FEMA India Rules for NRI
Bank Accounts, Investments, Property, and Repatriation

The Foreign Exchange Management Act, 1999 (FEMA) governs all foreign exchange transactions in India, and for Non-Resident Indians (NRIs) — Indian citizens or Persons of Indian Origin (PIOs) living and working abroad — FEMA creates a specific framework of rights, permissions, and restrictions for maintaining bank accounts in India, investing in Indian assets (shares, property, mutual funds), remitting money to and from India, and managing the transition back to Indian residence when they return. Understanding FEMA’s NRI rules is essential because violations — such as holding the wrong type of bank account, making restricted investments from the wrong account, or failing to convert accounts on change of residential status — are FEMA contraventions that require compounding with the RBI at rbi.org.in.

The FEMA NRI framework rests on a fundamental distinction: what is the source of the funds being used for investment in India? Foreign income (salary earned abroad, business income from outside India, foreign savings) can be brought into India through NRE or FCNR(B) accounts and invested on a “repatriable” basis — meaning the investment proceeds can be freely sent back abroad when the investment is sold or matures. Indian income (rent from Indian property, dividends from Indian shares, pension from an Indian employer, interest on Indian bank accounts) must go through the NRO account and can only be repatriated up to USD 1 million per financial year after paying applicable taxes in India. This source-based distinction between NRE (foreign source, freely repatriable) and NRO (Indian source, restricted repatriation) runs through every FEMA NRI compliance decision: which account to use, which investments to make through which account, how to structure property sales, and how to remit money back to the country of residence. N D Savla & Associates, Chartered Accountants based in Mumbai, advises NRI clients on the full spectrum of FEMA compliance: account structuring, investment route selection, property transaction FEMA compliance, repatriation advisory, Form 15CA/15CB certification, and FEMA compliance on return to India.

This page covers the complete FEMA framework applicable to NRIs: the NRI definition under FEMA, the three types of NRI bank accounts (NRE, NRO, FCNR-B) and their comparison, NRI investment rules for shares, property, and mutual funds, the repatriation limits and the USD 1 million NRO repatriation process, Form 15CA and Form 15CB (the documentation required for most NRI remittances), the FEMA rules when an NRI returns to India permanently, and the most common FEMA compliance issues that NRIs face. For NRIs investing in Indian companies as business investors (not just portfolio investors), the FDI-related filings — Form FC-GPR, FC-TRS, and FLA return — are covered in our FDI Filing with RBI guide and FLA Return Filing guide.

FEMA uses the concept of “person resident outside India” rather than the term NRI specifically, though the RBI notifications use NRI in a more specific sense. Under FEMA:

Person Resident Outside India (PROI) — FEMA Section 2(w)

• A person who has gone out of India or stays outside India for or on taking up employment outside India
• A person who has gone outside India for carrying on outside India a business or vocation outside India
• A person who has gone outside India or stays outside India for any other purpose indicating intention to stay outside India for an uncertain period
• A person who was not resident in India during the immediately preceding financial year is also considered resident outside India

NRI vs PIO vs OCI — The Three Categories

• NRI (Non-Resident Indian): A citizen of India who is resident outside India. Holds an Indian passport. Has the most comprehensive set of FEMA permissions
• PIO (Person of Indian Origin): A foreign citizen (not Indian passport holder) who is/was of Indian origin — held an Indian passport at some point, or whose parents/grandparents were Indian citizens. PIOs have largely the same FEMA permissions as NRIs for property and bank accounts
• OCI (Overseas Citizen of India): A foreign national who was an Indian citizen or whose parent/grandparent was Indian. OCI is the current primary status replacing PIO (PIO cards are no longer issued; existing PIOs have been encouraged to convert to OCI). OCI holders have similar FEMA rights as NRIs for most purposes except agricultural land

When Does NRI Status Begin and End Under FEMA?

