Understanding NRI Tax on Remittance: 2025 Rules, Limits & Exemptions Explained

What is NRI Tax on Remittance?

NRI tax on remittance refers to the taxes you need to pay or comply with when transferring money from your Indian bank accounts to foreign accounts. This includes both the tax deducted from your Indian income and the compliance requirements for moving that money abroad.

The key thing to understand is this: as an NRI, you're taxed only on income earned or received in India. Your foreign income is not taxable in India. So when you remit money abroad, the tax concerns revolve around whether tax has been properly deducted on the Indian income you're transferring.

There are two main types of remittances you need to know about. Inward remittances are when you receive money from abroad into your Indian accounts, these are generally not taxable. Outward remittances are when you send money from India to foreign accounts, and this is where tax compliance becomes critical.

How is NRI Remittance Tax Different from Resident Tax?

Here's where many NRIs get confused. The tax rules for NRI remittances are completely different from what resident Indians face.

Resident Indians who send money abroad under the Liberalized Remittance Scheme (LRS) have to pay TCS (Tax Collected at Source). As per Budget 2025 updates, residents pay no TCS up to ₹10 lakh, then 5% TCS on education or medical remittances above that, and 20% TCS on other purposes like investments or gifts.

But here's the good news: NRIs are exempt from TCS when remitting from NRO accounts. Instead, you deal with TDS (Tax Deducted at Source) and compliance forms. The tax has already been deducted from your Indian income at the source (like when you receive rent or sell property), so there's no additional TCS when you transfer that money abroad.

However, you must submit Form 15CA and Form 15CB to your bank before remitting. These forms certify that applicable taxes have been paid on the income you're transferring. Without these forms, banks won't process your remittance request, no matter how small or large the amount.

What are the Tax Rules for NRIs Sending Money Abroad?

Section 195 and TDS Requirements

Section 195 of the Income Tax Act governs tax deduction on payments made to non-residents, including NRIs. Any person or entity in India making a payment to you (other than salary) must deduct TDS if that income is taxable in India.

The standard TDS rates for NRIs are typically higher than for residents. For example, interest on NRO fixed deposits attracts 30% TDS plus applicable cess and surcharge.

When you sell property in India, the buyer must deduct 20% TDS even though the actual long-term capital gains tax is only 12.5% (you can claim the refund when filing your ITR). Rental income also faces 30% TDS on all payments, regardless of amount.

The good news? You can apply for a lower TDS certificate using Form 13 through the TRACES portal. If your actual tax liability is lower than the standard TDS rate, the Income Tax Department can issue a certificate allowing the payer to deduct tax at a reduced rate or even nil rate.

Form 15CA and 15CB: Your Remittance Gateway

Think of Form 15CA and 15CB as your gateway to moving money abroad. Without these forms, your bank will not process any remittance request, making them absolutely essential for NRI financial planning.

Form 15CA is your declaration as the remitter, stating details about the payment you're making abroad. It includes information like the amount, purpose, recipient details, and tax status. This form must be filed online through the Income Tax e-filing portal.

Form 15CB is a certificate from a Chartered Accountant that verifies the nature of the payment and confirms that applicable taxes have been paid. This CA certificate is required only when your remittance exceeds ₹5 lakh in a financial year.

Form 15CA has four parts, and which one you file depends on your situation.

• Part A is for remittances up to ₹5 lakh where no CA certificate is needed.
• Part B is for amounts exceeding ₹5 lakh where you've obtained a certificate from the tax officer for lower or nil TDS.
• Part C is for amounts exceeding ₹5 lakh with a CA certificate (Form 15CB). Part D is for remittances that are not taxable under the Income Tax Act.

The filing process typically takes 2-4 days. You engage a CA who reviews your documents, issues Form 15CB, and provides the acknowledgment number. You then use this number to file Form 15CA online.

Once both forms are submitted, you provide the acknowledgments to your bank, which then processes your remittance within 2-4 business days.

Annual Repatriation Limits

The Reserve Bank of India (RBI) has set clear limits on how much you can repatriate from different account types. Understanding these limits is crucial for planning large transfers or multiple remittances throughout the year.

