- The investment basis decides repatriability: repatriable investments must be paid for with money from abroad, NRE or FCNR(B). NRO money can fund only non-repatriable investments, whose proceeds go to NRO.
- NRO current income can go abroad after tax: rent, dividends, interest and pension can be remitted without using the USD 1 million limit.
- Other NRO money has a yearly cap: up to USD 1 million per financial year, including transfers from NRO to NRE.
- Repatriable share purchases use a designated bank branch: this is the Portfolio Investment Scheme (PIS) route. Since 13 June 2026 it also needs a designated repatriable rupee account.
- Holding limits changed on 12 June 2026: each individual resident outside India must hold less than 10% of a listed company’s paid-up capital, and all such individuals investing on a repatriable basis may together hold up to 24%.
- Tax comes first: tax is deducted at source before proceeds are credited. Forms 15CA and 15CB are now Forms 145 and 146 under the Income-tax Act, 2025.
- NRI repatriation rights end when the holder becomes resident in India under FEMA: NRE balances must then be re-designated or moved to a Resident Foreign Currency (RFC) account.
What does repatriation mean for an NRI investor?
For an NRI investor, repatriation means converting the rupee proceeds of Indian investments into foreign currency and sending them to a bank account outside India.
Selling an investment and repatriating the money are two separate steps. When shares or mutual fund units are sold, the proceeds, after tax, are first credited to a bank account in India. Whether that money can then be sent abroad, and how much of it, depends on the basis on which the investment was made. That basis is set by the Foreign Exchange Management Act, 1999 (FEMA) and the rules and regulations under it.
NRIs are Indian citizens who live outside India. Overseas Citizens of India (OCIs) are foreign citizens who hold an OCI card. For the USD 1 million facility, the Reserve Bank of India (RBI) treats OCI cardholders as Persons of Indian Origin (PIOs). Since 12 June 2026, any individual resident outside India can also buy listed Indian shares on a repatriable basis. Prior government approval is still needed where the beneficial owner is a citizen of a country that shares a land border with India, or where the investment would pass ownership or control of the company to citizens or entities of such a country. Residential status under FEMA and under the Income-tax Act is decided by different tests, so a person can be non-resident under one law and resident under the other.
Which bank accounts can NRIs repatriate money from?
NRE and FCNR(B) accounts are fully repatriable. From an NRO account, current income can be repatriated after tax, and other balances only up to USD 1 million per financial year.
| Feature | NRE account | NRO account | FCNR(B) deposit |
|---|---|---|---|
| Currency | Indian rupees | Indian rupees | Foreign currency (freely convertible) |
| Account type | Savings, current or term deposit | Savings, current or term deposit | Term deposit only, 1 to 5 years |
| Typical credits | Money sent from abroad; transfers from other NRE or FCNR(B) accounts; proceeds of repatriable investments | Income earned in India (rent, dividends, interest, pension); other legitimate dues in India; money sent from abroad | Money sent from abroad; transfers from NRE or FCNR(B) accounts |
| Repatriation | Fully repatriable, principal and interest | Current income after tax; other balances up to USD 1 million per financial year | Fully repatriable, principal and interest |
| Interest taxed in India? | Exempt for eligible non-residents, subject to conditions | Taxable; tax deducted at source | Exempt for eligible non-residents, subject to conditions |
| Exchange-rate risk | Yes, balance is held in rupees | Yes, balance is held in rupees | No rupee conversion while the deposit is held; currency risk remains if the deposit currency differs from the investor’s home currency |
Source: RBI Master Direction – Deposits and Accounts (updated 2 September 2026); RBI FAQ on accounts in India by non-residents (16 January 2025); Income-tax Act, 2025, Schedule IV.
An NRE account can also receive current income such as rent or dividends if the bank is satisfied that tax on it has been deducted or paid. Money can move from NRO to NRE only within the USD 1 million-per-financial-year facility. An amendment dated 18 June 2026 wrote this rule into the FEMA (Deposit) Regulations themselves (FEMA 5(R)(6)/2026-RB). Transfers between repatriable accounts are allowed for all bona fide transactions.
What is the difference between repatriable and non-repatriable investments?
