NRI
This article looks at the tax and compliance rules to keep in mind for transferring money to an NRE account by resident Indians, from NRO accounts and from abroad.
To comply with the Foreign Exchange Management Act (FEMA) rules, an NRI cannot have regular savings accounts in India. Therefore, you must convert existing accounts to NRE or NRO accounts, and excess accounts must be closed. This step is important once your status changes from resident Indian to NRI and can be done either online or during your next visit to India.
An NRE account can be opened only once you are an NRI as a fresh account. Old accounts, which existed when you were a resident Indian, will become NRO accounts, not NRE accounts. You can check your NRI status here: Who is an NRI and who is not? Understanding FEMA and NRE/NRO bank accounts.
This account is used to send money to India. The features and uses are:
This account is used for any income and investments in India. The features and uses are:
Transferring money from abroad to your own NRE account in India is the reason that the NRE account exists. To transfer the amount, you primarily need:
The transfer fees and time will depend on the platform chosen and the amount that is being transferred. There is no additional tax in India or abroad since this is your own post-tax money. There is no limit to the amount being transferred (though some platforms have their limits and banks do not).
Unlike the previous case, this is money moving within India. An NRE account allows unrestricted repatriation, i.e. money being sent abroad without tax or limits, while an NRO account has limits.
As per the RBI circular from 2012, NRO to NRE transfer is allowed up to $1 million in a financial year (Apr to Mar).
Since income in the NRO account is taxable, only the post-tax amount can be transferred to your NRE account. This means you need to produce a certificate, via CA, that all taxes have been paid before the bank will accept the NRO to NRE transfer.
For doing the NRO to NRE transfer, you must submit:
You cannot directly transfer money from a resident Indian account to an NRE account. The transfer must be first to the NRO account of the NRI and then from NRO to NRE as above.
Resident to NRO transfers come under RBI’s Liberalised Remittance Scheme (LRS) with 20% TCS applicable for all transfers above ₹7 lakhs/year.
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Published: 20 November 2024
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This post titled The complete guide for transferring money to an NRE account: NRO to NRE and resident to NRE covered first appeared on 10 Apr 2024 at https://arthgyaan.com
