Sending money back: repatriating rental income and sale proceeds to the UAE

NRE and NRO: the distinction that decides everything

An NRE account holds money you have brought into India from abroad. It is maintained in rupees, the interest is generally tax-free in India, and both the principal and the interest are freely repatriable. Money can flow back out without a cap.

An NRO account holds income that arises in India - rent, dividends, a pension, the proceeds of a sale. Interest is taxable, and repatriation out of it is restricted and requires documentation.

Rental income from an Indian property is Indian-source income, so it lands in the NRO account. That is the account most repatriation questions are really about.

Keep the two accounts genuinely separate and never mix funds between them casually. A clean separation is what makes the paperwork straightforward later.

Repatriating rental income

Rent is taxable in India. Tenants are generally required to deduct tax at source before paying you, and you can file an Indian return to claim a refund if too much was withheld - which is common, since the deduction takes no account of your actual liability after the standard deduction and any loan interest.

Once the tax position is settled, the post-tax balance sitting in your NRO account can be remitted to the UAE within the annual limit described below.

The USD 1 million limit

Under RBI rules, an NRI can generally remit up to USD 1 million per financial year out of an NRO account, covering the balance in the account and the sale proceeds of assets. For the overwhelming majority of individual buyers this is far more headroom than they will ever need.

The limit runs by financial year, which in India means April to March - not the calendar year. If you are selling something substantial, the timing of the transaction relative to that boundary is worth a conversation with your advisor.

Repatriating sale proceeds

Where a residential property was bought using foreign exchange - money remitted in from abroad, or funds from an NRE or FCNR account - the sale proceeds can be repatriated, subject to a limit of two residential properties.

This is exactly why the remittance receipts from your original purchase matter. If the property was bought with rupee funds, or you cannot evidence how it was paid for, you are pushed back into the general NRO route and its annual limit.

Keep the purchase remittance advices, the bank statements showing the transfers, the registered sale deed and every payment receipt in one place from the day you buy. Scan them.

Form 15CA and Form 15CB

Before your bank will process the remittance, it will normally want Form 15CA - a declaration you file online - and Form 15CB, a certificate from a chartered accountant in India confirming that the correct tax has been paid or deducted on the money being sent.

Build this into your timeline. It is a routine piece of work for any CA who deals with NRI clients, but it is not instant, and banks will not release funds without it where it applies.

Capital gains and the India-UAE tax treaty

Selling a property in India triggers capital gains tax there, with the rate and treatment depending on how long you held it. When an NRI sells, the buyer is required to deduct tax at source at a higher rate than applies to a resident seller - and that deduction is often more than your actual liability, leaving you to reclaim the difference by filing a return.

India and the UAE have a double taxation avoidance agreement, which governs how the same income is treated across both jurisdictions. Rates and thresholds have been revised more than once in recent years, so treat any specific percentage you read - here or anywhere else - as something to confirm rather than rely on.

This article is general information, not tax advice. Before you sell, get your specific position reviewed by a chartered accountant who handles NRI clients.