A repatriable investment is paid for with money sent from abroad or held in a repatriable account, and its proceeds can go back abroad after tax. The proceeds of a non-repatriable investment are credited only to an NRO account, whichever account paid for it.
| Aspect | Repatriation basis | Non-repatriation basis |
|---|---|---|
| FEMA rules (listed shares) | Schedule III, FEM (Non-Debt Instruments) Rules, 2019 | Schedule IV of the same Rules |
| Who can invest | Any individual resident outside India, including NRIs and OCIs (from 12 June 2026) | NRIs and OCIs |
| How it is paid for | Money sent from abroad, or a repatriable account such as NRE or FCNR(B) | Money sent from abroad, NRE, FCNR(B) or NRO |
| Route for shares bought on the exchange | Through a bank branch designated by an Authorised Dealer bank (the PIS route), using a designated repatriable rupee account | Through an NRO-linked trading and demat account |
| Where sale proceeds go | The designated repatriable account, or abroad | NRO account only |
| Holding limits | Each individual below 10% of paid-up capital; all such individuals together up to 24% | Treated as domestic investment and outside the 24% aggregate limit; the individual below-10% limit counts holdings under all FEMA schedules |
| Sending the money abroad | After tax, outside the USD 1 million cap | Within the USD 1 million-per-financial-year facility, after tax |
| Demat account | NRI repatriable demat account | A separate NRI non-repatriable demat account |
Source: FEM (Non-Debt Instruments) Rules, 2019, as amended by S.O. 3030(E) dated 12 June 2026; FEMA 395/2019-RB as amended by FEMA 395(4)/2026-RB dated 13 June 2026; CDSL investor FAQs.
One consequence is easy to miss. If NRE money pays for a non-repatriable investment, the proceeds still go to the NRO account and lose their repatriable status. An investor with both kinds of holdings needs separate demat accounts for them.
How does repatriation work for a repatriable share investment?
A repatriable share investment moves through five stages: fund, buy, hold, sell and remit. Tax is deducted before the money is released.
Money is sent from abroad into an NRE or other repatriable account. Since 13 June 2026, the investor designates one repatriable rupee account that is used only for these share investments.
The order is placed through an NRI repatriable trading account. Purchases are subject to the foreign-investment limits monitored by the depositories, and the designated bank reports the purchase to RBI.
The shares are credited to the NRI repatriable demat account.
The shares are sold on the exchange. Tax on the capital gain is deducted at source before the proceeds are released, and a TDS certificate is issued. Depending on how the NRI account is set up, the tax is deducted by the designated bank or by the broker.
The net proceeds are credited to the designated repatriable account and can be sent abroad. Before remitting, the bank may ask for Form 145 and, where applicable, a Form 146 certificate.
How does repatriation work for a non-repatriable investment?
The proceeds of a non-repatriable investment land in the NRO account first. They can be sent abroad only under the USD 1 million-per-financial-year facility, once tax has been paid and documented.
Shares are bought through an NRO-linked trading account and held in a non-repatriable demat account.
Tax is deducted at source and the proceeds are credited to the NRO account.
The investor submits the bank’s remittance application and Form A2. It comes with an undertaking that the money is a legitimate receivable in India and has not been borrowed.
Form 145 is filed online. A Form 146 certificate from a chartered accountant is also needed where the remittance is chargeable to tax and it, or the total of such remittances in the tax year, exceeds ₹5 lakh, unless an Assessing Officer’s certificate has been obtained.
The bank sends the money abroad or transfers it to the NRE account. Either way, it counts toward the USD 1 million limit. If the amount is sent in instalments, all of them must go through the same bank.
What is the USD 1 million limit and what counts toward it?
NRIs and PIOs, including OCI cardholders, can remit up to USD 1 million per financial year (April to March) from NRO balances and from the sale proceeds of assets in India, including transfers to an NRE account. Remitting more than that needs prior approval from RBI.
| Counts toward the USD 1 million limit | Does not count toward the limit |
|---|---|
| Balances in the NRO account, other than current income | Current income after tax: rent, dividends, interest, pension |
| Sale proceeds of assets in India, including shares held on a non-repatriation basis | Proceeds of investments made on a repatriation basis |
| Assets received by inheritance or legacy | Balances in NRE accounts and FCNR(B) deposits |
| Transfers from NRO to NRE | Transfers between repatriable accounts |
Source: RBI Master Direction – Remittance of Assets (updated 29 June 2026); FEMA 13(R)/2016-RB; RBI Master Direction – Deposits and Accounts.
Do NRIs still need a PIS account to buy shares?
Yes, for repatriable purchases of listed shares on a stock exchange. These must still go through a bank branch designated by an Authorised Dealer bank, which is the arrangement commonly called the Portfolio Investment Scheme (PIS).
Amendments in June 2026 (FEMA 395(4)/2026-RB of 13 June 2026 and RBI A.P. (DIR Series) Circular No. 14 of 15 June 2026) made three changes:
- The investor designates one repatriable rupee account, used only for repatriable share investments.
