NRIs and Persons of Indian Origin (PIOs) accumulating rupee income in India typically hold it in an NRO (Non-Resident Ordinary) account — rent, dividends, interest, sale proceeds of investments, sale proceeds of immovable property, gifts received. Under FEMA, these funds are remittable abroad through the USD 1 million per financial year scheme, subject to tax compliance and documentation. The scheme is in the RBI Master Direction on Remittance of Assets, and the operational mechanics are well-established.
The framework
The scheme allows an NRI / PIO to remit up to USD 1 million (or equivalent in other currency) per financial year from the balances held in their NRO account abroad, after providing satisfactory evidence of payment of taxes in India on the underlying funds. The limit applies to the aggregate of remittances in a financial year, across all sources of NRO balances and across all AD banks the NRI deals with.
The legal basis is in FEMA Notification 13(R) — Foreign Exchange Management (Remittance of Assets) Regulations, 2016, read with the RBI Master Direction on Remittance of Assets, updated periodically. The Master Direction lays out the eligibility, documentation and AD-bank process.
What can be repatriated under the scheme
The USD 1 million window covers:
- Sale proceeds of immovable property held in India (subject to limits on the number of residential properties — typically two residential properties)
- Sale proceeds of investments — equity shares, mutual funds, bonds
- Rental income from immovable property held in India
- Dividends, interest on bank deposits, interest on bonds and other current receipts credited to NRO
- Inherited assets, gifts received from relatives
- Other legitimate dues owed to the NRI by Indian counterparties
What does not count toward the limit: remittances from NRE / FCNR accounts (these are freely repatriable without limit, since the funds were originally inward-remitted from abroad). The USD 1 million cap only applies to NRO.
The paperwork pack
Each remittance requires:
- Form A2 — the AD bank’s remittance request form, signed by the NRI
- Form 15CA — the remitter’s declaration filed on the income-tax e-filing portal (Parts A / B / C / D depending on the nature and amount of the remittance)
- Form 15CB — a Chartered Accountant’s certificate confirming that the tax due on the underlying transaction has been paid (mandatory for Part C remittances; not required for Part A small remittances or Part D specified list)
- Documentary proof of source — sale deed for property sale, demat statement for equity sale, rental agreements for rental income, TDS certificates for income on which tax was deducted at source
- Self-declaration on the USD 1 million limit — statement that aggregate remittances in the financial year are within the cap
- PAN card and passport copy of the NRI
The AD bank’s process
The AD bank’s role is to verify that:
- The remittance is from an NRO account.
- The source of funds is documented and traceable.
- Tax has been paid — evidenced by the 15CB certificate and TDS records.
- The 15CA acknowledgement is valid and matches the 15CB.
- The aggregate remittance during the year is within the USD 1 million cap.
- The Form A2 is complete and the SWIFT message can be constructed.
Major banks have dedicated NRI banking desks that handle this verification. Most banks now accept digital submission of the 15CA / 15CB acknowledgement — the NRI uploads the e-filing portal acknowledgement to the bank’s NRI banking portal, and the bank verifies against the income-tax portal.
The five common rejection reasons
1. Aggregate already crossed USD 1 million
The cap is on the aggregate across all NRO sources and all AD banks. If the NRI has done partial repatriations from multiple banks during the year and the aggregate is already at USD 950k, a USD 100k request will be rejected by the receiving bank or capped at USD 50k. The NRI should maintain a running tally; some banks ask for a self-declaration of past remittances at every new request.
2. Source-of-funds documentation incomplete
The bank traces the underlying source back to a documented receipt. Funds “sitting” in the NRO account without supporting source documentation are queried. The cleanest position is to provide source documents for the specific remittance — the sale deed for sale proceeds, the TDS certificate and Form 16A for rental / interest income, the demat statement for equity sale proceeds.
3. Form 15CB not in the Part C format for taxable remittance
For amounts above the Rs 5 lakh threshold that are taxable, Part C 15CA is required, supported by a 15CB. Some NRIs file Part D (specified list / not taxable) by mistake for items that are actually taxable — the bank queries this. The CA preparing the 15CB has to classify correctly.
4. TDS-paid evidence weak
For amounts where TDS was supposed to be deducted by the Indian payer (e.g., buyer of property), the AD bank wants to see the TDS certificate — the buyer’s Form 16A — and the TDS reflection in Form 26AS / AIS of the NRI. If TDS was under-deducted or the buyer hasn’t yet filed the quarterly return, the bank may hold the remittance until the position is resolved.
5. NRI status documentation missing
The account must be an NRO account (not a resident account that the customer claims is NRO). The bank verifies the account status, the customer’s NRI status (passport showing departure / overseas residence), and PAN linkage to the NRO account.
The relationship with capital-account vs current-account
The USD 1 million scheme covers capital-account remittances — remittances of accumulated balances. Separate from this, current-account remittances (current income that has not yet accumulated as balances) flow through the AD-bank route for current-account transactions under FEMA, with their own form (Form A2) and Purpose Code framework.
For an NRI who earns rental income in India and wants to remit it monthly as it accrues, the cleaner route is the current-income mechanism (which doesn’t consume the USD 1 million capital-account limit). The USD 1 million scheme is for periodic batch repatriations of accumulated balances — particularly large one-offs like property sale proceeds.
For accumulated balances above USD 1 million
NRIs with large accumulated balances (e.g., sale proceeds of multiple properties, large equity portfolios) often need to remit more than USD 1 million in a financial year. The standard pattern is to split the remittance across two financial years (USD 1 million in one FY, balance in the next) — with appropriate paperwork in each year.
For exceptional cases above USD 1 million in a single year, a specific approval from RBI is theoretically possible but rare in practice. Splitting across years is the workable approach.
The financial-year discipline
The USD 1 million cap is on the financial year (April-March), not the calendar year. NRIs planning a large repatriation around year-end (March-April) often split the transaction — USD 1 million in March under the current FY, balance USD remitted in April under the next FY. Each tranche needs its own 15CA / 15CB and AD bank paperwork.
Sources
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