RBI rules allow eligible NRIs to move funds from NRO accounts to NRE accounts, subject to tax compliance and repatriation conditions
Non-resident Indians (NRIs) can transfer eligible funds from a Non-Resident Ordinary (NRO) account to a Non-Resident External (NRE) account, subject to the applicable foreign-exchange rules. The annual ceiling for such transfers is US$1 million per financial year, according to Reserve Bank of India (RBI) rules.
An NRO account is generally used to manage income earned in India, including rent, dividends, pensions and interest. An NRE account, meanwhile, is designed primarily for overseas earnings brought into India. Funds held in an NRE account are repatriable, while NRO balances are subject to the US$1 million repatriation facility.
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The US$1 million limit applies to the NRO repatriation facility during the financial year, which runs from April to March
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Transfers to an NRE account count towards this overall ceiling
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The limit also applies alongside other eligible assets covered by the repatriation rules
NRIs must also meet tax and documentation requirements before transferring funds. Banks may require evidence that applicable taxes have been paid, along with documents establishing the source of the money and the nature of the remittance.
The distinction between the two accounts is important. While NRO balances are generally taxable in India and have restricted repatriation, interest on NRE accounts is exempt from Indian income tax for qualifying NRIs under the applicable rules. NRE balances can also be repatriated abroad without the US$1 million NRO ceiling.
The rules remain relevant for NRIs managing Indian income while seeking to move eligible funds into a repatriable account. RBI guidance confirms that transfers from NRO to NRE accounts are permitted within the prescribed US$1 million facility.
