CA Certificate Remittance of Funds Out of India
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CA Certificate Remittance of Funds – Out of India
CA CERTIFICATE SERVICES – OUT OF INDIA
Under the FEMA (Foreign Exchange Management Act), a Non-Resident Indian (NRI), is a citizen of India living abroad, or a foreign citizen of Indian origin. An Individual is considered as a Non-Resident Indian if he stays outside India for more than the prescribed period. However, even if a Non-Resident Indian is staying outside India he is permitted to open a bank account in India and in foreign country. The Non-Resident Indian or a Foreign citizen is permitted to bring in India any amount through the banking channels in the bank account. However, if he has to transfer funds out of India to his foreign country there are certain limits prescribed by the Reserve Bank of India.
Repatriation under FEMA (Foreign Exchange Management Act) refers to the transfer or remittance of funds from India to Foreign countries. There are two types of repatriation
Repatriation of Funds from Non-Resident Ordinary (NRO) A/c to an overseas bank account.
Repatriation of Funds from Non-Resident Ordinary (NRO) A/c to Non-Resident External (NRE) A/c
Repatriation refers to the transfer of Indian Rupees from your Non-Resident Ordinary (NRO) Rupee Checking Account or NRO Deposit either in foreign currency to your overseas account or FCNR Deposit, or in Indian Rupees to your Non-Resident External (NRE) Rupee Checking Account.
Sources of Funds in India
The Non-Resident Indian (NRI) or Person of Indian Origin (PIO) can have the following sources of funds in India:
1.) Money Transferred by NRI from foreign country to India
2.) Sale proceeds of Self Acquired Immovable Property of NRI In India
3.) Sale proceeds of Inherited Immovable Property by NRI In India
4.) Maturity from NRI Insurance Policies in India
5.) Surplus from NRI Investments in India such as Mutual Funds, Shares etc.
6.) Maturity from Provident Funds of NRI in India
7.) Gifts Received by NRI In India
8.) Rental Income, Dividend Income, Interest Income on NRO Fixed Deposits or NRI Investments in India
If an NRI wants to repatriate the sale proceeds of self-acquired or inherited immovable property OR repatriate maturity amount of an NRI Insurance Policy OR repatriate any gifted amount OR his income from NRI deposits in India OR any other fund accumulated in India to his country of residence like America, Canada, Norway, London, Singapore, Indonesia, Australia, etc. he needs to comply with the NRI Rules for repatriation. The complete documentation and compliance for NRI need to be arranged with professional experts to save time and not invite any Income tax and FEMA Regulatory issues.
Non-Resident External account- (NRE Bank Account) can be sourced or funded only by foreign income from abroad. Deposits or credits of any income or any other funds from India are not allowed. As the account is funded from abroad the funds available therein are freely repatriable i.e. you can transfer the money back to your country of residence without any prior approval or restriction. However, the necessary documentation and declaration of source of funds need to be provided. The amount available in an NRE Account can also be freely transferred to an NRO Account or an FCNR A/c or even in a resident savings account.
Non-Resident Ordinary Account – (NRO Bank Account) is a saving bank account in India which is to be used for depositing income earned locally e.g. dividend, sale proceed of investments, sale proceeds of immovable property, pension, dividend, rental income or any other financial assets. The prime condition before allowing remittance of funds abroad is that the applicable income taxes needs to be deposited before initiating a remittance. To certify that the applicable taxes have been calculated appropriately the Income Tax Department in India has made it mandatory that all remittance shall be certified by chartered accountant practicing in India in the prescribed format i.e. Form 15CB duly certified by chartered accountant. Let us understand more about this CA Certificate
CA Certificate Form 15 CB
The Income Tax Department in India has made it mandatory that all remittances of funds from India to Foreign Bank Account shall be verified by a Chartered Accountant who will determine and check the sources of funds in the bank account in India and ensure that the relevant taxes have been paid before the remittance is initiated for transfer of funds from Bank Account in India to a foreign country. This is a precondition of the transfer of funds for Indian Resident Individuals and companies and also for Non-Resident Indians and Foreign Citizens.
We at Sunil K. Khanna & Co. chartered accountants based in New Delhi, India, serve our non-resident clients by generating and filing Form 15CA and Form 15CB online and submit the same on behalf of the clients to the bank in India. We also advise our clients on the documentation required for the purpose of remittance of funds abroad. We ensure that all compliances of the bank and income tax department are adhered to by the NRI’s. We also assist the NRI’s to file appropriate income tax returns for money’s remitted aboard and claim income tax refunds in case excess withholding taxes which have been paid by the NRI’s to the banks, property buyers, etc. In case any tax is payable on the transactions or incomes earned in India we also assist to deposit the income taxes on behalf of non-resident clients.
