How to repatriate the amount from NRO account to NRE account in compliance with Income tax Act, 1961 and Foreign exchange management Act, 1999?

1. Whether a resident relative (Father) can deposit money in his son’s Account?

Yes, a resident relative (father) can deposit money.

2. What would be tax implication in respect of question No.1 under Income tax Act, 1956?

As per the provision contained under Section 56 of Income tax Act, 1961 gift given by a resident relative (father) do not attract any tax in India and father would qualify as a close relative in terms of explanation 1st of Section 56 (2) (VII).

3. Whether a resident relative (father) can direct deposit the amount in NRE/ NRO account of his NRI Son?

Yes, in terms of RBI master Circular No, 14/2015-16 dated 1st January 2016 (as amended) a close relative (father) can direct deposit money in his son’s NRO account. On pursuant of para 6.7 of said circular, wherein it is prescribed that a resident can transfer money in the form gift to NRI relative.  However, in terms of para 4.4 of this circular a resident can’t deposit money in NRE account of his relative and only inward and outward remittances are permitted from NRE account.

4. Whether an NRI can repatriate money from his NRO account to his NRE account?

The corpus lying in NRO account normally is not repatriable. However, as per the RBI master circular No. 03/2010-11 dated 1st July 2010 (as amended) makes it possible to transfer an amount of USD 1 million per annum, from NRO account to NRE account subject to the conditions specified in Foreign Exchange Management (Remittance of Assets) Regulatiaons, 2016. Therefore, funds can be transferred to NRE account within the overall ceiling limit of USD 1 million in a financial year subject to the payment of applicable taxes.

5. Whether form 15CA/ 15CB are required in respect of transfer of USD 1 million to NRE account form NRO account?

Yes, as per the provisions contained under rules 37BB of Income tax Act, 1961, NRI needs to submit form 15CA and form 15CB to the bank branch.

6. Whether TDS is required to be deducted from funds transferred from NRO account to NRE account?

That the NRO account can be opened for the purpose of maintaining the income earned from India such as income from rent, pension or interest, however, TDS shall be deducted at the source of interest earned in India and other income shall also be taxable as per the Income tax Act, 1961. Therefore, the funds from NRO account is not freely repatriable.

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Disclaimer: The opinion is expressed by the consultant as per the interpretation of laws. However, the opinion may differ from consultant to consultant and not binding on anyone. Further, the consultant has no liability and responsibility in relation to the said opinion.

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Qualification: CA in Practice
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Location: Delhi, Delhi, India
Member Since: 31 Jan 2021 | Total Posts: 2
Mohd Khalid is a qualified chartered account and he has developed an illustrious practice only in litigation, advisory and consultancy under GST, Customs, FEMA, FTP, Central Excise and Service tax, Income tax, DGFT and IBC. You can reach him on +91-8586958613 Email:- [email protected] View Full Profile

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