For NRIs, managing funds between Indian and overseas accounts can often be complicated due to the regulatory and tax obligations involved. Among the most frequent transactions is the transfer of money from a Non-Resident Ordinary (NRO) account to a Non-Resident External (NRE) account. These transfers are governed by stringent guidelines under the Income Tax Act and the Foreign Exchange Management Act (FEMA). To ensure transparency and compliance, the Central Board of Direct Taxes (CBDT) has prescribed specific procedures and documentation requirements for such transactions. This blog provides a clear and comprehensive understanding of the process, rules, and forms involved in NRO to NRE fund transfer, helping NRIs carry out their remittances smoothly and in full compliance with the law.
Understanding the CBDT Circular 93/2015
Effective from April 1, 2016, the CBDT Circular 93/2015 dated December 16, 2015, substituted Rule 37BB, which specifies the reporting requirements for any person responsible for paying to a non-resident or a foreign company any interest or salary or any other sum chargeable to tax under the provisions of the Income Tax Act. This rule mandates the furnishing of Form 15CB and Form 15CA for such transactions. However, the forms and their requirements were changed significantly through this circular, simplifying procedures in certain cases and clearly defining when these forms are required.
Understanding Form 15CA
Form 15CA is a declaration by the remitter (transferor) and serves as a tool for collecting information regarding payments that are chargeable to tax in the hands of the non-resident recipient. Form 15CA, whether Part A, B, C, or D, must be electronically submitted to the Income Tax Department. After submission, an acknowledgement of the Form 15CA is generated and made available online. The remitter (transferor) must then verify the form electronically using net banking or Aadhaar or DSC – Digital Signature Certificate. This verification completes the electronic submission process, enabling the remitter to provide the acknowledgement to the bank for processing the remittance.
Understanding Form 15CB
Form 15CB is the prescribed certificate issued by a Chartered Accountant (CA). In this form, the CA certifies that the tax, if any, on the payment to an NRI or on the transfer of funds out of the NRO account has been deducted and/or paid in accordance with the provisions of the Income Tax Act. The Form 15CB must be digitally signed by the Chartered Accountant and submitted to the bank processing the fund transfer. This certificate is an essential part of the compliance process, as it ensures that all taxes related to the source of funds have been properly addressed before remittance.
Revised structure of Form 15CA
Form 15CA has been revised and divided into four parts (A, B, C, and D), each applicable under specific circumstances:
Part A:
For any payment chargeable to tax, if the aggregate of such payments during the financial year does not exceed ₹5,00,000, Form 15CA Part A is to be submitted.
Part B:
For any payment exceeding ₹5,00,000, if a certificate or order from the Assessing Officer is obtained, Form 15CA Part B must be submitted.
Part C:
For any payment that is chargeable to tax, and the amount of payment or sum of payments exceeds ₹5,00,000 during the year, and where no order or certificate from the Assessing Officer is obtained, a Chartered Accountant’s certificate in Form 15CB and Form 15CA Part C are required. The CA certificate in Form 15CB must be submitted electronically.
Part D:
For any payment that is not chargeable to tax and is not included in point #1 (the specified list), Form 15CB and Form 15CA are not required. However, Form 15CA Part D is to be submitted.
When Form 15CA and Form 15CB are not required
Forms 15CA and 15CB are not required when the payment being made to a non-resident is not taxable in India. In other words, if the remittance does not represent income that is chargeable to tax – such as personal transfers, gifts, or maintenance expenses – these forms need not be furnished. They are also not required when the Reserve Bank of India (RBI) does not mandate prior approval for the transaction, or when the remittance falls under the general permissions granted by FEMA for non-taxable transfers. In short, if the payment does not give rise to taxable income in India, Form 15CA and Form 15CB are not applicable.
RBI’s view on CBDT procedures
In light of CBDT Notification 67/2013, the Reserve Bank of India (RBI) reviewed its policy and decided that it would no longer issue instructions clarifying any tax issues under FEMA. The RBI has placed the responsibility on Authorized Dealers (banks) to comply with the requirement of the tax laws. In other words, banks must ensure that all necessary tax documentation, including Forms 15CA and 15CB, is duly furnished before processing remittances. RBI also instructed Authorized Dealers to approach the CBDT for any clarification, if needed.
What does “any payment chargeable to tax” mean?
The CBDT circular changed the rule so that the furnishing of 15CA or 15CB or both, as the case may be, is required only for the payment that is chargeable to tax under the Income Tax Act. Any payment that is not chargeable to tax – for example, gifts from close relatives, inheritance, or fund transfers between personal accounts – may not require 15CB/15CA. Also, it is important to note that tax can only be levied on the income, and there is NO tax on the transfer of funds between accounts, be it –
NRO to NRO
NRE to NRE
NRO to NRE
NRO to an account outside India
However, whether the source of funds in NRO is after payment of tax or not, needs to be verified before transferring to NRE or abroad.
Example: How tax compliance works for NRO to NRE transfer
To understand how this rule applies in practice, consider the following example:
Mr. Anup Pal, an NRI from Canada sold an immovable property for Rs 4,500,000 resulting in a gain of Rs. 1,000,000. The buyer did not deduct TDS and the funds were credited to his NRO account. Now, if he wants to transfer the funds from NRO to NRE, while there is no tax on the transfer, the source of funds in the NRO account is taxable and he can transfer the funds to his account in Canada or to an NRE account only after the payment of tax and furnishing information in 15CB/15CA in India.
Need help with NRO to NRE transfers?
NRIs often face challenges ensuring proper documentation, tax payment, and regulatory compliance before remitting funds abroad. ExpertNRI provides complete assistance for every stage of your NRO to NRE fund transfer – from verifying tax-paid sources and coordinating with Chartered Accountants to preparing and submitting Forms 15CA and 15CB. Their experienced professionals ensure your transfer process is accurate, efficient, and fully compliant with Indian income tax and FEMA regulations. With ExpertNRI’s guidance, you can move your hard-earned money seamlessly and confidently, knowing your international remittance meets every legal and procedural requirement.
Transferring funds from an NRO to an NRE account is a legitimate and routine process for NRIs, provided it adheres to tax and regulatory guidelines. While the transfer itself is not taxable, the source of the funds must be verified and taxes, if applicable, should be duly paid. By complying with CBDT Circular 93/2015 and correctly submitting Forms 15CA and 15CB, NRIs can ensure transparent, lawful remittances. Clear coordination with the authorized dealer bank and proper documentation safeguard against scrutiny or delays, enabling smooth, compliant fund transfers while maintaining full alignment with Indian income tax and FEMA regulations.