For NRO accounts, you can repatriate up to USD 1 million per financial year. This limit applies to the cumulative total of all remittances from all your NRO accounts combined. The money can come from any legitimate source like rental income, property sale proceeds, pension, dividends, or interest.

However, NRE and FCNR accounts have no repatriation limits. Since these accounts hold money earned abroad or received through foreign currency, you can transfer any amount from these accounts without restrictions.

This is why many NRIs prefer to first transfer money from NRO to NRE accounts (after paying applicable taxes) and then remit abroad from their NRE accounts.

If you need to remit more than USD 1 million from NRO accounts in a year, you'll need special permission from the RBI.

The process involves submitting detailed documentation and justification, and approval is granted on a case-by-case basis.

What are the Current Tax Rates on NRI Remittances in 2025?

Understanding the exact tax rates helps you calculate your liabilities and plan accordingly. Here's a breakdown of the key TDS rates you'll encounter as an NRI in 2025.

• Interest income from NRO fixed deposits and savings accounts is taxed at 30% plus applicable surcharge and cess. However, if you're a tax resident of a country with which India has a DTAA (like the US or UK), you can reduce this to 15% by submitting a Tax Residency Certificate and other required documents.
• Property sale proceeds see a TDS of 20% deducted by the buyer at the time of transaction. But here's an important update from Budget 2025: the actual long-term capital gains tax rate has been reduced to 12.5% for properties held more than two years. This means you'll get a refund of the excess TDS when you file your Income Tax Return.
• Rental income attracts 30% TDS on all payments made by your tenant, even for amounts below the usual TDS thresholds. The tenant must also submit Form 15CA and Form 15CB when remitting rent payments to you.
• Dividend income from Indian companies is taxed at slab rates in your hands. Short-term capital gains from equity (held less than 12 months) are taxed at 15%, while those from debt instruments are taxed at slab rates. Long-term capital gains from equity exceeding ₹1.25 lakh per year are taxed at 12.5%.

It's worth noting that NRE and FCNR account interest remains completely tax-free in India, making these accounts highly attractive for parking foreign earnings.

How Can NRIs Reduce Tax on Remittances?

DTAA Benefits

The Double Taxation Avoidance Agreement is your most powerful tool for reducing tax on Indian income. India has signed comprehensive DTAAs with over 90 countries, including the US, UK, Canada, Australia, UAE, Singapore, and most European nations.

DTAA ensures you don't pay tax twice on the same income. If your Indian income is also taxable in your country of residence, you can claim relief either through exemption, reduced tax rates, or foreign tax credit.

For example, let's say you earn ₹5 lakh annual interest from an NRO fixed deposit. Normally, 30% TDS (₹1.5 lakh) would be deducted. But if you're a US tax resident, the India-US DTAA allows you to pay only 15% tax in India. By submitting a Tax Residency Certificate (TRC) from the US tax authorities and Form 10F, you can reduce your TDS to ₹75,000, saving ₹75,000 annually.

To claim DTAA benefits, you need three things. First, obtain a Tax Residency Certificate from your country of residence's tax authority. Second, file Form 10F electronically on the Indian tax portal with your details and TRC. Third, submit these documents to the payer (your tenant, bank, or property buyer) before they deduct TDS.

The tax savings can be substantial. On property sales, some DTAAs allow capital gains to be taxed only in the country of residence, not in India. On royalties and technical fees, rates can drop from 30% to as low as 10-15% depending on the treaty.

Lower TDS Certificate

If you expect your total tax liability to be lower than the TDS being deducted, you can apply for a certificate for lower or nil TDS deduction under Section 197.

The process involves filing Form 13 electronically through the TRACES portal. You need to submit supporting documents like your previous year's ITR, computation of income, PAN, bank statements, and if claiming DTAA benefits, your TRC and Form 10F.

The Assessing Officer reviews your application and, if satisfied that lower TDS is justified, issues a certificate specifying the reduced rate. This certificate is valid for a specified period and can be renewed.

For example, if you're selling a property with expected gains of ₹10 lakh but the buyer must deduct ₹20 lakh as TDS (20% of ₹1 crore sale price), you can apply for a certificate showing your actual tax liability is only ₹1.25 lakh (12.5% of ₹10 lakh). The buyer then deducts only ₹1.25 lakh instead of ₹20 lakh, avoiding a huge cash flow problem.