FEMA residential status is determined separately from Income Tax residential status (though the two are often aligned). Under FEMA: a person who has gone out of India with the intention of staying outside India for an uncertain period becomes a “person resident outside India” immediately upon departure. When they return to India with the intention of permanent residence, they become “person resident in India” from the date of return. The intention test is what matters — a person going on a business trip abroad is not PROI; a person taking up a 2-year employment contract abroad IS PROI. The practical complication: intentions can change, and FEMA requires converting accounts/assets based on the change in residential status.

The bank account structure is the foundation of all NRI financial planning in India. Every NRI who has any financial connection to India — family, property, investment — needs to understand which accounts to use and for what purpose. The three FEMA-permitted NRI accounts in India:

NRE Account (Non-Resident External) — The “Foreign Income” Account

The NRE account is the workhorse of NRI financial planning. All foreign income — salary, business income, savings accumulated abroad — can be brought to India through the NRE account. Key rules:

• Only foreign-source income can be credited. Indian income (rent, dividends, pension received in India) CANNOT go into the NRE account — that goes into the NRO account
• Interest earned on NRE accounts is exempt from Indian income tax as long as the account holder is an NRI under FEMA
• The NRE account is freely repatriable: both the principal and accumulated interest can be sent abroad at any time without limit or tax
• Investments made FROM the NRE account are on a repatriable basis: the sale proceeds of property, shares, or other investments purchased with NRE funds can be freely sent back abroad
• NRE savings accounts earn interest at rates notified by the RBI from time to time
• NRE Fixed Deposits typically earn higher interest than NRE savings; the interest rate must not exceed the interest rate on comparable domestic term deposits

NRO Account (Non-Resident Ordinary) — The “Indian Income” Account

The NRO account is for the NRI’s Indian income. Every NRI who owns property in India, holds Indian shares that pay dividends, has a pension from an Indian employer, or receives any other Indian-source income must have an NRO account. Key rules:

• Indian income credited to NRO: rent from Indian property, dividends from Indian shares, interest from Indian deposits, pension from India, proceeds from sale of assets acquired as a resident before becoming NRI
• Foreign income can also be credited to NRO (NRE account can receive foreign income too, but the NRI may choose NRO for convenience in paying Indian bills)
• Interest on NRO account is taxable in India (subject to TDS at 30% or applicable DTAA rate — NRI can claim benefit of DTAA by providing Tax Residency Certificate from their country of residence)
• Repatriation from NRO is subject to: USD 1 million per financial year (aggregate of all NRO accounts) — only after paying applicable taxes and submission of Form 15CA/15CB
• NRO accounts can be held jointly with a resident Indian close relative (on former or survivor basis)

FCNR(B) Account — The “No Currency Risk” Foreign Currency Deposit

The FCNR(B) (Foreign Currency Non-Resident Bank) account solves the currency risk problem of NRE accounts. While NRE accounts are in INR (so the NRI faces exchange rate risk when converting back to foreign currency), the FCNR(B) deposit is maintained in the original foreign currency:

• Available in: USD, EUR, GBP, AUD, CAD, JPY, SGD, CHF, HKD (and other RBI-permitted currencies)
• Fixed deposits only: FCNR(B) is only available as a term deposit (not savings or current account)
• Minimum 1 year, maximum 5 years
• Fully repatriable: principal and interest can be freely sent abroad in the original foreign currency
• Interest exempt from Indian income tax
• Premature withdrawal: allowed with certain penalties prescribed by the bank
• On becoming resident: FCNR(B) deposits can be converted to RFC (Resident Foreign Currency) accounts or held till maturity before conversion

Investment in Listed Shares — Portfolio Investment Scheme (PIS)

NRIs can invest in shares of Indian companies listed on BSE and NSE through the Portfolio Investment Scheme (PIS) route. Key rules:

