Transferring funds out of India post-inheritance is rarely as simple as a wire transfer. The Reserve Bank of India (RBI) heavily regulates outbound capital flows, making structural compliance the most critical phase of international inheritance.
Whether you are an NRI looking to move funds from the sale of your parents' flat in Mumbai, or an OCI trying to repatriate fixed deposit balances, navigating the intersection of the Foreign Exchange Management Act (FEMA) and the Income Tax Act is fraught with procedural traps.
1. Understanding the Non-Resident Ordinary (NRO) Route
The golden rule of Indian repatriation: All funds derived from inherited Indian assets must first pool into an NRO (Non-Resident Ordinary) account. You cannot directly deposit proceeds from an Indian property sale into a foreign bank account or even an NRE account.
The NRO account acts as a holding pen where Indian taxes are calculated and deducted at the source (TDS) before the funds are cleared for cross-border transit.
Structural Strategy Tip
Attempting to bypass the NRO account route via hawala or informal channels is a severe violation of FEMA and can lead to asset freezing and heavy penalties. Ensure your banking architecture is compliant from day one.
Map your structural compliance flow2. The $1 Million USD Limit Explained
Under the current FEMA guidelines, NRIs and OCIs are permitted to repatriate up to USD 1 Million per financial year (April to March) out of balances held in their NRO accounts. This limit applies specifically to balances representing assets acquired as inheritance or legacy.
What if your inherited assets exceed $1 Million?
- Staggering: You can repatriate $1M in Year 1, wait for the next financial year (April 1st), and repatriate another $1M.
- Special RBI Approval: If you must remit more than $1M in a single year due to hardship or specific requirements, a special application must be made to the RBI. This is heavily scrutinized and requires robust legal documentation.
3. Mastering Form 15CA & 15CB
This is where 90% of repatriation attempts fail. Before your bank will authorize the wire transfer, you must prove that all Indian taxes on the funds have been paid. This is done via a twin-form system:
Form 15CB: This is a certificate issued by an Indian Chartered Accountant (CA). The CA reviews your source of funds (e.g., Will, Sale Deed) and certifies that the correct tax (TDS or Capital Gains) has been calculated and paid.
Form 15CA: This is a declaration filed by you (the remitter) on the Income Tax portal, based on the CA's 15CB certificate. It generates an acknowledgment number the bank requires to execute the transfer.
4. Common Banking Pitfalls
Even with a 15CB in hand, Authorised Dealer (AD) banks often stall transfers out of extreme caution. Common hurdles include:
- Mismatched Status: Attempting to repatriate from a resident savings account instead of converting it to an NRO account first.
- Missing Source Documents: Failing to provide a registered Will, succession certificate, or registered sale deed to the bank's forex department.
- TDS Certificate Delays: If you sold an inherited property, the buyer must deduct TDS and issue you a Form 16B. Banks will hold transfers until this certificate is provided as proof of tax payment.
5. Essential Document Checklist
To ensure a smooth transition, assemble the following structural dossier before initiating any bank transfer:
- Registered Will / Succession Certificate or Legal Heir Certificate
- Death Certificate of the deceased
- Registered Sale Deed (if the inherited property was liquidated)
- Form 15CB issued by a Chartered Accountant
- Form 15CA acknowledgment
- A2 Remittance Form standard to your bank
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Key Takeaways
- All inherited funds must pass through an NRO account.
- The annual repatriation limit under LRS rules is $1 Million USD.
- A CA-certified Form 15CB and self-declared Form 15CA are mandatory.
- Over-communicate with your AD bank's forex desk to prevent document delays.