Strategic Account Planning

Smart NRIs use a three-step strategy to minimize tax and maximize flexibility. First, receive your Indian income in an NRO account where TDS is deducted at source. Second, transfer funds from NRO to NRE after submitting Form 15CA/15CB. Third, remit abroad from your NRE account without any additional compliance.

This works because NRE accounts offer full repatriation without limits, tax-free interest, and simpler compliance. Once money is in your NRE account, you can transfer it abroad anytime without additional forms or documentation.

What Exemptions are Available for NRI Remittances?

Several types of remittances are completely exempt from tax or Form 15CA/15CB requirements, and knowing these can save you time and money.

• Interest from NRE and FCNR accounts is completely tax-free in India. You can remit this interest abroad without any tax deduction or compliance requirements beyond basic bank procedures.
• Inheritance transfers are not taxed when you receive them, though the estate may have other tax implications. You can remit inherited money up to USD 1 million per year from NRO accounts using standard repatriation procedures.
• Gifts from specified relatives (parents, spouse, siblings, children) are tax-free under Section 56. There's no limit on the amount you can receive as a gift from these relatives, and you can remit it abroad after proper documentation.

Under Rule 37BB, 33 specific types of payments don't require Form 15CA/15CB. These include remittances for Indian investments abroad in equity capital, import payments, loan repayments, and certain specified purposes under RBI codes.

Your bank can guide you on whether your remittance falls under these exemptions.

For resident Indians (if you're transitioning status), education loans under Section 80E are exempt from TCS. Medical and education expenses face no TCS up to ₹10 lakh, and only 5% on amounts exceeding that threshold.

What Documents Do You Need for NRI Remittance?

Having the right documents ready before starting the remittance process saves time and prevents delays. Here's your complete checklist.

You absolutely need your PAN card for any remittance. Banks and CAs won't process any transfer without it. If you're claiming DTAA benefits, you need a Tax Residency Certificate from your country of residence's tax authorities.

Proof of source of funds is critical. For property sale proceeds, provide the sale deed and buyer's TDS certificate (Form 16A). For rental income, provide tenancy agreements and TDS certificates. For interest income, provide bank statements showing TDS deduction. For business income, provide audited financial statements.

Your CA will need your previous year's ITR acknowledgment, Form 26AS showing TDS deductions, and bank statements for the account from which you're remitting. If your remittance includes capital gains, provide purchase and sale documents with date and value details.

The Form 15CA and 15CB acknowledgments must be submitted to your bank. Banks typically also ask for a signed repatriation application on their letterhead, your passport copy, visa or OCI card, and sometimes your foreign bank account details for verification.

Keep copies of everything. The Income Tax Department can ask for supporting documents even years later during assessments, so maintain a complete file for each remittance transaction.

What are Common Mistakes NRIs Make with Remittance Tax?

Avoiding these mistakes can save you thousands in penalties and prevent remittance delays.

• Not filing Form 15CA/15CB on time is the most common error. Many NRIs think they can file these forms later, but banks won't process remittances without them. Failure to file can also attract a penalty of ₹1 lakh under Section 271-I.
• Ignoring DTAA benefits means you're overpaying tax. If you're paying 30% TDS on interest when you could be paying 15% with a TRC, you're losing money unnecessarily. Even if excess TDS is refundable, why lock up your money for months?
• Confusing TDS with TCS leads to wrong planning. Many NRIs think they'll face TCS like residents do, and are pleasantly surprised (or confused) when banks ask for different forms instead.
• Not claiming TDS refunds through ITR filing leaves money on the table. If ₹20 lakh was deducted as TDS on your property sale but your actual tax liability is only ₹1.25 lakh, you must file ITR to get back ₹18.75 lakh.
• Missing lower TDS certificate applications is costly for large transactions. On a ₹2 crore property sale, the difference between 20% TDS (₹40 lakh) and a certificate-based 5% TDS (₹10 lakh) is ₹30 lakh in cash flow.

How Do You Claim Refunds on Excess TDS?

If more TDS was deducted than your actual tax liability, claiming a refund is straightforward but requires filing your Income Tax Return.

