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FEMA Rules for NRIs: Key Points

 


✅ What is the core objective of FEMA rules for NRIs?

The Foreign Exchange Management Act (FEMA) governs how NRIs manage cross-border financial transactions. Its primary purpose is to regulate the flow of foreign exchange and ensure that funds sent to and from India are compliant with national interests and international financial protocols. For NRIs, it plays a vital role in managing investments, remittances, and property dealings in India.

✅ Can NRIs maintain regular savings accounts in India?

No, NRIs cannot operate standard savings bank accounts in India. As per RBI guidelines, they must maintain either a Non-Resident Ordinary (NRO) account or a Non-Resident External (NRE) account to manage their finances within India.

✅ Are there restrictions on investments NRIs can make in India?

Yes. While NRIs have broad investment opportunities, certain schemes are off-limits, including:

  • Public Provident Fund (PPF)
  • National Savings Certificates (NSCs)
  • Senior Citizen Savings Scheme
  • Post Office Savings Schemes

These small savings schemes are exclusively reserved for resident Indians.

✅ Can NRIs buy property in India?

Yes. NRIs are allowed to purchase residential and commercial properties in India without restrictions. However, they cannot buy agricultural land, plantation property, or farmhouses. These can only be acquired through inheritance or gifts from relatives.

✅ Can NRIs remit income from overseas assets to India?

Yes, FEMA permits NRIs to remit foreign income (such as rent from property owned abroad) to India. These funds must originate from legitimate, repatriable assets held overseas.

✅ Can NRIs repatriate the sale proceeds of property in India?

Only partially. Under FEMA rules, sale proceeds from immovable property in India are non-repatriable without explicit approval from the Reserve Bank of India (RBI). Exceptions exist but must follow strict documentation and approval norms.

✅ When can NRIs repatriate up to USD 1 million from India?

NRIs can repatriate up to USD 1 million per financial year under specific situations, such as:

  • When the funds relate to inheritance
  • Upon retirement from employment in India
  • For maintenance of close relatives abroad (subject to documentary evidence)

✅ What is the difference between repatriable and non-repatriable investments under FEMA?

FEMA distinguishes NRI investments as:

  • Repatriable: Funds and returns can be moved outside India (e.g., through NRE accounts)
  • Non-repatriable: Returns must remain in India (e.g., through NRO accounts)

NRIs can freely invest under both routes, but repatriation rights depend on the transaction nature and regulatory approvals.

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