Saving Mantra Blogs

Repatriation of Funds from India: Step-by-Step Guide

Written by

Financial Analyst

in

Saving Mantra Blog: Step-by-Step Process for Repatriation of Funds under FEMA/LRS in India

Repatriation of funds from India refers to transferring money outside India by residents or non-residents under regulated frameworks such as FEMA (Foreign Exchange Management Act, 1999) and LRS (Liberalised Remittance Scheme). Whether it is income earned in India, sale proceeds of investments, or remittance for education or family maintenance, the Reserve Bank of India (RBI) and banks ensure proper documentation, tax compliance, and traceability.

This guide breaks down the complete step-by-step process covering RBI rules, bank procedure, documentation, and tax compliance.

🏛 1. Understanding FEMA & LRS Framework

Before initiating repatriation, it is crucial to know which rules apply:

✔ FEMA (Foreign Exchange Management Act, 1999)

Controls foreign exchange transactions in India and governs:

  • Inward remittances
  • Outward remittances
  • Repatriation of sale proceeds
  • Repatriation by NRI/OCI investors
  • Limits, documentation, and approvals

✔ LRS (Liberalised Remittance Scheme)

Allows resident individuals to remit up to USD 250,000 per financial year for:

  • Education expenses
  • Travel
  • Family maintenance
  • Gifts & donations
  • Medical treatment
  • Investment abroad

✔ Repatriation by NRIs/OCIs

NRIs/OCIs can repatriate from:

  • NRE Accounts – Fully repatriable (principal + interest)
  • FCNR(B) Accounts – Fully repatriable (principal + interest)
  • NRO Accounts – Up to USD 1 million per FY post-tax

📑 2. Documentation Required for Repatriation

Banks require compliance and proof of source of funds. Below are typical documents:

🗂 Commonly Required Documents

  • PAN card
  • Passport (for NRIs/OCIs)
  • Visa/OCI card copy
  • Bank account statements
  • FEMA declaration
  • Remitter’s self-declaration
  • Purpose code selection

🗂 Specific Cases

(a) NRO to NRE / Overseas Transfer

  • Form 15CA (online submission via Income Tax portal)
  • Form 15CB (issued by Chartered Accountant)
  • Proof of tax paid/TDS certificates
  • Source of funds (e.g., rental income, sale proceeds, dividend)

(b) LRS Remittances

  • LRS declaration form (A2 form)
  • KYC documents
  • Tax Collected at Source (TCS) confirmation (if applicable)

🏦 3. Bank Procedure for Repatriation

Below is the standard step-by-step process followed by banks in India:

Step 1 — Contact Bank Branch or Authorized Dealer (AD Bank)

Repatriation can only occur through banks authorized by RBI to deal in forex.

Step 2 — Submission of Documents

Submit:

  • Application form
  • FEMA/LRS declaration
  • 15CA/15CB (if required)
  • Source of funds proof
  • KYC documents

Step 3 — Verification by Bank

Bank verifies:

  • Purpose code
  • FEMA compliance
  • Tax clearance
  • Foreign exchange usage limit
  • Beneficiary details abroad

Step 4 — Forex Conversion & Transfer

Bank converts INR to foreign currency (USD/EUR/GBP etc.) and sends funds via SWIFT to the beneficiary account.

Step 5 — Confirmation & Reporting

Bank issues confirmation reports for compliance and future reference, such as:

  • SWIFT copy
  • Remittance advice
  • FIRC (Foreign Inward Remittance Certificate) or debit advice

💼 4. Tax Compliance Before Repatriation

Most repatriations require income tax compliance to avoid misuse.

🔶 Form 15CA

An online declaration filed to the Income Tax Department for foreign remittances.

🔷 Form 15CB

A certificate issued by a Chartered Accountant confirming:

  • Nature of remittance
  • Applicable tax rate
  • Taxability under DTAA (if applicable)
  • TDS paid (if applicable)

⭐ When 15CA & 15CB Are Mandatory

Required when:
✔ Taxable nature of funds
✔ NRO repatriation beyond ₹5 lakh
✔ Specific foreign remittances under rule 37BB

🌍 5. RBI Compliance & FEMA Reporting

Depending on purpose, banks apply correct Purpose Codes, such as:

  • S1101 – Maintenance of close relatives
  • S0301 – Education abroad
  • S0501 – Gifts
  • S1301 – Remittance by NRI from NRO

This ensures alignment with RBI’s foreign exchange monitoring system.

📦 6. Types of Funds Allowed for Repatriation

Below funds can be repatriated depending on status:

✔ Resident Individuals (Under LRS)

  • Maintenance for family abroad
  • Education & travel expenses
  • Investments in securities abroad
  • Purchase of property abroad

✔ NRIs/OCIs

  • Rent income
  • Dividend
  • Pension
  • Sale of immovable property (post compliance)
  • Sale of investments
  • Current income (interest etc.)
  • Inheritance receipts

🚫 7. Repatriation Restrictions to Note

  • TCS applicable under Section 206C(1G) for LRS if limits exceeded
  • Restrictions on remitting lottery/illegal income
  • Sale proceeds of agricultural property not repatriable in many cases
  • FEMA approval required in specific real estate scenarios

📌 8. Practical Tips for Smooth Processing

✔ Keep all tax proofs and TDS certificates
✔ Maintain trail of credit entry in NRO accounts
✔ Take CA assistance for 15CA/15CB
✔ Check double taxation relief under DTAA
✔ Apply before financial year end for LRS limit optimization
✔ Choose correct purpose code for compliance

Conclusion

Repatriation of funds from India is a structured process involving RBI rules, FEMA compliance, tax clearance, and bank procedures. With proper documentation and professional support, the process is smooth, compliant, and efficient.

Disclaimer

This article is for educational and informational purposes only and does not constitute legal, tax, or financial advice. FEMA rules, RBI regulations, limits, and tax laws may change over time. Always consult a qualified professional and verify latest rules before initiating any repatriation transaction.

More posts