First, verify all TDS deductions in Form 26AS available on the Income Tax e-filing portal. This statement shows all TDS deducted against your PAN by various deductors. Cross-check that all deductions are reflected correctly.

File your ITR for the relevant financial year, reporting all your Indian income and the TDS deducted. The ITR form automatically calculates your actual tax liability based on applicable rates and deductions you're eligible for.

If your TDS exceeds your tax liability, the ITR will show the refund amount. After processing your return (which takes 1-3 months typically), the Income Tax Department will credit the refund to your Indian bank account.

For faster processing, ensure your bank account is pre-validated on the e-filing portal. You can also track your refund status online using your PAN and acknowledgment number.

If TDS was wrongly deducted or deducted at a higher rate than applicable under DTAA, you can file a rectification request along with supporting documents like your TRC and Form 10F.

What Changed in Budget 2025 for NRI Remittances?

Budget 2025 brought several significant changes affecting NRIs, though many changes primarily benefit resident Indians.

The TCS threshold increased from ₹7 lakh to ₹10 lakh for resident Indians under LRS. This means residents now pay no TCS on the first ₹10 lakh remitted abroad. However, remember that NRIs don't pay TCS anyway, so this change doesn't directly impact you.

The long-term capital gains tax rate dropped from 20% to 12.5% on property held for more than two years. This is great news if you're selling property in India. Though TDS remains 20%, your actual tax liability is lower, increasing your refund.

Two self-occupied properties can now be held tax-free without deemed rental income. Previously, only one property could be self-occupied for tax purposes. This benefits NRIs who own multiple properties in India for personal use.

TDS on education loan EMI payments to foreign institutions was abolished. This was 0.5% earlier and has now been removed, simplifying education loan repayments for NRI families.

The exemption limit for TDS on transfers from relatives increased from ₹7 lakh to ₹10 lakh per year. So if your parents in India send you money, TDS applies only on amounts exceeding ₹10 lakh annually.

NRI Remittance Tax: Real-World Examples

Example 1: Remitting Property Sale Proceeds

Rajesh sold his Mumbai apartment for ₹1.5 crore. He bought it in 2015 for ₹80 lakh. After indexation, his long-term capital gains are ₹30 lakh.

The buyer deducted ₹30 lakh as TDS (20% of ₹1.5 crore) and deposited it with the government. Rajesh's actual tax liability at 12.5% on ₹30 lakh gains is ₹3.75 lakh.

To remit the ₹1.2 crore net proceeds abroad, Rajesh engaged a CA who issued Form 15CB certifying the property sale and tax deduction. Rajesh filed Form 15CA Part C online and submitted both acknowledgments to his bank.

The bank processed the remittance within 3 business days. When Rajesh files his ITR, he'll claim a refund of ₹26.25 lakh (₹30 lakh TDS minus ₹3.75 lakh actual tax), which will be credited to his account in 2-3 months.

Example 2: Transferring Rental Income

Priya owns a property in Bangalore generating ₹50,000 monthly rent. Her tenant deducts 30% TDS (₹15,000 monthly, ₹1.8 lakh annually) before payment and deposits it with the government.

Priya receives net ₹35,000 monthly (₹4.2 lakh annually) in her NRO account. After a year, she has ₹4.2 lakh to remit abroad.

Since the amount is under ₹5 lakh, Priya files Form 15CA Part A online (no CA certificate needed). She provides the acknowledgment to her bank along with rent agreement, TDS certificates (Form 16A) from her tenant, and bank statements.

Priya is a US tax resident and has a TRC. For next year, she submits her TRC and Form 10F to her tenant, reducing TDS from 30% to 15% under the India-US DTAA, saving ₹90,000 annually.

Example 3: NRO to NRE Transfer

Amit has accumulated ₹25 lakh in his NRO account from dividends, interest, and past rental income. He wants to transfer this to his NRE account for easier future remittances.

Even though this is his own money moving between his own accounts, he needs to file Form 15CA/15CB because it's a transfer to an account classified differently under FEMA.

Amit engages a CA who verifies that all income in the NRO account has had TDS deducted properly. The CA issues Form 15CB confirming tax compliance. Amit files Form 15CA Part C and submits both forms to his bank.

