FEMA Compliance & NRO/NRE Account Advisory

5.0 - 28 Google Reviews

FEMA Compliance & NRO/NRE Account Advisory

FEMA-compliant transactions for NRIs — NRO/NRE/FCNR account guidance, fund repatriation, RBI reporting, and foreign exchange compliance.

The Foreign Exchange Management Act (FEMA) governs all cross-border financial transactions involving Indian residents and Non-Resident Indians. For NRIs, virtually every financial transaction involving India — receiving rental income, repatriating funds, investing in Indian assets, or receiving inherited property — has FEMA implications. Violations can attract significant penalties.

AAA Global LLP provides comprehensive FEMA compliance advisory — helping NRIs navigate the regulatory framework for their Indian financial assets, ensuring every transaction is properly documented and reported.

NRI Bank Accounts — Understanding the Types

NRO Account (Non-Resident Ordinary) For managing income earned in India — rental income, dividends, pension. Interest: taxable at 30%. Repatriation: up to USD 1 million per year after paying applicable taxes..
NRE Account (Non-Resident External) For parking foreign income in India. Interest: tax-free. Principal and interest: fully and freely repatriable without any limit. Cannot receive Indian-source income.
FCNR Account (Foreign Currency Non-Resident) Fixed deposits in foreign currency (USD, GBP, EUR, AUD, CAD, JPY). Interest: tax-free. Fully repatriable. Protects against exchange rate risk.

Repatriation of Funds from India

NRIs can repatriate funds from India — but the process, documentation, and limits depend on the source of funds.

From NRE account Fully and freely repatriable — no limit, no documentation required beyond bank’s standard KYC.

From NRO account Up to USD 1 million per financial year after payment of applicable taxes. Requires CA certificate (Form 15CA/15CB) for amounts subject to TDS.

Property sale proceeds Must comply with FEMA repatriation provisions — Form 15CA/15CB required. Up to USD 1 million per year from NRO after taxes.

Inheritance and gifts Inherited assets can be repatriated subject to specific conditions — proof of inheritance and tax clearance required.

FEMA Reporting Requirements

FC-GPR when a non-resident subscribes to equity shares of an Indian company (FDI reporting)
FC-TRS when shares are transferred between resident and non-resident
Annual Performance Report (APR) annual FEMA reporting for Indian companies with foreign shareholders
FLA Return annual return on Foreign Liabilities and Assets filed by Indian companies with overseas investments

Common FEMA Mistakes NRIs Make

Using resident account after becoming NRI NRIs must convert their resident savings accounts to NRO or NRE accounts within 3 months of becoming NRI. Continuing to use a resident account after that is a FEMA violation.

Receiving India income in NRE account Indian-source income (rent, salary, dividends) cannot be credited directly to an NRE account — it must first go to NRO. Violation of NRE account conditions.

Investing in PPF after becoming NRI NRIs cannot open a new PPF account. Existing PPF accounts continue but cannot be extended after maturity.

Buying agricultural land NRIs cannot purchase agricultural land, plantation property, or farmhouses in India without specific RBI approval.

Frequently Asked Questions

01 Can an NRI invest in Indian stock markets?

Yes — under the Portfolio Investment Scheme (PIS), NRIs can invest in Indian equity shares and convertible debentures. Investment must be through a designated PIS-linked NRO/NRE account with SEBI-registered broker. Aggregate NRI holding in any company is subject to limits.

02 Can an NRI maintain a Demat account in India?

Yes — NRIs can maintain a Demat account in India. NRI Demat accounts are of two types: NRO Demat (for non-repatriable investments) and NRE Demat (for repatriable investments).

03 What is the liberalized remittance scheme and does it apply to NRIs?

The Liberalized Remittance Scheme (LRS) applies to resident individuals — allowing remittance of up to USD 250,000 per year for various purposes. It does not apply to NRIs. NRI repatriation is governed by separate FEMA provisions.

04 I have not converted my savings account to NRO after becoming NRI. What should I do?

Convert your account to NRO immediately — contact your bank. While the violation has already occurred, voluntary regularization is better than being caught. We advise on regularization options under FEMA compounding provisions.

5.0 - 28 Google Reviews