As India continues to attract foreign investment due to its growing economy and improving ease of doing business, a major concern for foreign investors, multinational corporations (MNCs), and Non-Resident Indians (NRIs) remains the repatriation of profits and funds. Repatriation refers to the process of transferring money (such as profits, dividends, or capital) earned in India to the investor’s home country.
The Indian regulatory environment has evolved to offer better clarity, but the process still involves compliance with Foreign Exchange Management Act (FEMA), Reserve Bank of India (RBI) guidelines, and taxation laws. In this article, we’ll explore all aspects of repatriation of funds from India, including the legal framework, types of repatriable incomes, taxation, procedures, and best practices.
Repatriation is the transfer of profits, dividends, interest, capital gains, or any other earnings from a foreign investment or business operation back to the investor’s country of origin. In the Indian context, this could be:
A foreign company sending profits back to its parent company
An NRI withdrawing rental income or capital gains to their overseas account
A foreign investor repatriating returns on Indian securities
Repatriation in India is primarily governed by:
Foreign Exchange Management Act (FEMA), 1999
Income Tax Act, 1961
Rules and regulations set by the Reserve Bank of India (RBI)
Under FEMA, repatriation is allowed subject to certain conditions, and all remittances must be routed through authorized dealer banks (typically scheduled commercial banks authorized by RBI to deal in foreign exchange).
The following entities are permitted to repatriate funds from India:
Foreign investors and companies (FDI, FII, FPI, etc.)
NRIs/PIOs (Non-Resident Indians / Persons of Indian Origin)
Foreign nationals employed or residing in India
Indian companies paying dividends or royalties to foreign shareholders or technology providers
There are various categories of income and capital that can be repatriated legally, subject to documentation and tax compliance:
Foreign companies operating in India through subsidiaries or joint ventures can repatriate post-tax profits, dividends, and retained earnings. With the abolition of Dividend Distribution Tax (DDT), dividends are now taxed in the hands of shareholders, making repatriation more transparent.
NRIs and foreign investors can repatriate long-term or short-term capital gains arising from the sale of:
Real estate
Shares and securities
Mutual funds
Business assets
Proper tax payment and Form 15CA/15CB filings are required.
Interest earned on NRE (Non-Resident External) or FCNR (Foreign Currency Non-Resident) deposits is fully repatriable.
Royalties and technical fees paid to foreign technology or IP providers can also be remitted subject to RBI approval and tax deduction.
Rental income from property in India owned by NRIs or foreign investors can be repatriated after tax compliance.
An NRI or foreign investor can repatriate proceeds from the sale of residential or commercial property up to two properties, provided the original investment was made in foreign exchange.
NRIs can use the following bank accounts in India to manage and repatriate funds:
Funds are fully repatriable (both principal and interest)
Maintained in INR
Suitable for income earned abroad and transferred to India
Held in foreign currency
Fully repatriable
Protects against exchange rate risk
Used for income earned in India (rent, dividends, pension)
Repatriation up to USD 1 million per financial year allowed (with tax clearance)
The general steps for repatriating funds from India are:
Ensure all taxes applicable to the income being repatriated have been paid. This may include:
TDS (Tax Deducted at Source)
Capital gains tax
Advance tax
For most transactions, especially those above a certain threshold, a CA certification is mandatory in Form:
15CB: A Chartered Accountant certifies the nature of remittance and tax compliance
15CA: The remitter files this online with the Income Tax Department
Submit the following to your authorized dealer bank:
Form 15CA/15CB
PAN card
Copy of tax returns or challans
Invoice or sale deed, if applicable
FEMA declaration and repatriation request form
The bank verifies documents and processes the remittance to the foreign account as per RBI norms.
While repatriation is permitted, some restrictions and caps apply:
Can remit up to USD 1 million per financial year from NRO account, including income and sale proceeds
No limit from NRE or FCNR accounts
Profits, dividends, and fees can be repatriated without limits post-tax
Sale proceeds of investments may require RBI approval if investment was under government route
Repatriation allowed only for two properties
Original purchase must have been made using foreign exchange
Cannot repatriate inherited or gifted properties beyond the USD 1 million limit
Here’s a quick overview of how different incomes are taxed before repatriation:
| Income Type | Tax Applicability |
|---|---|
| Dividend | Taxed in recipient’s hands (rate varies) |
| Capital Gains | LTCG @ 10% or 20% depending on asset |
| Rent | Taxed at applicable slab rates |
| Interest (NRE/FCNR) | Exempt from tax |
| Interest (NRO) | Taxable @ 30% (TDS) |
Foreign exchange transactions related to repatriation are categorized under:
No prior RBI approval is required for:
Repatriation of dividends
Repatriation from NRE/FCNR accounts
Sale proceeds of shares under FDI
Requires prior permission from RBI for:
Repatriation of sale proceeds of assets not covered under automatic route
Royalties exceeding prescribed limits
Certain cases involving sensitive sectors
RBI regularly updates Master Directions and AP (DIR Series) circulars to guide banks and businesses.
Always keep proper records, sale agreements, CA certifications, and tax filings ready to avoid rejection by banks.
Ensure there are no pending tax demands or scrutiny notices. Settle all liabilities before filing Form 15CA/CB.
Use forward contracts or FCNR accounts to mitigate exchange rate risks.
If your transaction falls under the approval route, engage with an expert early to ensure timelines and compliance.
Startups raising funds from abroad or issuing ESOPs to foreign employees must ensure compliance under FEMA and report to RBI via forms like FC-GPR and FLA.
Funds received as inheritance can be repatriated up to USD 1 million per financial year with documentation like a will, succession certificate, and CA certificate.
Repatriation of funds from jointly held assets requires documentation from all co-owners.
Plan taxes before investing in India
Maintain a clear audit trail of foreign investments
Use NRE or FCNR accounts wherever possible
Hire a reliable Chartered Accountant familiar with FEMA and taxation
Stay updated with RBI circulars and notifications
Repatriation of profits and funds from India is completely legal and feasible when done in compliance with Indian tax laws and FEMA regulations. Whether you are an NRI, a foreign investor, or a multinational corporation, India offers several mechanisms to move your funds abroad with relative ease.
However, due diligence, expert advice, and timely documentation are critical. As India continues to attract global capital, simplifying repatriation processes will remain a focus, making it even more favorable for foreign participation in the Indian economy.