Importantly, no TCS is charged on this NRO to NRE transfer. Once the money is in his NRE account, Amit can remit it abroad anytime without further Form 15CA/15CB requirements, and the interest earned on the NRE balance will be completely tax-free.

What is the Step-by-Step Process for NRI Remittance?

Here's your complete roadmap for a smooth remittance process from start to finish.

Step 1: Determine your remittance type and amount. Calculate the exact amount you want to remit and verify the source (property sale, rent, interest, etc.). Check that TDS has been properly deducted on the income.

Step 2: Check Form 15CA/15CB requirements. If the amount exceeds ₹5 lakh or is taxable income, you'll need both forms. If under ₹5 lakh and taxable, you need only Form 15CA Part A. If not taxable, you need Form 15CA Part D.

Step 3: Engage a Chartered Accountant (if remittance exceeds ₹5 lakh). Provide your CA with all documents: PAN, passport, bank statements, source of funds proof, TDS certificates, previous ITR, and any DTAA documents if applicable.

Step 4: CA issues Form 15CB. The CA verifies your documents, confirms tax compliance, and issues Form 15CB with an acknowledgment number. This typically takes 1-2 business days and costs between ₹2,000 to ₹10,000 depending on complexity.

Step 5: File Form 15CA online. Log into the Income Tax e-filing portal, select the appropriate Part (A, B, C, or D), enter details, and submit. Use the Form 15CB acknowledgment number if required. Download and save the Form 15CA acknowledgment.

Step 6: Submit to your bank. Provide both Form 15CA and 15CB acknowledgments to your bank along with your remittance application, source of funds documents, and any other bank-specific requirements.

Step 7: Bank processing. Your bank verifies the documents, checks RBI compliance, and processes the remittance. This takes 2-4 business days for most banks. The money is credited to your foreign account in the currency you specified.

Step 8: Maintain records. Keep copies of all forms, bank transaction confirmations, TDS certificates, and related documents for at least 7 years for potential tax audits or assessments.

How to Stay Compliant with NRI Remittance Regulations?

Staying compliant isn't just about avoiding penalties, it ensures smooth financial operations and peace of mind.

The Reserve Bank of India regulates remittances under the Foreign Exchange Management Act (FEMA). All remittances must have valid purposes under FEMA and use RBI-authorized channels (banks or authorized dealers).

Never use unauthorized channels or informal hawala networks, as these are illegal and can result in prosecution.

The Income Tax Act requires proper tax deduction and reporting. Ensure TDS is deducted before remitting any taxable income. File Form 15CA for all remittances as applicable. Report all your Indian income in your ITR even if it's below the taxable threshold.

Maintain complete records of all transactions. Keep TDS certificates (Form 16A), bank statements, remittance confirmations, Form 15CA/15CB copies, source of funds documents, and ITR acknowledgments. The Income Tax Department can ask for these documents up to 7 years after the transaction.

File your annual ITR in India if you have taxable income. This is mandatory if your Indian income exceeds ₹2.5 lakh under the old regime or ₹4 lakh under the new regime for FY 2025-26. The due date is typically July 31st (extended to September 15, 2025 for FY 2024-25).

Penalties for non-compliance are severe. Not filing Form 15CA/15CB can attract a penalty of ₹1 lakh under Section 271-I. Not deducting TDS leads to interest charges of 1.5% per month.

Misreporting or concealment of income can result in penalties up to 300% of tax evaded, along with potential prosecution.

Summary

Understanding NRI tax on remittance doesn't have to be complicated. Remember these key points: you don't pay TCS like residents, but you must ensure TDS has been properly deducted from your Indian income and file Form 15CA and 15CB for most remittances above ₹5 lakh.

Your action plan is simple: maintain proper documentation of all income and TDS deductions, leverage DTAA benefits with a Tax Residency Certificate to reduce tax rates, and engage a qualified CA for amounts exceeding ₹5 lakh to ensure smooth processing. Keep complete records of all transactions for future tax filings and potential audits.

With the right knowledge and planning, you can remit money from India efficiently, legally, and with minimum tax outflow. Whether you're repatriating property sale proceeds, transferring rental income, or moving inherited funds, following these guidelines ensures you stay compliant while optimizing your tax liability. When in doubt, consult a tax advisor specializing in NRI taxation for personalized guidance based on your specific situation.