Repatriating Money from India: FEMA Rules, Limits, and U.S. Tax Treatment

Transferring money from India to the U.S. — whether it is your NRO account balance, proceeds from selling Indian property, or funds accumulated in an NRE account — involves two regulatory frameworks: India's Foreign Exchange Management Act (FEMA) and U.S. tax law. Understanding both is essential before initiating any large transfer.

FEMA Rules for NRI Repatriation

FEMA (Foreign Exchange Management Act, 1999) governs all cross-border money movements for Indian residents and NRIs. For NRIs wishing to repatriate funds to the U.S., the core FEMA rules are set out in the Foreign Exchange Management (Remittance of Assets) Regulations.

The key FEMA principle for NRIs: funds held in India can be repatriated only if (1) they were derived from legitimate Indian-source income or foreign currency inflows, (2) all applicable taxes in India have been paid, and (3) the prescribed documentation (Form 15CA/15CB) is in order. The Reserve Bank of India (RBI) permits repatriation under a general permission — no specific RBI approval is needed for routine cases within the prescribed limits.

FEMA violations can result in penalties of up to three times the amount involved, plus confiscation in severe cases. For legitimate NRI remittances following the rules, FEMA is procedural rather than restrictive — but the procedures must be followed precisely.

NRE (Free) vs. NRO ($1M/Year Limit)

The most important distinction for repatriation purposes is the type of Indian account:

The practical implication: if you want to repatriate money earned in India (rent, capital gains from selling Indian property or stocks, NRO interest), it must flow through your NRO account and is subject to the $1M annual limit and the Form 15CA/15CB documentation requirement. Money you send to India from the U.S. (your H-1B salary) flows into your NRE account and can be freely repatriated with no cap.

See the full NRE/NRO accounts guide for a deeper dive into the U.S. tax and FBAR reporting requirements for both account types.

Form 15CA and 15CB Requirements

Whenever you repatriate funds from your NRO account (or from the proceeds of selling Indian assets), your Indian bank requires Form 15CA and Form 15CB before initiating the foreign remittance:

• Form 15CB: A certificate issued by a Chartered Accountant in India that certifies (a) the nature and source of the remittance, (b) that the applicable taxes in India have been paid or adequate provision has been made, and (c) that the remittance complies with applicable DTAA (Double Taxation Avoidance Agreement) provisions. The CA must upload Form 15CB to the Income Tax India e-filing portal before you file Form 15CA.
• Form 15CA (Part C): A self-declaration filed by you (the remitter) on the Income Tax India e-filing portal after obtaining the CA certificate (Form 15CB acknowledgment number). It declares the details of the remittance, the applicable tax treaty provision, and confirms tax compliance.
• Exceptions: Some remittances are exempt from 15CA/15CB — specifically, transfers between NRE accounts (between two NRE accounts of the same person), or remittances covered by Rule 37BB exemptions (such as certain interbank transfers and travel expenses under ₹5 lakh). But for NRO fund repatriation, 15CA/15CB is almost always required.
• Penalty for non-compliance: Repatriating funds without proper 15CA/15CB is a FEMA violation and can result in penalties. The Indian bank will typically refuse to process the transfer without these documents.

For large transactions — particularly property sales — engage a CA in India well in advance of the planned remittance date. The 15CA/15CB process typically takes 1–2 weeks, and some banks add additional processing time.

LRS (Liberalised Remittance Scheme) for Indian Residents Sending Money Out

The Liberalised Remittance Scheme (LRS) is relevant not to you as an H-1B NRI, but to your family members who are Indian residents and may be sending you money or receiving money from you:

• Who it applies to: Indian residents (not NRIs) who wish to remit money abroad for permitted purposes: overseas education, travel, maintenance of relatives abroad, investment in foreign securities, purchase of foreign property, etc.
• Annual limit: USD $250,000 per resident individual per financial year (April–March).
• Tax Collected at Source (TCS): LRS remittances above ₹10 lakhs per year are subject to TCS at 20% (reduced to 0.5% for education loans and 5% for education/medical purposes). The threshold was raised from ₹7 lakhs to ₹10 lakhs effective April 1, 2025 per Finance Act 2025. The TCS is refundable against your income tax liability when you file the Indian ITR.
• Relevance for H-1B holders: If your parents in India send you money for a down payment on a U.S. home, or if you receive money as a gift from Indian relatives, the LRS limit applies to the sender. Gifts from NRIs to Indian residents and vice versa have separate rules under Indian gift tax provisions.
• Permitted vs. prohibited: LRS permits many categories but prohibits remittances for trading in foreign exchange abroad, margin calls in foreign exchanges, and purchase of lottery tickets.

U.S. Tax Treatment of Transfers Under IRC §988 Forex Gain/Loss

When you transfer Indian rupees from India to USD in the U.S., the exchange rate difference between when you acquired the rupees and when you converted them can create a taxable event under IRC §988 (Treatment of Certain Foreign Currency Transactions).

The §988 rules work as follows:

• Acquisition of foreign currency: When you deposit money into an Indian bank account (say, you wire $10,000 from your U.S. salary at 83 INR/USD, creating an INR balance worth $10,000), your basis in those rupees is $10,000.
• Disposition of foreign currency: When you transfer those rupees back to USD years later (say, the exchange rate has moved to 90 INR/USD), the same INR balance is now worth $9,222. You have a $778 forex loss — deductible as an ordinary loss under §988.
• Gain scenario: If the rupee appreciated (82 INR/USD when repatriated vs. 83 INR/USD when deposited), you have a small forex gain — taxable as ordinary income.
• Personal use exception: Under §988(e), personal transactions (non-investment, non-business) that generate a forex gain of $200 or less are excluded. This de minimis rule covers routine ATM withdrawals, small transfers, and similar personal transactions.
• Large NRO/NRE transfers: For material transfers (property sale proceeds, large NRO balance transfers), the §988 analysis is relevant. You need records of when you acquired the INR balance (or the equivalent USD value at that time) and the exchange rate at the time of conversion.

For INR/USD conversion rules and the IRS average exchange rates used for U.S. tax reporting, see our INR to USD conversion guide. For FBAR reporting requirements on Indian accounts during the transfer process, see the FBAR guide.