• PIS requires a designated PIS bank account (either NRE-PIS for repatriable investments or NRO-PIS for non-repatriable investments) and a PIS permission from the designated bank
• Investments from NRE-PIS account are on repatriable basis: sale proceeds can be freely repatriated abroad
• Investments from NRO-PIS account are on non-repatriable basis: sale proceeds credited to NRO account (subject to USD 1 million repatriation limit)
• Individual NRI limit: 5% of the paid-up capital of any listed company
• Aggregate NRI limit: 10% of paid-up capital (extendable to 24% by a special shareholders’ resolution of the Indian company)
• Derivatives (futures and options on NSE/BSE) are NOT permitted for NRIs under the standard PIS route
• Capital gains tax: NRI is subject to Indian capital gains tax on share sale profits (STCG at 15% for listed equity held less than 12 months; LTCG at 10% above Rs. 1 lakh for listed equity held more than 12 months) — subject to applicable DTAA

Investment in Unlisted Companies — FDI Route

When an NRI invests in shares of an unlisted Indian company, the investment is treated as FDI (under the FEMA NDI Rules). For NRI investment in unlisted companies:

• On repatriable basis (from NRE/FCNR funds): treated as FDI — requires Form FC-GPR filing by the Indian company on the FIRMS portal at
• firms.rbi.org.in. See our complete FDI Filing guide
• On non-repatriable basis (from NRO funds): treated as domestic investment — no FC-GPR required, but company must update Register of Members and file PAS-3 with MCA
• NRI investment in unlisted companies is subject to the FDI sectoral caps and conditions applicable to the sector

Investment in Mutual Funds

• NRIs can invest in most Indian mutual fund schemes directly
• On repatriable basis: from NRE/FCNR account. Redemption proceeds go back to NRE account (freely repatriable abroad)
• On non-repatriable basis: from NRO account. Redemption proceeds to NRO account (subject to repatriation limit)
• US-based and Canada-based NRIs: Many Indian AMCs do not accept investments from US/Canada residents due to FATCA (Foreign Account Tax Compliance Act) compliance requirements. Check with the specific AMC before investing
• TDS on redemptions: Mutual fund redemptions by NRIs attract TDS at applicable rates (STCG or LTCG rates depending on holding period and fund type)

Investment in Government Securities and Bonds

• NRIs can invest in Government of India dated securities, Treasury Bills, and State Development Loans
• Investment can be through NRE (repatriable) or NRO (non-repatriable) accounts
• RBI Bonds, Sovereign Gold Bonds, and certain other government instruments are available to NRIs
• Interest income is subject to Indian TDS (at applicable DTAA rate if a Tax Residency Certificate is provided)

What Property Can NRIs Purchase in India?

NRIs can freely acquire the following immovable property in India without any prior RBI approval:

• Residential property: any number of residential properties (houses, apartments, villas) — no limit on the number
• Commercial property: offices, shops, warehouses — no limit on the number
• Agricultural land, plantation property, farmhouses: NRIs CANNOT PURCHASE these. They can inherit or receive as a gift from a resident relative. This is a key restriction that many NRIs inadvertently violate

Property Purchase by NRIs — Source of Funds Rules

• Payment from NRE/FCNR accounts: investment is on repatriable basis. Sale proceeds can be fully repatriated (up to the amount of original foreign currency investment)
• Payment from NRO account: investment is on non-repatriable basis. Sale proceeds credited to NRO account and subject to the USD 1 million repatriation limit per year
• Home loan for NRIs: NRIs can take home loans from Indian banks and HFCs. Repayment can be from NRE/NRO accounts or inward remittances. Principal + interest repayment from NRE account: proceeds of sale can be repatriated to the extent of loan repaid from NRE funds
• Registering property: all property must be registered as per the Indian Registration Act. The NRI’s PAN is required. Stamp duty and registration charges are applicable as per the relevant state’s laws

Property Sale by NRIs — Repatriation of Sale Proceeds

• For property purchased from NRE/FCNR funds (repatriable basis): sale proceeds can be freely repatriated, limited to the original investment amount in foreign currency. Appreciation (capital gain) can also be repatriated after payment of applicable Indian capital gains tax
• For property purchased from NRO funds (non-repatriable basis): proceeds go to NRO account. Subject to USD 1 million per year repatriation limit after taxes
• For property inherited by NRI: proceeds can be repatriated up to USD 1 million per financial year
• Capital gains tax on property sale: NRIs are subject to Indian capital gains tax (LTCG at 20% with indexation for property held more than 2 years; STCG at slab rate for property held less than 2 years)
• TDS on property purchase from NRI: the buyer of property from an NRI must deduct TDS at 20% (or applicable DTAA rate) on the sale consideration before making payment to the NRI — this is Form 26QB/TDS compliance under Section 195 of the Income Tax Act

