Tax on transfer of funds from NRO to NRE account

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Milind M. Kulkarni

Practicing CA

589 Points Joined April 2011

One of my clients in NRI and has NRO and NRE accounts in India. While her case for tax return filing comes to me now, I notice that she received heavy amounts in her NRO account (approximately Rs. 60 Lakh) of which, she transferred Rs. 35 Lakh (in different lots) to her NRE account during the year. She has paid absolutely no tax - neither on receipts in NRO account nor at the time of transfer to NRE account as is clear from her form 26AS and AIS/ TIS which make no mention of any such receipts or any such transfer to NRE account.

My queries are as follows.

1. Can a bank allow transfer of funds from NRO to NRE account without payment of tax or without a CA certificate in form 15CB as I understand there was no such certificate given by any CA for these transfers?

2. If it turns out that receipts to her NRO account were capital in nature and non-taxable, should I still insist her to pay tax before filing return just because she transferred funds from NRO to NRE account?

Replies (5)

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

207976 Points Joined July 2016

According to the Reserve Bank of India notification dated May 7, 2012,” it has been decided that henceforth NRI as defined in Foreign Exchange Management (Deposit) Regulations, 2000 contained in Notification No. FEMA.5/2000-RB dated 3rd May 2000, as amended from time to time, shall be eligible to transfer funds from NRO account to NRE account within the overall ceiling of USD one million per financial year subject to payment of tax, as applicable (i.e. as applicable if funds were remitted abroad). Such credit of funds to NRE account shall be treated as eligible credit in terms of paragraph 3(j) of Schedule-1 of Notification No. FEMA.5/2000-RB dated 3rd May 2000.”

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

207976 Points Joined July 2016

Limit on the transfer NRO to an NRE account
The Reserve Bank of India allows the transfer of funds up to USD 1 million a year from an NRO to an NRE account.

Documents required
Here is a list of documents you will require if you are planning transfer funds from an NRO account to an NRE account...

A signed cheque for the transfer of funds from NRO to NRE account
FEMA declaration
Documentary evidence of source of funds
Form 15CA
Form 15CB - It is a form certified by the CA. It contains details regarding the payment like the TDS rate, deductions and the applicability of DTAA.

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

207976 Points Joined July 2016

1. You need to verify first the taxability of funds credited to NRO account.

2. Bank would have received declaration of CA for the source of funds being transferred, so get copy of such document from client/via her earlier CA.

sabyasachi mukherjee

27983 Points Joined May 2017

Nro to nre account .
no tax implications.

Roodita Gaikwad

Practice

4668 Points Joined November 2024

Banks generally require Form 15CA & 15CB before allowing transfer from NRO to NRE, as per RBI and Income Tax guidelines. However, some small-value or exempt remittances may not need a CA certificate if covered under Rule 37BB exclusions. Still, most banks insist on it to ensure compliance and avoid future liability.
If the funds are capital receipts (like sale proceeds of inherited assets or past savings), and not taxable, no tax is payable. But to justify the remittance, you should get a Form 15CB certifying it as non-taxable, and Form 15CA (Part C) filed accordingly. This helps avoid unnecessary scrutiny and supports your ITR.

For simplified and efficient filing of Form 15CA/CB, you can use our Excel utility for bulk XML generation — fully compliant with the Income Tax portal.

Download here: https://xltool.in/15ca-15cb/ | www.xltool.in