- That account can be funded from any repatriable account allowed under the Deposit Regulations, not only an NRE account.
- Banks may open such accounts for any individual resident outside India, not only NRIs and OCIs.
Banks may call this account by different names. Non-repatriable investing in shares through an NRO account generally does not need a PIS designation. IPO applications, mutual funds and bonds have traditionally not needed PIS permission. Bank practice varies, so investors can confirm with their bank how these rules, including the June 2026 designated-account rule, apply to them.
How much of a company can an NRI own on a repatriable basis?
An individual resident outside India must hold less than 10% of a listed company’s paid-up equity capital, on a fully diluted basis, counting holdings under all FEMA schedules. All such individuals investing on a repatriable basis may together hold up to 24%. These limits have applied since 12 June 2026.
Before that, the limits were 5% for each NRI or OCI and 10% for all of them together, and a company could raise the combined limit to 24% by a special resolution. The Foreign Exchange Management (Non-Debt Instruments) (Third Amendment) Rules, 2026 (S.O. 3030(E), 12 June 2026) replaced these with the current limits, following an announcement in the Union Budget speech of 1 February 2026.
If an individual’s holding reaches 10% or more, the investment in breach must be sold within five trading days of settlement. Otherwise the whole holding is treated as foreign direct investment. The depositories, NSDL and CDSL, monitor the limits for each company, and further purchases are stopped once a limit is reached. Some companies also have sector-specific caps. Holdings on a non-repatriation basis are treated as domestic investment and do not count toward the 24% aggregate limit. The bank or a chartered accountant can confirm how they count toward the individual limit.
What can NRIs invest in, and how are the proceeds treated?
NRIs can invest in listed shares, IPOs, mutual funds, government securities, bonds and exchange-traded derivatives. In each case, the proceeds can be repatriated only if the investment was made on a repatriation basis, which requires paying with money from abroad or from a repatriable account.
| Investment | Repatriation basis | Non-repatriation basis | Points to note |
|---|---|---|---|
| Listed shares (secondary market) | Through a designated bank branch; proceeds to the designated account or abroad | Through an NRO-linked account; proceeds to NRO | Holding limits apply on the repatriation basis |
| IPOs | Paid from NRE or other repatriable funds | Paid from NRO (or other permitted funds) | An application paid from NRO can only be non-repatriable |
| Mutual funds | Paid from NRE, FCNR(B) or money sent from abroad; since 13 June 2026, redemption proceeds can be remitted abroad or credited to any permitted account, as the investor chooses | Paid from NRO; redemption proceeds go to NRO | Some fund houses do not accept investors resident in the US or Canada |
| Government securities, treasury bills, listed bonds and NCDs | Paid from money sent from abroad, NRE or FCNR(B); no investment limit; proceeds remitted abroad or credited to NRE, FCNR(B) or NRO | Proceeds credited to NRO | Governed by the FEM (Debt Instruments) Regulations, 2019 |
| Exchange-traded futures and options | Not available on this basis | Permitted using rupee funds held in India | A custodial participant (CP) code has been optional since SEBI’s circular of 29 July 2025 |
Source: FEMA 395/2019-RB and FEMA 396/2019-RB, as amended; RBI Master Direction – Non-resident Investment in Debt Instruments (updated 5 June 2026); SEBI circular SEBI/HO/MIRSD/MIRSD-PoD/P/CIR/2025/109 (29 July 2025); SEBI investor education material on investments by NRIs.
How is tax handled before money is repatriated?
Tax is usually deducted at source before investment proceeds reach an NRI. On share sales, the designated bank or the broker deducts it, depending on how the NRI account is set up. The fund house deducts it on mutual fund redemptions, and the paying company or fund on dividends.
The Income-tax Act, 2025 replaced the Income-tax Act, 1961 from 1 April 2026. Income of tax years that began before that date stays under the 1961 Act. Budget 2026 did not change capital gains tax rates. The main rates for Tax Year 2026-27 are:
| Income | Tax rate for non-residents | Provision (Income-tax Act, 2025) |
|---|---|---|
| Short-term capital gains on listed equity shares and equity-oriented funds (held 12 months or less, STT paid) | 20% | Section 196 (formerly 111A) |
| Long-term capital gains on the same (held more than 12 months) | 12.5% on gains above ₹1.25 lakh a year | Section 198 (formerly 112A) |
| Units of specified (debt) mutual funds bought on or after 1 April 2023 | Slab rates, whatever the holding period | Section 76 (formerly 50AA) |
| Dividends | TDS at 20%, or a lower tax-treaty rate where eligible | Section 393(2), read with Section 207 |
| NRO deposit interest | TDS at 30%, or a lower tax-treaty rate where eligible | Section 393(2) |
| NRE and FCNR(B) deposit interest | Exempt for eligible non-residents, subject to conditions | Schedule IV |
Surcharge (capped at 15% on dividends and capital gains) and 4% health and education cess are added to these rates. Source: Income-tax Act, 2025; Finance Act, 2026, First Schedule.
