Introduction

In 2026, the financial landscape for Non-Resident Indians (NRIs) looking to repatriate funds from India rests on two critical axes: compliance under the Foreign Exchange Management Act (FEMA) and tax clarity under Indian income tax laws. Repatriation—whether it is sale proceeds from property, income earned in India, or funds held in NRO/NRE accounts—triggers obligations under both FEMA and the Indian tax regime, making planning and documentation essential.

This article decodes FEMA guidelines, explains applicable limits under the Liberalised Remittance Scheme (LRS), and demystifies key documentation such as Form 15CA/CB, Chartered Accountant certificates, and select Income Tax Appellate Tribunal (ITAT) rulings that influence compliance practices. This article focuses on practical compliance, avoiding generic lists and instead offering a strategic roadmap.

1. Understanding FEMA and Its Relevance to NRIs

FEMA governs all foreign exchange transactions in India. For NRIs, two aspects matter most under FEMA:

a. Permissible Credits and Debits: These determine which transactions can legally cross India’s borders.

b. Repatriability: This specifies which funds earned or held in India can be transferred abroad and how.

FEMA’s core objective is to regulate foreign exchange flows to maintain macroeconomic stability while enabling legitimate capital movements. Repatriation—especially from sources like property sales or investments—must adhere to this regime to avoid enforcement issues.

2. Liberalised Remittance Scheme (LRS) and NRIs

The LRS is often misunderstood as applying only to resident individuals. However, for NRIs, the scope is narrower.

What LRS Means for NRIs in 2026

Under LRS, a resident individual can remit up to USD 250,000 per financial year for permitted current and capital account transactions. For NRIs, the scheme does not directly govern the repatriation of funds that are already under FEMA-compliant accounts, such as NRE or FCNR accounts.

a. Funds in NRE/FCNR Accounts: Freely repatriable without invoking LRS limits.

b. Funds in NRO Accounts: Repatriable up to USD 1 million per financial year, subject to documentation and tax compliance.

c. Sale Proceeds of Property: Repatriation permitted up to the original investment + applicable capital appreciation, with specific timelines and documentation.

In 2026, NRIs should clarify whether their transaction falls under:

a. Automatically repatriable (NRE/FCNR), or

b. Subject to repatriation rules and documentation (NRO / sale of assets).

The LRS cap of USD 250,000 mainly applies to residents and therefore does not restrict most NRI repatriation outside NRE/FCNR accounts.

3. Repatriation Pathways—What Funds Qualify?

NRIs generally wish to repatriate:

a. Savings or balances in NRE/FCNR accounts—permitted freely.

b. NRO account balances—subject to USD 1 million per financial year.

c. Sale proceeds from Indian property—repatriable within limit, subject to certificate and tax compliance.

d. Investment returns (shares, mutual funds, bonds)—follow separate FEMA and tax provisions.

The most compliance friction points arise with NRO accounts and the sale of immovable property because:

a. Funds are not inherently freely repatriable.

b. Tax may be owed before repatriation.

c. Documentary evidence of original investment and tax payments is required.

4. Tax Linkage: Why It Matters for FEMA Compliance

Tax compliance is a gatekeeper for FEMA repatriation. Authorities, especially RBI and Authorised Dealer banks (AD banks), require proof of tax clearance before allowing outward remittance.

Capital Gains Tax and Withholding

For example:

a. The sale of immovable property triggers capital gains tax.

b. TDS (Tax Deducted at Source) is typically required before remittance.

c. The NRI must file Indian income tax returns and settle any tax dues.

Banks will not process outward remittance unless they are convinced that:

a. All applicable taxes have been paid, and

b. No further tax liabilities exist on the repatriated amount.

This is where Form 15CA/CB and Chartered Accountant certificates play a pivotal role.

5. Form 15CA and 15CB—Architecture and Roles

Form 15CA

a. An online declaration by the remitter stating that applicable taxes on the payment out of India have been paid or are not applicable.

b. The form contains details of the remittance, withholding tax, and tax treaties if applicable.

Form 15CB

a. A Chartered Accountant’s certificate validating that:

1. The taxability of the remittance has been examined,
2. Withholding requirements have been met,
3. The amount declared in Form 15CA is accurate.

Without Form 15CB, most banks will not process the remittance (especially above threshold limits).

Why Both Are Necessary

a. 15CA signals a taxpayer’s compliance intention.

b. 15CB provides professional assurance to banks and authorities about the correctness of tax handling.

c. Together, they create a compliance chain linking FEMA, Tax Deducted at Source, and outward remittance.

6. CA Certificates: Bridging Tax and FEMA

A CA certificate (under Section 195 of the Income Tax Act) becomes necessary when:

a. The remittance is against payment to non-residents for technical services.

b. It involves capital account transactions.

c. Withholding taxes are hard to compute due to treaty benefits.

Even after 15CA/CB, some banks may request:

a. Proof of investment origin (for property sale),

b. Tax returns filed (ITR acknowledgement),

c. Evidence of TDS deposit,

d. PAN/Tax Residency Certificate of the NRI.

A CA’s role extends beyond stamps—they interpret tax treaty impacts, assess withholding applicability, and ensure no double taxation arises.

7. ITAT Rulings and Judicial Clarity

In the context of repatriation, a few important trends from tax tribunals in India shape practice:

Documentary Evidence Takes Priority

ITAT rulings emphasize that repatriation must be backed by clear documentary proof of:

a. Original investment amount,

b. Source of funds,

c. Tax paid on gains.

This protects the taxpayer where:

a. Funds in foreign currency were converted to INR,

b. Or were held from multiple sources.

Capital Gain Computation

Disputes often arise on:

a. Indexation benefit,

b. Long-term versus short-term categorization,

c. Applicability of Double Taxation Avoidance Agreement (DTAA).

ITAT decisions in recent years reiterate that correct tax computation must precede any repatriation compliance.

Tax Residency Certificate (TRC) Validity

TRCs issued by foreign tax authorities must align with Indian assessment years and tie back to actual residency status to invoke treaty benefits.

8. Step-by-Step Practical Repayment Approach (2026)

To comply with FEMA and tax obligations effectively, NRIs should follow this sequence:

a. Classify the Funds: NRE/FCNR vs NRO vs Sale Proceeds.

b. Compute Tax: Consult a CA for capital gains, TDS, and treaty benefits.

c. File Indian ITR: Settle all dues and obtain the ITR acknowledgement.

d. Prepare 15CA: Declare the remittance and tax status.

e. Get 15CB: CA certifies tax compliance and remittance correctness.

f. Submit to the Bank: Provide the bank with all documentation: ITR, TDS proof, and investment proof.

g. Bank Processes Under FEMA: RBI reporting happens via the bank’s remittance channel.

h. Remittance Executes

Conclusion

Repatriating funds as an NRI in 2026 involves a careful intersection of FEMA compliance, tax settlement, and documentation. While the LRS limit applies primarily to residents, NRIs navigate repatriation through specific FEMA provisions, especially when dealing with:

a. NRO accounts and capital gains,

b. Sale of immovable property,

c. Tax-deducted obligations.

Strategic planning—beginning with tax computation and ending with a properly backed 15CA/CB—not only ensures regulatory compliance but also avoids costly delays or disputes.

For NRIs, the mantra is not simply “pay tax and remit.” It is a process of documentation, certification, and presentation—converting compliance into a predictable, auditable flow that satisfies both FEMA and tax authorities.

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