Transfer Limits for NRIs and Overseas Residents
Non-Resident Indians live inside a set of rules that most residents never encounter and that most banks explain only when asked. The Liberalised Remittance Scheme (LRS) that governs residents does not apply to NRIs at all. In its place sits a different framework built around two account types (NRE and NRO), a USD 1 million annual repatriation limit, and a set of tax and reporting rules that follow the source of the funds. If you are an NRI moving money between the US and India, or a returning NRI trying to figure out how much of your Indian earnings you can take with you, this is the map.
For the day-to-day flows most NRIs run (sending USD to family, moving money into an NRE account, receiving rent from an Indian property), a cross-border payments app like Sliq Pay handles the US-to-India leg instantly at mid-market FX with a small percentage fee. This article covers the regulatory backdrop that shapes what you can and cannot do at scale.
Who Counts as an NRI
Two definitions matter, and they are not the same.
Under the Income Tax Act, you are a Non-Resident Indian if you spend less than 182 days in India in the relevant financial year (and satisfy the second condition of less than 60 days in the current year combined with less than 365 days in the four preceding years, subject to the modified rules that apply to Indian citizens leaving for employment or crew members). Recent changes tightened the definition further for Indian citizens with high India-sourced income, but the 182-day rule remains the starting point for most people.
Under FEMA, you are a Person Resident Outside India (PROI) if you are residing outside India for a purpose indicating an indefinite stay. The FEMA test is intent-based, not day-count based, which means you can become a PROI the day you land in the US on a work visa, even before you have crossed the 182-day mark for tax purposes.
Banks in India use the FEMA definition for account opening and remittance purposes. The Income Tax Department uses its own definition for tax residency. It is possible to be an NRI under FEMA and a resident for tax purposes in the same year, especially in the year you move.
NRE vs NRO: The Two Accounts Every NRI Needs
If you become an NRI, your existing resident savings account in India has to be redesignated. You have two account types to choose from, and most NRIs end up with one of each.
NRE (Non-Resident External) account. Denominated in INR but funded only by foreign earnings. Fully repatriable, both principal and interest. Interest earned is tax-free in India. Cannot be used to deposit any INR earned from Indian sources (rent, dividends, business income).
NRO (Non-Resident Ordinary) account. Denominated in INR. Holds Indian-source income (rent, dividends, pension, sale proceeds of property, gifts from Indian residents). Interest is taxable at 30 percent plus surcharge. Repatriation from NRO is capped at USD 1 million per financial year (see below).
Most NRIs use the NRE account for USD wires from their overseas salary and the NRO account for their India-sourced income. The two accounts should not be commingled. Moving funds between them requires paperwork and, in some cases, tax certification.
FCNR (Foreign Currency Non-Resident) deposits are a third option: a fixed deposit denominated in foreign currency (USD, GBP, EUR, etc.), fully repatriable, interest tax-free in India. Useful for NRIs who want to lock in USD deposits at Indian bank rates without exchange rate exposure.
Inbound Remittance: No Cap
There is no annual dollar cap on how much money an NRI can send from an overseas bank account into their own NRE account, their own NRO account, or any Indian resident’s account. You can wire USD 500 to your parents on Diwali or USD 500,000 to your NRE account to fund a property purchase; the FEMA rules do not gate either.
What matters is:
- Source of funds. The bank will ask, especially for larger inbound transfers, where the money came from (salary, business income, sale proceeds abroad, inheritance).
- Beneficiary account type. USD sent to your own NRE account arrives as INR at the applicable rate and stays fully repatriable. USD sent to a resident’s savings account gets converted and treated as their INR income; you cannot claw it back to your NRE later.
- Purpose code. Even inbound transfers get a purpose code (P0301 for family maintenance, P0308 for personal gifts, etc.). Wrong purpose codes can slow down downstream compliance if the funds are ever queried.
For monthly household support to family in India, the flow is essentially: USD out of your US checking, converted at some FX rate, INR credited to the recipient’s bank account or UPI. Banks charge USD 25 to 50 flat plus 2 to 4 percent FX spread. Modern cross-border payments apps run the same flow at mid-market FX for a small percentage fee and settle in seconds.
The USD 1 Million Repatriation Rule (Outbound from NRO)
This is the number NRIs run into most often. You can repatriate up to USD 1 million per financial year from your NRO account, including proceeds of sale of immovable property, in aggregate.
The USD 1 million ceiling covers:
- Sale proceeds of an inherited property in India
- Sale proceeds of a property you bought when you were a resident
- Balances built up in NRO from rent, dividends, or business income
- Gifts received from Indian residents (subject to the recipient’s tax on the giver’s side)
For each repatriation, you need:
- Form 15CA filed electronically on the Income Tax portal
- Form 15CB signed by a Chartered Accountant, certifying that applicable Indian taxes have been paid or that the remittance is not taxable
- Bank’s own outward remittance form (each bank has its own version)
The USD 1 million is a rolling annual limit, aggregated across all your NRO accounts across all Indian banks. Two spouses can each independently repatriate USD 1 million per financial year, though the source of the funds still has to be attributable to each individual.
There is no cap on repatriation from your NRE account. Whatever is in your NRE account is already deemed to be from repatriable sources and can be moved out freely.
