Repatriation of money abroad

NRIs do not visit India frequently and are not open to renting out their properties. They prefer not to burden relatives and friends with the task of paying property tax, maintenance and society dues and see more sense in encashing the capital value of their inherited properties. Selling real estate is not a challenge but what creates confusion is remitting the resulting funds back into the country of residence. Money that is legally owned and accounted for, can quite easily be remitted abroad through normal banking channels, in a safe and legal manner.

Legal method of repatriating money abroad

Proceeds from Sale of Property

There are certain guidelines that need to be followed, when it comes to transferring money that is received from the sale of property abroad. In case the property was purchased, with money received from inward remittance or debit to NRE/FCNR/NRO account, then the principal amount can be repatriated outside India.

Example: 250,000 US$ are sent from abroad by an NRI to purchase property in India.  Suppose the property is sold for a sum that is equivalent to US$350,000.The principal amount of US$ 250,000, can be repatriated immediately. The balance would be deposited in an NRO account. (Previously there was a lock in period of three years; this has now been removed by RBI.)

How to repatriate money from sale of property

To be able to transfer money, received in India from the sale of your property, it is important that the payment for the property is accepted through legal banking channels. Documentary proof showing source of money will be required when transferring money abroad. In order to transfer the money it must first be deposited in an NRO bank account.

Repatriation of Investments in financial instruments

Interest earned and balances held in NRE and FCNR accounts are not taxed and can be freely repatriated abroad.

The RBI allows NRIs to transfer money from NRO to NRE account, subject to the overall ceiling of $1 million per financial year, and after applicable taxes have been paid.

Proceeds of investments made by an NRI in Indian financial instruments can be repatriated provided the investment was made from funds brought in from abroad, i.e., the money was remitted from abroad via banking channels, or the purchases were made out of money in NRE or FCNR accounts. Capital gains tax, if applicable, will have to be paid before repatriation.

To start the repatriation process, the first step is to get a certificate from a Chartered Accountant (CA) in India.

Documents required by Bank:

1.Form 15CA.

2.Form 15CB in duplicate signed by the Chartered Accountant

3.Form A2 – Your bank should supply you with this form, a sample form A2 is included in this book.

4.Application for foreign exchange- this form would also be supplied by the bank

To verify that the person who is sending the money abroad, did have legal ownership of the property sold and the transmission of funds are the sale proceeds of property; banks may want to see documentary proof such as:

1.Copy of the sale document of the property.

2.If the property had been inherited then copy of the WILL, legal heir certificate, death certificate on whose death the property has been inherited.

Note: From 1 June 2015, any remittance of funds to an NRI (an NRI transferring funds from NRO to NRE account, and remittance of even non-taxable funds like long-term capital gain on equity shares) will require the remitter to provide a certificate from a chartered accountant in Form 15CB and filing of Form 15CA at the IT Department’s web site. Earlier, CBDT regulations required these forms only for taxable transfers, while bank personnel asked for these forms even for non-taxable transfers. This created confusion. This confusion was cleared by Finance Bill 2015 which said that these forms have to be filled for all remittances (taxable or non-taxable).

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