- Tax-treaty rates: to get a lower tax-treaty (DTAA) rate, an NRI generally gives a Tax Residency Certificate from the country of residence, Form 41 (formerly Form 10F) and PAN details (Section 159, formerly Section 90).
- Lower TDS: an NRI can apply under Section 395 for a lower or nil TDS certificate, using Form 128 (formerly Form 13).
- Refunds: if more tax was deducted than was due, the excess can be claimed only by filing an income-tax return. For individuals without business income, the due date is 31 July after the end of the tax year.
- Share buybacks: from Tax Year 2026-27, money received in a share buyback is taxed as capital gains rather than as dividend income (Finance Act, 2026).
Which forms and sections changed under the Income-tax Act, 2025?
From 1 April 2026, Form 15CA became Form 145 and Form 15CB became Form 146. TDS on payments to non-residents moved from Section 195 to Section 393(2).
| Purpose | Before 1 April 2026 (1961 Act) | From 1 April 2026 (2025 Act) |
|---|---|---|
| TDS on payments to non-residents | Section 195 | Section 393(2) |
| Remittance declaration filed online | Form 15CA | Form 145 |
| Chartered accountant’s certificate | Form 15CB | Form 146 |
| Tax-treaty relief | Section 90 | Section 159 |
| Treaty information form | Form 10F | Form 41 |
| Lower or nil TDS certificate | Section 197, Form 13 | Section 395, Form 128 |
| Short-term gains on listed equity | Section 111A | Section 196 |
| Long-term gains on listed equity | Section 112A | Section 198 |
Source: Income-tax Act, 2025; Income-tax Rules, 2026; Income Tax Department guide to forms under the Income-tax Act, 2025 (March 2026).
Forms 145 and 146 apply to remittances made on or after 1 April 2026. Forms 15CA and 15CB apply only to remittances made on or before 31 March 2026.
What documents does a bank ask for before repatriating?
Banks typically ask for proof that the money was legitimately earned in India and that tax on it has been paid, along with the income-tax remittance forms.
- Form 145, filed online before the remittance. It has four parts:
- Part A: taxable remittances up to ₹5 lakh in total in the tax year.
- Part B: larger amounts, backed by an Assessing Officer’s certificate.
- Part C: larger amounts, backed by a Form 146 certificate.
- Part D: amounts not chargeable to tax.
- Form 146, a chartered accountant’s certificate, where Part C applies.
- The bank’s remittance application and Form A2.
- Proof of source, such as contract notes, a capital gains statement, TDS certificates, a sale deed or dividend statements.
- An undertaking, for remittances under the USD 1 million facility.
- Tax Residency Certificate and Form 41, where a tax-treaty rate has been applied.
Exact requirements vary from bank to bank.
What mistakes commonly delay repatriation?
Most delays come from the wrong type of account being used and from missing tax paperwork, not from the rules themselves.
- Paying for a repatriable purchase from NRO funds. NRO money cannot fund repatriable investments.
- Assuming a sale means the money has been repatriated. The proceeds stay in an Indian account until a separate remittance is made.
- Missing treaty documents. Without a Tax Residency Certificate and Form 41, tax is deducted at the domestic rate, which may be higher than the treaty rate, and any excess can be recovered only through a tax return.
- Using several banks for the USD 1 million facility. All instalments in a year must go through the same bank.
- Using old form names. For remittances from 1 April 2026, banks expect Forms 145 and 146, not 15CA and 15CB.
- Not updating residential status. Bank, demat and mutual fund records must be changed when an NRI returns to India.
- Reaching the 10% individual limit. A holding of 10% or more must be brought down within five trading days of settlement, or the whole holding is treated as foreign direct investment.
What happens to repatriation rights when an NRI returns to India?
NRI repatriation rights end when the person becomes resident in India under FEMA, for example on returning to take up employment or to live in India. At that point, NRE accounts must immediately be re-designated as resident accounts, or the money moved to a Resident Foreign Currency (RFC) account.
- FCNR(B) deposits can run to maturity at the contracted rate, and then be converted to a resident account or an RFC account.
- NRO accounts are re-designated as resident accounts.
- RFC accounts, for those eligible, hold foreign currency, and the balances are free from all restrictions on use outside India (RBI Master Direction – Deposits and Accounts).
