Repatriation refers to the capacity of funds that freely they can be transferred across borders by changing or converting into foreign currency. In order to do that, an individual needs to create an NRO, NRE, or FCNR-B account in India after you become an NRI. While NRO accounts are designed to keep cash generated in India, NRE accounts are designed to hold your overseas income. Repatriation occurs when funds are transferred from your NRO account to your NRE account or to any other account in the country of your residency. When an NRI invests foreign profits in India on a repatriation basis, the money can be sent back to the NRI’s place of residence at any moment by changing them from India Rupee to the foreign currency. Non-repatriation is the inverse of repatriation.In the event where the investment is non-repatriation basis-, monies cannot be transferred back to the NRI’s place of residence or changed to any foreign currency.
Separate NRI Bank account types are available for investments on a repatriable and non-repatriable basis.
The Foreign Currency Non- Resident (FCNR) and Non- Resident External (NRE) bank accounts are specially intended for repatriation investment. unds in these accounts under many circumstances can be changed to foreign currency and transferred to an account which is over at any time. These are also known as NRI repatriable accounts. ,the For the purpose of non-repatriation investment, the Non-Resident Ordinary (NRO) bank account is intended. NRO accounts are frequently used to handle earnings of NRI in India from sources such as rent, pension, dividends, and so on. This account is also known as a non-repatriable NRI account.
NRI Repatriation Limit
There are no repatriation limits on the funds held in NRE and FCNR bank accounts and are freely repatriable.The funds held in NRO bank account are subject to certain limits as per below:The principal amount held in NRO is not repatriable, The interest earned on NRO balances is freely repatriable and The income earned in India in nature of rent, salary, dividend, pension, etc. and proceeds from the sale of financial assets viz. equity stocks, initial public offering (IPO), mutual funds and proceeds from the sale of immovable property in India is repatriable up to USD 1 million per financial year. Any repatriation above the mentioned limit is subject to RBI approval.
NRI Repatriation of Funds from India
In addition to the repatriation limitations, the following rules of NRI repatriation shall apply:
- Repatriation of cash from the NRO type of account is permitted only after payment of all relevant taxes on income generated in India and the sale profits of investments of NRI.
- Funds from an NRO type of account can be repatriated to any NRE type of account of the NRI or any foreign bank account of the NRI, but not to a third party.
- A repatriation limit of USD 1 million applies to all NRO bank accounts owned by the NRI.
- The USD 1 million repatriation limit from the NRO account authorised per fiscal year must be used in a single fiscal year only. There is no carryover.
Documents required for NRI repatriation of funds
- An NRI can withdraw funds from his or her NRE, NRO, or FCNR bank accounts. An NRI must provide the general papers listed below in order for the repatriation to be processed. Please keep in mind that criteria may differ somewhat from one bank to the next.
- Documents required in case of repatriation from NRE/FCNR account
- Request to the Bank for Repatriation of funds – An NRI must complete the request form in order to notify the bank of the remittance.
- A2 Form, often known as a “FEMA statement” or “form for outward remittance.” Each bank has its own A2 form with its own emblem and, if applicable, unique instructions. To apply for the purchase of foreign currency, the A2 form is necessary. An NRI must additionally provide the NRI repatriation purpose code for which the monies must be repatriated.
The documentation is available on the website of bank. The form can be downloaded by the NRIs and fill it out before sending it to banks for processing through courier. Many banks, on the other hand, provide NRIs with online repatriation services.
NRI repatriable Investment options
- A repatriable type of investment is one in which NRIs make investments from their NRE accounts. NRIs can engage in Indian stock on a repatriation basis, but they must do so through the method of PIS, which requires each transaction to be disclosed to the RBI. Aside from that, the government has identified a number of additional investment possibilities for NRIs on a repatriation basis that are not limited in any way.Government dated securities;
- Treasury bills (T-bills);
- Units of domestic mutual funds;
- Bonds issued by a Public Sector Undertaking (PSU) in India.
- Shares in Public Sector Enterprises being disinvested (partial dilution) by the Central Government.
- Bonds/ units issued by Infrastructure Debt Funds.
- Listed non-convertible/ redeemable preference shares or debentures
- Perpetual debt instruments (with an overall ceiling of 24%) and Debt capital instruments issued by banks in India to augment their capital.
- Initial Public offerings.
National Pension System. (This option is available for NRIs between 18 to 60 years.
Note of Importance: Repatriation using your NRE type of account is quicker and has no restrictions. If you wish to send money back to your home country from an NRO type of account, you should be informed of the restrictions. Another thing to keep in mind is that the USD 1 million limit for your NRO account is only valid for one fiscal year. This implies that if you transfer less than this amount, you will be unable to use the remainder in the next fiscal year.