Most NRI remittance confusion traces back to one thing: which account the money is sitting in. NRE and NRO look similar and behave completely differently when you try to send money out of India, and the difference is decided when the money goes in, not when you want it out.
NRE — foreign earnings, freely repatriable
- Funded from income earned outside India.
- Held in rupees, but both principal and interest are freely repatriable — you can send it back out without limit or special permission.
- Interest is exempt from tax in India.
- This is where money you may want to move out again belongs.
NRO — Indian income, restricted
- Funded from income arising in India — rent, dividends, a pension, proceeds of a sale.
- Interest is taxable in India, and TDS applies.
- Repatriation is capped at USD 1 million per financial year, and requires documentation.
- This is where money that arose in India has to sit, whether or not that is convenient.
The USD 1 million route
An NRI may remit up to USD 1 million per financial year from an NRO account, covering the sale of assets, inherited money and accumulated Indian income. It needs Form 15CA and, where the payment is taxable and above the threshold, a Form 15CB certificate from a chartered accountant confirming the tax position.
The certificate is the step that takes the time. Arrange it before you approach the bank, not after — a CA needs the underlying documents, and assembling those is what turns a week into a month.
The mistake that causes the most trouble
Depositing Indian rental income or sale proceeds into an NRE account because it is the account with the better tax treatment. That money did not arise abroad, so it does not belong there, and putting it there creates a problem that has to be unwound before anything can be repatriated. Indian income goes to the NRO account, and is repatriated through the USD 1 million route.
Practical points
- 1Keep NRE and NRO strictly separate at the point of deposit. Sorting it later is far harder.
- 2For a property sale, keep the sale deed, the proof of original purchase and the tax computation together — the CA will need all three.
- 3The USD 1 million limit is per financial year, so a large repatriation can be split across two years where timing allows.
- 4Check the DTAA between India and your country of residence. It often reduces the tax withheld, but only if it is claimed.
