447. Transfer money from NRO

bank account to NRE bank account

Questions: Sir, Reserve Bank Of India as per circular dated7th May 2012 allows the transfer of funds from NRO A/c to NREA/c which was not possible before the date of this circular. My ward transferred funds from his NREA/c to NRO FD A/c prior to this date and he is paying Income tax on the interest earned at the highest rate and has to wait for refunds by filing returns. As per the present circular he can transfer the NRO FD to NRE FD and earn taxfree interst at the same rate for NRO Deposits. RBI has taken this step to prmote high flow of foreign money to our nation. I may point out in this connection that the amount available in the NRO FD IS BY TRANSFER FROM his NRE A/C. but NO FORMAT OF APPLICTION IS SEEN GIVEN IN THE RBI CIRCULAR DATED 7TH MAY 2012 FOR THE TRANSFER PURPOSE. Kindly enlighten as to the nature of application format to be used for the transfer. Answer to this aspect would be useful for NRIs having the same problem. thanking you, Hari. Answer: The Reserve Bank of India circular RBI/2011-12/536 A. P. (DIR Series) Circular No.117, dated May 7, 2012 that provided information to all authorized banks to allow transfer of funds from NRO to NRE account does not clearly specify a form to be used for such a transfer. The use of the word repatriable funds in the RBI notification is confusing. The notification from the RBI (reproduced at the end of the page) states: ‘to transfer repatriable funds from their NRO account’ Currently, repatriable funds are assumed to be funds from the sale proceeds of assets/the assets in India acquired by way of inheritance/legacy or property that has been held for ten years . . .and such funds can be transfered on production of acceptable documentary evidence such as a certificate from a chartered accountant . . . Form 15CA, Form 15CB etc. Hence more clarification is required. Perhaps the bank where the NRO account is held, can offer more clarification. I am currently visiting the United States, and following my return to India will seek clarification from my bank on such transfer procedures. RBI/2011-12/536 A. P. (DIR Series) Circular No.117 May 07, 2012 To All Authorised Dealer banks and Authorised banks Madam/Sir, Transfer of Funds from Non-Resident Ordinary (NRO) account to Non- Resident External (NRE) Account The Committee to Review the Facilities for Individuals Under FEMA, 1999 (Chairperson : Smt. K.J.Udeshi) has recommended that the NRIs/PIOs may be permitted, subject to payment of applicable taxes, to transfer repatriable funds from their NRO account within the overall ceiling of US $ 1 million per financial year, for credit to their NRE account in India. At present transfer of funds from NRO to NRE account is not permissible. 2. On a review, 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. 3. All Authorised Dealer banks and Authorised banks may bring the contents of this circular to the notice of their constituents and customers concerned. 4. The directions contained in this circular have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions/approvals, if any, required under any other law. Yours faithfully, (Rudra Narayan Kar) Chief General Manager