DOCUMENTATION REQUIRED FOR REMITTANCE/ REPATRIATION OF FUNDS
A Non-Resident Indian can remit the funds from India to a foreign country by the following accounts:-
1.) Fund Transfer From NRE to Foreign Bank Account – Freely Repatriable
2.) Fund Transfer from NRO to NRE – Repatriable After Payment of Taxes in India, if any
3.) Fund Transfer from NRO to Foreign Bank Account – Repatriable After Payment of Taxes in India, if any
In case the NRI wants to repatriate the funds from NRE to Foreign Bank Account he can easily transfer the funds without any prior permission. He needs to contact the bank or he can transfer the funds online through net banking. No compliance is required from the Income Tax Department or under FEMA.
In case the NRI wants to transfer the funds from NRO to NRE, he needs to contact the bank and has to carry out the following documentation as prescribed by Income Tax Department and under FEMA.
DOCUMENTS REQUIRED FOR TRANSFER OF FUNDS FROM NRO TO NRE BANK ACCOUNT
Copy of Income Tax PAN Card in India – PAN Number is a Permanent Account Number issued for identification by the Income Tax Department in India. It is mandatory for opening a bank account in India, Invest in Mutual Funds, Shares, Immovable Properties, or Bank Fixed Deposits. It is even mandatory for every repatriation/transfer of funds from India to a foreign country.
Application Form for Repatriation: Format is Provided by the Bank
Declaration under FEMA in Form A2: Format is Provided by the Bank
Declaration under FEMA for Source of Funds: Format is Provided by the Bank
Tax Compliance Certificates in Form 15 CB: Chartered Accountant in India will provide
A Certificate from a Chartered Accountant (CA) certifies the source of Income and whether the applicable taxes have been paid by the Non-Resident. A Chartered Accountant in India will also help in calculating the appropriate tax payable on your remittance and will assist in generating tax challans under the appropriate section of Tax Laws and also assist in depositing the tax with Indian Treasurer, before issuing the CA Certificate in Form 15CB.
Tax Declaration in Form 15 CA: The Non-Resident Indian or Foreign Citizen is required to submit an undertaking to the Income Tax Department stating the source of funds and taxes paid by him. It is also to be linked with the CA Certificate in Form 15CB provided by the Chartered Accountant in India.
DOCUMENTS REQUIRED FOR TRANSFER OF FUNDS FROM NRO TO FOREIGN BANK ACCOUNT
Copy of Income Tax PAN Card in India – PAN Number is a Permanent Account Number issued for identification by the Income Tax Department in India. It is mandatory for opening a bank account in India, Invest in Mutual Funds, Shares, Immovable Properties, or Bank Fixed Deposits. It is even mandatory for every repatriation/transfer of funds from India to a foreign country.
Application Form for Repatriation: Format is Provided by the Bank
Declaration under FEMA in Form A2: Format is Provided by the Bank
Declaration under FEMA for Source of Funds: Format is Provided by the Bank
Tax Compliance Certificates in Form 15 CB: Chartered Accountant in India will provide.
A Certificate from a Chartered Accountant (CA) certifies the source of Income and whether the applicable taxes have been paid by the Non-Resident. A Chartered Accountant in India will also help in calculating the appropriate tax payable on your remittance and will assist in generating tax challans under the appropriate section of Tax Laws and also assist in depositing the tax with Indian Treasurer, before issuing the CA Certificate in Form 15CB.
Tax Declaration in Form 15 CA: The Non-Resident Indian or Foreign Citizen is required to submit an undertaking to the Income Tax Department stating the source of funds and taxes paid by him. It is also to be linked with the CA Certificate in Form 15CB provided by the Chartered Accountant in India.
LIMITS FOR REPATRIATION OF FUNDS BY NRI / FOREIGN CITIZEN
Over the years, the Indian Government through the Reserve Bank of India has substantially liberalized remittances of income and assets.
Repatriation of funds from NRO Accounts is currently limited to US$ 1 MM (or equivalent) per financial year in India (April 1 – March 31) per Account Holder on the Account, subject to documentation requirements. This limit will apply to all NRO Accounts in India and is an aggregate amount across all categories of repatriation and excludes current income. Also the remittances from India to foreign bank accounts can only be done by one bank and not multiple banks. So ideally, if a non-resident has multiple bank accounts in India he should combine the funds from all bank accounts to one bank account and then remit the funds overseas.