Repatriation from NRE and FCNR(B) Accounts — Freely Permitted

Funds held in NRE accounts and FCNR(B) accounts are fully and freely repatriable. An NRI can transfer any amount from their NRE or FCNR(B) account to their foreign bank account at any time without any limit or prior permission from the RBI. No Form 15CA/15CB is required for repatriation from NRE accounts.

Repatriation from NRO Accounts — USD 1 Million Per Year Limit

Repatriation from NRO accounts is subject to a limit of USD 1 million per financial year (April to March), net of applicable Indian taxes. This limit covers:

• Current income: rent, dividends, interest, pension credited to NRO
• Sale proceeds of assets: property sold, shares sold, mutual funds redeemed (from NRO-linked investments)
• Inheritance or gift received from a resident and credited to NRO

The NRO repatriation process:

• Step 1: Pay applicable Indian tax on the income/gains being repatriated (TDS or self-assessment tax, as applicable)
• Step 2: Obtain a Chartered Accountant’s certificate in Form 15CB (certifying the nature of payment, applicable DTAA provisions, and tax computation) — required for most NRO remittances above the threshold
• Step 3: File Form 15CA online on the income tax portal at
• incometax.gov.in (self-declaration of the remittance and tax details)
• Step 4: Submit Form 15CA reference number and Form 15CB certificate to the bank handling the remittance
• Step 5: Bank processes the overseas remittance from the NRO account to the foreign bank account

Form 15CA and Form 15CB — When Are They Required?

Form 15CA is an online self-declaration filed by the remitter (the person sending money abroad from India) on the income tax portal. Form 15CB is a CA certificate accompanying Form 15CA. Together they ensure that the applicable Indian taxes on the remittance have been paid before funds leave India.

• Form 15CB required: for any remittance from an NRO account that is chargeable to tax in India, above Rs. 5 lakh per transaction (as per current rules). Covers: rent proceeds, property sale proceeds, dividend remittances, NRO account balance transfers abroad
• Form 15CA not required (exempted): certain specified nature of payments listed in Rule 37BB are exempt from 15CA/15CB requirements (e.g., remittances for imports covered by RBI general permission, family maintenance, certain categories)
• From NRE account: Form 15CA/15CB is NOT required for standard NRE repatriation (since NRE funds are already of foreign-source/post-tax character)
• N D Savla & Associates issues Form 15CB certificates for NRI clients, covering the tax computation, DTAA analysis, and nature of payment certification required by the authorised dealer bank before processing the remittance

RNOR Status — Resident but Not Ordinarily Resident

When an NRI returns to India permanently, they do not immediately become a full Indian resident for Income Tax purposes. The Income Tax Act provides a transitional status: RNOR (Resident but Not Ordinarily Resident). An individual is RNOR if: (i) they were a non-resident in 9 of the preceding 10 years; OR (ii) they have been in India for 729 days or less in the preceding 7 years. For RNOR: foreign income is NOT taxable in India (only Indian-source income is taxed) — a significant benefit for returning NRIs with continuing foreign income during the transition period. RNOR status lasts for 2–3 years for most returning NRIs.

