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NRO-TO-NRE-TRANSFER-RBI-CIRCULAR

Feel free to call CA Naresh Shah on +91-22-64500000



We offer  Attestation services 15cb certificate, 15ca forms etc.for remittance to non-residents. Due to RBI circular 04/2009  for  15ca form for remittance, many banks insist on 15cb certificate. 
(also see these 2 related pages - NRO-TO-NRE & 15cb-15ca-documents-required )

NRO TO NRE
After recent May 2012 RBI circular (enclosed below this page) for transfer from nro to nre bank account for nri, upto 1 million USd can be transferred from NRO to NRE based on a CA certificate in form 15CB which is followed  by uploading  form 15CA on nsdl website, stating no tax is payable or tax if payable, it has been paid off.

  1. Initially, the source of funds into nro a/c. is mainly to be seen first as to its taxability. 
  2. Also, the residential status of the assessee is also to be seen. 
Below are few different types of sources of funds into nro a/c., just to give an idea to readers:-

If money is nro a/c. is sale proceeds of indian property - Lets say an nri has sold a flat in India, then the tax on capital gains needs to be calculated (after considering all  exemptions like re-investments etc. and calculating as per rules for investments out of foreign currency etc.) , and thereafter, after due taxes are paid off (if any), 15cb form can be issued for enabling banker to transfer from nro a/c. to nre a/c.

If money in nro a/c. is pension received from indian army - pension (besides galantary awardees or families of war deaths is taxable. hence, one must pay off taxes before nro to nre transfer can be made.

If money in nro a/c. is salary from foreign employer :- here , assuming nri is a non-resident, prima facie, no taxes would be payable. Hence, nro to nre transfer can be made based on nil tax ca certificate (15cb).

If money in nro a/c is due to an inheritance from abroad - This prima facie may require taxes to be paid assuming recepient is  a resident indian. After this, nro to nre transfer can be made.

If money in nro a/c. is a loan from relative or non-relative - this is has long descriptive content as below:-

Loan from NRI relative
This can be taken upto usd 250000. Latest RBI official letter/circular on this is dated 29.3.2012. 

What is relative as per foreign exchange laws? 

Below is List of Relatives for taking loan from nri by Indian resident (upto 250000 USD)

1. Father.

2. Mother (including step-mother)

3. Son (including step-son).

4. Son’s wife.

5. Daughter (including step-daughter).

6. Father’s father.

7. Father’s mother

8. Mother’s mother.

9. Mother’s father.

10. Son’s son.

11. Son’s Son’s wife.

12. Son’s daughter.

13. Son’s daughter’s husband.

14. Daughter’s husband.

15. Daughter’s son.

16. Daughter’s son’s wife.

17. Daughter’s daughter.

18. Daughter’s daughter’s husband.

19. Brother (including step-brother).

20. Brother’s wife.

21. Sister (including step-sister)

22. Sister’s husband

LOAN FROM NON-RELATIVE
relatives can give loan to indian resident but if non-relative gives loan, then it cannot be repatriated back outside India (i.e. it stays in India only). For this, fema (borrowing lending regulations 2000) are applicable. all loans from non-relatives have to adhere to below conditions as per FEMA (Borrowing lending in rupees regulations 2000) :-

1.      The loan has to be for term of less than 3 years  on non-repatriation basis

2.     Interest rate shall not be more than 2 percentage points over prevailing bank rate

 3.     Loan shall be received by inward remittance ferom outsie India or out of NRE / NRO or FCNR/ NRNR/NRSR a/c. of lender

 4.     If Loan is is madeout of funds held in NRSR a/c. of lender, interest and repayment shall be made by credit to that a/c. and in other cases, interest and repayment of loan shall be made to lender’s NRO or NRSR a/c.

5.     The amount borrowed shall not be allowed to repatriated outside India. 


(Disclaimer - Above is only a short general write up and is subject to changes based on full facts of each case)


click on below attachments for relevant circulars and general format which few banks may accept for request to transfer from nro to nre 

nro to nre

posted 23 Sep 2012, 22:51 by CA Kunjan Shah

repatriation from NRO is very widely used now thanks to the may 2012 rbi circular

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