, such as a will, succession certificate or legal heir certificate, which the authorised dealer bank will examine before remitting.