Account Conversion on Return — RFC and Resident Accounts

When an NRI becomes resident in India (under FEMA), the bank accounts must be re-designated:

• NRE accounts: must be converted to a Resident Rupee account (savings/current) OR to an RFC (Resident Foreign Currency) account. The conversion must happen as soon as the residential status changes under FEMA (typically within a reasonable time of return)
• NRO accounts: can continue as resident accounts (converted from NRO to regular savings/current). There is no longer any distinction between repatriable and non-repatriable basis once the person is a resident
• FCNR(B) deposits: can be held till maturity OR converted to RFC accounts at any time before maturity
• RFC (Resident Foreign Currency) Account: a special account available to returning NRIs to hold foreign currency without converting to INR. Available in major foreign currencies. Funds in RFC accounts can be used for any purpose freely

Foreign Assets on Return — What a Returning NRI Can Keep

When an NRI becomes a resident, what happens to their foreign assets (bank accounts abroad, foreign investments, foreign property)?

• FEMA general permission: residents are permitted to hold foreign currency accounts, immovable property, and investments outside India that were acquired when they were non-residents — these can be retained even after becoming resident
• Income from foreign assets: once the returning NRI becomes an ordinary resident (after RNOR period), income from foreign assets is taxable in India
• Foreign assets disclosure: if the total value of foreign assets exceeds Rs. 5 lakh, they must be disclosed in the Indian Income Tax return under the Foreign Asset Schedule
• RFC Account for foreign income: even after return, if the former NRI continues to receive foreign income (pension from a foreign employer, interest from a foreign bank account), they can credit it to their RFC account in India without converting to INR

• Continuing to hold NRE/NRO accounts after returning to India without converting: once FEMA residential status changes to Resident, NRE/NRO accounts must be converted. Many returning NRIs do not convert immediately, which is a FEMA violation
• Depositing Indian income into NRE account: the NRE account is strictly for foreign-source income. Crediting rent received from Indian property, interest from Indian FDs, or Indian dividends to the NRE account is a FEMA violation. These must go to the NRO account
• Purchasing agricultural land: NRIs cannot purchase agricultural land, plantation property, or farmhouses in India. They can inherit these. Any purchase of agricultural land by an NRI is a FEMA violation requiring compounding with the RBI
• Missing Form 15CA/15CB for NRO remittances: NRI clients who ask their bank to remit funds abroad from the NRO account without the required 15CA/15CB documentation often face rejection of the remittance. Banks are increasingly strict about documentation requirements
• Investing in Indian derivatives through unauthorised routes: NRIs are not permitted to invest in currency futures, interest rate derivatives, or most complex derivative products in Indian markets. Violations are FEMA contraventions
• Not filing Indian income tax returns despite Indian income: NRIs with Indian-source income above the basic exemption limit (Rs. 2.5 lakh currently) must file Indian Income Tax returns. NRO interest income, rental income, and capital gains are all taxable in India and require ITR filing at incometax.gov.in
• PIS (Portfolio Investment Scheme) account violations: buying or selling listed shares without a valid PIS designation from the bank, or exceeding the 5% individual NRI limit in any single company, are FEMA violations

From FERA to FEMA — NRI Liberalisation

Under the Foreign Exchange Regulation Act, 1973 (FERA), NRI investments and repatriation were subject to strict controls and prior RBI permissions for most transactions. The liberalisation era of the 1990s began relaxing these restrictions significantly. The Foreign Exchange Management Act, 1999 (FEMA) replaced FERA entirely from 1 June 2000, converting most prohibited foreign exchange transactions into permitted transactions subject to specified conditions, and transforming FEMA from a criminal enforcement law (under FERA) to a civil regulatory framework.

Key Milestones in NRI FEMA Liberalisation

• 1991–1992: NRI deposits (NRE/NRO/FCNR) liberalised to attract NRI remittances as India faced balance of payments crisis. Interest rates on NRI accounts made attractive
• 2000: FEMA replaces FERA. NRI property purchase in residential and commercial property (not agricultural land) made freely permitted without prior RBI approval
• 2004: Portfolio Investment Scheme (PIS) for NRI investment in listed shares streamlined
• 2019: FEMA Non-Debt Instruments Rules consolidate all FDI and NRI equity investment rules in a single notification, clarifying the framework for NRI investments on repatriable vs non-repatriable basis
• 2021–2024: Liberalisation of OCI holders’ investment rights to align with NRI rights for most purposes (except agricultural land)