Approximately 32 million NRIs or PIOs reside abroad according to the statistical data by the Ministry of External Affairs. The Indian regulations have allowed NRIs to facilitate a large number of overseas remittances into the country. Although, when it arrives at NRIs wanting to repatriate funds outside the country and to a foreign state where their residency lies, then these policies become stringent. Before we discuss more on the topic of Bringing money from India to USA, here are a few things you should know.
What is Repatriation?
Repatriation is the transfer of funds (like principal amount or interest from deposits) from the account of an NRI in India to overseas or any foreign country in which that person is residing. The process of Bringing money from India to USA or any other country you reside in is called repatriation.
Bringing money from India to USA is a slightly more rigid and long process than sending money from India to any other foreign country. These transactions are generally referred to as ‘Foreign Exchange’ or ‘Forex’ and the legal framework is governed by Foreign Exchange Management Act, 1999 (FEMA). This administers every foreign transaction.
Can funds be transferred from India to the USA?
According to the guidelines of FEMA, there are some transactions that are prohibited like lottery, trading in FX or capital account remittance etc. Apart from this, the forex services can be used to:
- Visit any country for vacation purposes or meeting family members
- Employment purposes like conducting businesses
Hence, these are the ways through which either a person can travel to another country or an NRI can easily transact or bring money back to the USA from India. Bank services available for NRIs are different from resident Indians. The savings account of an NRI is not recognized in India, instead, he/she has to convert the existing bank account to any of the following types of bank accounts:
1. Non-Resident (External) Rupee Account, formally known as ‘NRE Account’ which is a rupee-denominated account. This is mainly used for keeping the NRI’s foreign earnings.
2. Non-Resident Ordinary Rupee Account, formally known as ‘NRO Account’ is also a rupee-denominated account. This is kept to deposit an NRI’s Indian earnings like dividends, rents, pensions or other similar incomes.
3. Foreign Currency Non-Resident Account, formally known as ‘FCNR Account’ which helps in saving the NRI’s foreign currency as it is in India i.e., without exchanging it into rupees. Hence, it is not a rupee-denominated account unlike NRO or NRE Account.
How to Bring money from India to USA via Banks?
In India, the repatriation of funds from NRO Accounts is restricted to US$ 1 MM every financial year i.e., 1st April to 31st March for every account holder. Although it can be altered according to situations. This limit is applicable on NRO Accounts with Citibank India or other financial institutions like SBI, Axis Bank, HDFC Bank, etc. This limit is regarded as an aggregate amount throughout all the repatriation funds and does not take into factor the current income.
It is compulsory for an NRI to keep the identical name on all his accounts, be it in India (NRE/NRO) or the account situated in the foreign bank in which the funds will be transferred. The banks and forex services do not allow repatriation of funds to a third party.
After the account balance and the account itself have been recognized after documentations, the banks will then establish the conversion rate. The conversion rate is that amount that will be equivalent to the other countries’ currency in terms of their own economy (For example 1 USD= 74.45 INR).
In India, the banks convert the amount according to the TT selling rate for that day which can increase or decrease. They are directed by their respective head offices to convert the amount at a relevant and rational exchange rate for the destination country. The banks can quote the relevant currencies like USD, CAD, EUR, GBO, AED, AUD or NZD.
After the banks decide the conversion rate, they will monitor the country in which the amount is being transferred to. This is done to ensure that funds are not being transferred to any FATF negative country or OFAC negative country. These guidelines have been set up by the Reserve Bank of India.
After the security clearance about the foreign country is made, the account holder should provide the bank with digital numbers or codes. These numbers are codes that vary according to the country in which the funds are being transferred to.
|Bank Code and Transit||CAD|
|Sort Code (6-digit)||GBP|
Tax implication on Bringing money from India
According to the Indian regulations, the taxes and service fees on these transactions are fixed. Although they can be changed from time to time. Although NRE funds are freely repatriable. Currently, the tax slabs are as follows:
|AMOUNT OF CURRENCY EXCHANGE (ACE)||TAX RATE|
|Up to INR 100,000||0.12% of ACE(Minimum INR30/-)|
|INR 100,000- 1,000,000||INR 120+ 0.06% of ACE|
|Above INR 1,000,000||INR 660+ 0.012% of ACE(Maximum INR 6000)|
Apart from this, the bank will ask the account holder to give details like phone number, email id, residential address and to affix a signature on a declaration stating that the sending bank will not be responsible for any charges or taxes that the beneficiary bank might imply during the transaction.
Are there any tax implications on Bringing money from India to USA?
The United States Government does not levy taxes for transferring money from India to the USA but an NRI should avoid double taxes on the money transacted. This can be done by declaring the source of income in the USA by consulting their Certified Public Accountant or CPA.
This step can help NRIs in avoiding tax implications over there. Also, for an NRI there is a regulation known as DTAA (Double Taxation Avoidance Treaty) though they don’t need to pay double taxes in the foreign country. The DTAA is signed by both the countries and allows the NRI to not pay taxes to both the countries on the same source of income. But if there are different sources like from taxes on investment are different in both the countries. then the remaining amount needs to be paid in the foreign country.
The DTAA has been signed between India and other 85 and above foreign countries including USA, UK, UAE and Saudi Arabia. So, an NRI can impose these schemes to avoid paying taxes.
There are several tax related aspects regarding the repatriation funds from India to USA which are based on different accounts. These are:
1. NRE: This account is opened for the income earned from abroad and has a tax free interest rate up to 7.60%. This is applicable on fixed deposits which are freely repatriable from India.