- Trading and demat accounts: the investor informs the designated bank branch and the depository participant. The NRI trading account is closed, a resident account is opened, and the demat account is converted to resident status.
- Mutual funds: residential status is updated in KYC records. Repatriation rights on the holdings end with NRI status.
- After return, a resident individual sends money abroad under the Liberalised Remittance Scheme, which currently allows up to USD 250,000 per financial year.
What rules are still changing?
Two proposals could change NRI investing further, but neither was in force as on 18 September 2026.
- RBI draft Foreign Exchange Management (Foreign Investment) Rules, 2026, to replace the FEM (Non-Debt Instruments) Rules, 2019. RBI released the draft on 21 July 2026, and the comment period closed on 31 August 2026.
- SEBI consultation paper on KYC for individuals resident outside India, issued on 14 August 2026. It proposes fully digital account opening from abroad.
One related change is already in force: since SEBI’s circular of 10 December 2025, existing NRI clients can complete re-KYC from outside India.
Frequently asked questions
Can NRIs repatriate the full sale proceeds of Indian shares?
Yes, if the shares were bought on a repatriation basis: the proceeds, after tax, can be sent abroad without the USD 1 million cap. Proceeds of shares bought on a non-repatriation basis go to the NRO account and can be remitted only within the USD 1 million-per-financial-year facility.
Is there a limit on repatriating money from an NRE account?
No. NRE balances, both principal and interest, are fully repatriable, as are FCNR(B) deposits.
Can money in an NRO account be moved to an NRE account?
Yes, but only within the USD 1 million-per-financial-year facility, and only after tax on the money has been paid. Banks generally ask for Form 145, and Form 146 where applicable.
Do OCI cardholders have the same repatriation options as NRIs?
Largely, yes. OCI cardholders can invest on both a repatriation and a non-repatriation basis, and RBI treats them as PIOs for the USD 1 million facility.
Are Forms 15CA and 15CB still used?
Not for remittances made on or after 1 April 2026. They were replaced by Form 145 and Form 146 under the Income-tax Act, 2025 and the Income-tax Rules, 2026.
Does repatriation involve exchange-rate risk?
Yes, for NRE and NRO balances, which are held in rupees and converted at the prevailing rate when remitted. FCNR(B) deposits are held in foreign currency, so they are not converted from rupees when repaid. Currency risk remains if the deposit currency differs from the investor’s home currency.
Can NRIs living in the US or Canada invest in Indian mutual funds?
Some fund houses accept investments from residents of the US and Canada, and some do not. Policies differ, so the scheme documents and the fund house’s rules need to be checked.
Regulatory references
- RBI Master Direction – Deposits and Accounts (updated 2 September 2026)
- RBI Master Direction – Remittance of Assets (updated 29 June 2026)
- FEM (Non-Debt Instruments) Rules, 2019, as amended by the Third Amendment Rules, 2026 (S.O. 3030(E), 12 June 2026)
- FEM (Mode of Payment and Reporting of Non-Debt Instruments) Regulations, 2019, as amended by FEMA 395(4)/2026-RB (13 June 2026)
- FEM (Deposit) Regulations, 2016, as amended by FEMA 5(R)(6)/2026-RB (18 June 2026)
- SEBI investor education material: Investments by NRIs
- RBI A.P. (DIR Series) Circular No. 14 (15 June 2026)
- RBI Master Direction – Non-resident Investment in Debt Instruments (updated 5 June 2026)
- Income-tax Act, 2025; Income-tax Rules, 2026 (Rule 220, Forms 145 and 146); Finance Act, 2026
- SEBI circular SEBI/HO/MIRSD/MIRSD-PoD/P/CIR/2025/109 (29 July 2025) on NRI position limits in exchange-traded derivatives
- SEBI circular on relaxation of geo-tagging for NRIs undertaking re-KYC (10 December 2025)
Important information
This article is for investor education only. It explains how repatriation rules work and is not investment, tax or legal advice, nor a recommendation to buy, sell or hold any security or mutual fund scheme. Foreign exchange and tax rules change from time to time; this article reflects the position as on 18 September 2026. For advice on their own circumstances, readers may consult their bank, a chartered accountant or a SEBI-registered investment adviser.
Investments in securities market are subject to market risks, read all the related documents carefully before investing.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
Nikunj Stock Brokers Limited acts only as a distributor of mutual funds (AMFI ARN-0087). Mutual funds are not Exchange-traded products, and disputes about mutual fund distribution will not have access to the Exchange investor redressal forum or arbitration mechanism.