Property Sale Proceeds: A Common Scenario
When an NRI sells a property in India, the proceeds go into their NRO account first (never NRE). Two rules then kick in:
Tax at source. The buyer must deduct TDS at 20 percent on long-term capital gains (properties held more than 24 months) or 30 percent on short-term. On the full sale value if the NRI does not obtain a lower deduction certificate from the AO. This is the single biggest gotcha in NRI property sales; a lot of NRIs discover it at the closing table.
Repatriation cap. The net proceeds sitting in NRO are subject to the USD 1 million per financial year cap. Selling a property for INR 5 crore does not mean you can move all INR 5 crore out this year; you can move up to USD 1 million equivalent (roughly INR 8.3 crore at current rates, so this cap is not the binding constraint for a single sale of INR 5 crore, but it is binding for larger portfolios sold in a single year).
Reality Check
The two most common mistakes NRIs make with property proceeds are (1) forgetting that TDS is on gross consideration, not on the capital gain, without a lower deduction certificate, and (2) assuming that all NRE deposits are automatically repatriable without documenting the source. If your NRE was funded from an NRO transfer years ago without proper paperwork, an authorized dealer bank may still question the repatriation. Keep the FIRC (Foreign Inward Remittance Certificate) for every USD wire into NRE.
Annual Reporting
Form 26AS and AIS (Annual Information Statement) show all reported financial transactions in your PAN, including large deposits, TDS, and cross-border flows. NRIs should pull their AIS every year even if they are not filing an ITR in India, because banks report NRE/NRO interest and any TDS to the tax portal.
Foreign Assets Schedule (Schedule FA) in the ITR applies only to residents. As an NRI, you do not need to disclose your US brokerage account, US bank account, or US-titled property in an Indian tax return, provided you remain a non-resident for the year.
Returning to India: the year you return, your residential status can flip mid-year. You get up to two years of Resident but Not Ordinarily Resident (RNOR) status after return, during which foreign income remains generally tax-free in India. That two-year window is the most important tax-planning tool a returning NRI has.
Gifts and Inheritance
Gifts from Indian residents to an NRI: allowed up to USD 250,000 per financial year per giver, under the giver’s LRS quota. The gift is not taxable in the recipient’s hands under Indian tax law, since NRIs are taxed only on India-sourced income.
Gifts from NRIs to Indian residents: allowed without limit. Not taxable to the recipient as long as the giver is a “relative” as defined in the Income Tax Act (spouse, siblings, parents, children, siblings of spouse, etc.). Gifts above INR 50,000 from non-relatives are taxable to the recipient.
Inheritance: always tax-free in India. There is no inheritance tax. Whatever an NRI inherits from an Indian resident goes into their NRO account. Sale of inherited property follows the same TDS and USD 1 million repatriation rules as any other property sale.
FAQs
Q: Do I need to close my resident savings account after I become an NRI? No, you do not close it. You redesignate it to NRO. Keeping a resident-labeled account after you become an NRI under FEMA is technically a violation, so redesignation should happen promptly.
Q: Can I have both an NRE and an NRO account at the same bank? Yes, and most NRIs do. NRE for foreign income and NRO for Indian income.
Q: What is the tax on NRE account interest? Zero, as long as you remain an NRI under the Income Tax Act. Interest becomes taxable the year you become a resident again.
Q: Can I use my NRE account to receive rent from my Indian property? No. Rent is India-sourced income and must go into your NRO account. Diverting rent to NRE is a FEMA violation.
Q: Is there any inbound cap on how much I can transfer to my NRE account? No annual cap. Practical constraint is your US bank’s wire limit and the KYC threshold your Indian bank applies for individual credits above USD 25,000 to 50,000.
Q: I want to send money to my parents monthly. Which account should it go to? Their regular savings account. You cannot send money to your parents’ NRE account (they don’t have one if they are residents). Modern cross-border payments apps route USD from your US bank to their Indian savings account or UPI ID at mid-market FX in seconds; onboarding takes about ten seconds.
Q: If I sell property and the proceeds exceed USD 1 million, can I move the rest next year? Yes. The USD 1 million cap resets every financial year (April 1 to March 31). Balances in the NRO account carry forward and can be repatriated in subsequent years, each within that year’s cap.
Q: Do I still need to file an ITR in India as an NRI? Only if you have India-sourced income above the basic exemption threshold, or if TDS has been deducted at a rate higher than your actual liability and you want to claim a refund. NRE interest is exempt, but NRO interest is not.
Q: What happens to my NRE account when I move back to India permanently? You must redesignate it as a resident account within a reasonable time after your status changes under FEMA (which happens at the point your stay in India becomes indefinite, not when you cross a day-count threshold).
Where Sliq Pay Fits
For US-based NRIs sending USD to family in India, funding an NRE account, or paying property taxes and utilities back home, Sliq Pay is a cross-border payments app built specifically for the US-to-India corridor. Money moves via UPI or IMPS rails at mid-market FX with a 0.3 to 0.5 percent fee and lands in seconds. There is no wallet balance to top up; you link your US bank once, complete a ten-second KYC, and can transact immediately. Join the waitlist at sliq-pay.com.
Disclaimer: The information in this article is provided for general informational purposes only and does not constitute tax, legal, financial, or immigration advice. Rules for NRIs under FEMA, the Income Tax Act, and repatriation caps are updated periodically. Please consult a qualified chartered accountant, tax advisor, or your authorized dealer bank for guidance specific to your residency and financial situation before making any remittance decision.