| What can be repatriated (B) | Limit for repatriation (C) | Time Limit for Repatriation |
|---|---|---|
| Current Income: Income in the nature of Salary, Pension, Dividend, Interest, Rent, Investment and Business Income | Without limit | Current Income can be Repatriated in Same year or in the next years cumulatively |
| Repatriation of Sale Proceeds of Assets (other than Immovable Property): Balance held in NRO a/c, Sale proceeds of Assets/ Assets in India acquired by way of Inheritance/Legacy or under deed of settlement by parents or specified relatives except for borrowings from others | US$ 1 million per Financial Year | 1 April – 31 March |
| Repatriation of Sale Proceeds of Immovable Property (other than agricultural land/farm house/plantation property)(Also refer Note 5):
A) Property acquired in Forex: 1. Amount paid in foreign inward remittance /out of funds held in Foreign Currency Non-Resident Account (FCNR a/c) or NRE a/c for acquisition of immovable property 2. Residential accommodation purchased out of funds raised by way of loan in accordance with Foreign Exchange Management Act, 1999 and repayment of such loan out of foreign inward remittance/funds held in NRE a/c or FCNR a/c 3. If sale proceeds are more than (1) or (2) above. B) Property acquired otherwise than in Forex: |
Equivalent to Forex investment Equivalent to repayment of loan in Forex Excess amount upto US$ 1 million per Financial Year US$ 1 million per Financial Year |
Can be repatriated in the Current Year or Next Years
Can be repatriated in the Current Year or Next Years 1 April – 31 March 1 April – 31 March |
| NRI Gifts from Residents in India
An NRI is permitted to receive gifts from residents in India in his NRO Bank Account. As per the Income Tax Act, the non resident can take gifts from his/her relatives as per the prescribed guidelines. Gifts received from Non Relatives shall be taxable under the Income Tax Act. Further the RBI has prescribed limits for receipt of gifts in NRO A/c to US$250,000 in a financial year. |
US$ 250,000 per Financial Year | 1 April – 31 March |
The limits prescribed are for each financial year and each financial year is considered separately. In case a non resident has not fully occupied the limit for remittance to foreign country he will not be able to utilise the balance limit in the next years.
REMITTANCE BY FOREIGN NATIONALS (OTHER THAN PIO OR CITIZEN OF NEPAL/BHUTAN)
Remittance of assets may be allowed by a foreign national where:
1.) He/she has retired from employment in India, or
2.) He/she has inherited from a person resident outside India who was resident in India at time of acquiring such asset or had inherited it from a person who was resident in India.
3.) He/she is a non-resident widow/widower and has inherited assets from her/his deceased spouse who was an Indian national resident in India.
4.) The remittance should not exceed USD 1 million per financial year. This limit, however, will not cover sale proceeds of assets held on repatriation basis.
5.) The remittance is in respect of balances held in a bank account by a foreign student who has completed his/ her studies, provided such balance represents proceeds of remittances received from abroad through normal banking channels or rupee proceeds of foreign exchange brought by such person and sold to an AD Bank or out of stipend/ scholarship received from the Government or any organization in India.
SPECIAL APPROVAL FROM RBI FOR REMITTANCE BEYOND PRESCRIBED LIMITS
The RBI – Reserve Bank of India also grants specific permissions from case to case basis for repatriation of funds beyond prescribed limits. This permission is specifically granted in cases where hardship will be caused to a person if remittance from India is not made to overseas bank accounts. Therefore, for genuine causes such as education, medical care, home purchase, relocation of residents, and dependents to a foreign country or any other similar transactions the RBI grants the permissions.
We at Sunil K. Khanna & Co. chartered accountants based in New Delhi, India, serve our non-resident clients by applying for specific permissions from Reserve Bank of India to remit funds exceeding the limits prescribed under the FEMA Act. We assist the client in preparation and filing of the application for seeking specific permission and also in representation before the Reserve Bank of India. The application is processed by the RBI in 30-45 Days and based on the permission received we proceed with the repatriation of funds. We assist in filing Form 15CA and Form 15CB online and submit the same on behalf of the clients to the bank in India. We ensure that all compliances of the bank and income tax department are adhered to by the NRI’s. We also assist the NRI’s to file appropriate income tax returns for money’s remitted aboard and claim income tax refunds in case excess withholding taxes which have been paid by the NRI’s to the banks, property buyers, etc. In case any tax is payable on the transactions or incomes earned in India we also assist to deposit the income taxes on behalf of non-resident clients.
The Non-Resident can seek special permission from Reserve Bank of India for the following purposes:-
1.) Remittance of Funds for Medical Care
2.) Remittance of Funds for Education
3.) Remittance of Funds on Sale of Immovable Property beyond Limits
4.) Remittance of Funds on Relocation to Foreign Country
5.) Remittance of Funds on Relocation of Dependent Parents to Foreign Country
6.) Remittance of Funds on Winding up of Business in India
We at Sunil K. Khanna & Co. chartered accountants based in India, apply for specific permissions from Reserve Bank of India to remit funds exceeding the limits prescribed under the FEMA Act. We ensure the client complies with the prescribed guidelines under the FEMA and Income Tax Act. We assist in the preparation and filing of the application and also in representation before the Reserve Bank of India. Based on the permission received we proceed with the repatriation of funds.
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We are highly appreciative of all the work done by Mr. Sumeet Khanna and his team for repatriation of money from India to US. Their strong work ethics and connections helped us navigate the bank bureaucracy smoothly. Excellent follow up and quick to respond to queries. We look forward to the next stage of tax filing through this company. I whole-heartedly recommend Mr. Sumeet Khanna!
Sumeet was recommended to us by a friend when we purchased property in New Delhi and needed a local professional to handle our accounting needs. His professional expertise has been invaluable in dealing with the Indian tax laws.