2. NRO: This type of account is the only one in which taxes are levied. In India, 30% tax and surcharge are deducted from the source of interest. The repatriation can be done only up to USD 1 Million per financial year
3. FCNR: The deposits in this type of account are freely repatriable in India. The principal amount and interest rate are tax-free.
4 steps for Bringing money from India to USA from an NRE Account
The deposits in this type of account are repatriable without any upper limit because there are no tax liabilities. Therefore, most NRIs prefer to keep an NRE Account.
Step 1: Submission of the documents that are required to repatriate to the bank. They are:
- NRI Passport
- PAN Card
- Visa/PIO/OCI Card
- Latest Bank Statement
- NRE Letter from NRIs bank proving that the person is the account holder of an NRE account with that bank
Step 2: These documents should be taken to the applicant’s bank and complete the KYC documentation requirement in person. The bank will provide an A2 Form that is used to fill transaction details like amount of remittance, beneficiary etc. by the applicant.
Step 3: The banks should be given the service fees.
Step 4: As soon as the bank verifies the documents, the transfer will take place according to the present exchange rates directed by the Government.
3 steps for Bringing money from India to USA from an NRO Account
This type of account holds any NRI income and is a non-repatriable account in nature. In this, the source of income is mainly rent, salary, dividend, pension, sale of immovable estate. But after 7th May, 2012 the RBI converted this account into repatriable although returns from investments in mutual funds or equity shares are still non-repatriable from this type of account. This was done on the condition that tax will be levied in these transfers and will be possible only after tax is deducted.
The following is the process through which the funds can be repatriated from an NRo Account:
Step 1: There are several documents that need to be submitted to the bank. They are:
- NRI’s Application of foreign bank account
- PAN CARD
- Visa/PIO/OCI Card
- 15 CA/CB certificate to prove that all the taxes are paid. This is made by the Chartered Accountant. In this, 15 CA form is available online on the Tax Information Network website for which the applicant must sign in first and then submit it. It contains information about the applicant, amount of remittance, account overseas and beneficiary.
- A2 Form
- Other documents which prove the source of those funds which are being repatriated.
Step 2: After these documents are submitted to the bank, the applicant will receive an acknowledgement slip.
Step 3: NRI should affix their signature on this slip and submit it to the bank along with the documents and transaction will be initiated.
2 steps for Bringing money from India to USA from an FCNR Account
Just like NRE Account, this type of account is also tax free and permits unlimited repatriation at any time. Most NRIs go with either FCNR even more than NRE Account because they carry foreign currency earnings and therefore, no conversion is made. Furthermore, there are no exchange rate fluctuations. The step-by-step procedure to repatriate under this account are:
Step 1: Prepare and submit the following documents:
- NRI’s Passport
- PAN Card
- Visa/PIO/OCI Card
- Latest bank statement
- Letter of proof for the applicant’s FCNR account
- A2 form
Step 2: After these documents are verified, the request of repatriation will be processed. This process is similar to that of repatriation under NRE Account.
What are other ways of beinging money from India to USA?
Money can be sent overseas through different types. The above-mentioned transactions are counted under offline mode via banks. Other healthy ways to transfer money especially in pandemics to the USA from India are:
1. Online Money Transfer Providers
Under this, the service providers are dedicated and well informed about foreign exchange. They provide a simple process and serve just like any other bank. This medium is available to transfer money from online or offline modes.
2. Demand Draft
Foreign Currency Demand Drafts is yet another simple process to repatriate money. For this action, one needs to prepare a demand draft with the bank in India with all the necessary details. Then that draft will be sent to the person in the USA or in whose name the demand draft is made. After the transfer, the same amount of money will be debited from your account and added to the beneficiary’s account. Although it should be noted that, this method might be simple but not efficient. This process takes time in transaction because the draft needs to be sent abroad which takes a lot of time. Also, the beneficiary then has to carry certain actions in order to receive the money.
3. Swift Transfer and Wire Transfer
Banks usually offer ‘Swift Transfer’ which is Society for Worldwide Interbank Financial Telecommunication. This service sends the money directly to the beneficiary’s bank account. For this, a form should be filled which is also available via online or offline mode. Every bank is provided a Swift Code that is connected under the same network. For online mode, one needs to access the foreign wire transfer feature.
How much money can an NRI bring to USA from India?
Under NRE and FCNR type of bank account, there is no upper limit but an NRI can remit up to USD 1 million online via NRO bank account.
Why is it imperative to have an NRE/NRO account for an NRI?
An NRI needs to have an NRE or NRO bank account for transacting money. These accounts allow the person to save earnings from overseas and income generated in India respectively. These accounts will also be beneficial to exempt from taxes or to not give double taxes.
Can an NRI repatriate funds from the sale of property (Immovable) in India?
- An NRI can sell residential or commercial property in India. In this case, the buyer can either be an Indian resident or another NRI. Although some properties like agricultural or plantation property or even farmhouses can only be sold to an Indian resident.
- If the NRI holds an NRE account, then the repatriation can be spent mainly to purchase the property.
- If the NRI bought the property from an NRO account, then the repatriation is limited to USD 1 million.
- If the property is inherited or gifted, then also the repatriation is limited to USD 1 million and these profits or capital gains are taxable. Hence, the amount of repatriation will be made after tax is deducted.
What are NRI Repatriable and Non- Repatriable Funds?
- The amount held by NRIs in their bank accounts comes under NRI repatriable funds or non-repatriable funds. Both of these funds are distinguished based on the sources that they come from/.
- NRI repatriable funds can be transferred from India to a foreign country by NRI. These funds are kept under NRI and FCNR Accounts.
- Non-repatriable funds cannot be taken out of India and are kept under NRO bank account. In this, these funds are earned from India through dividends, rents or pensions.