FEMA Guidelines for NRIs in 2026: Rules, Repatriation Limits, and What's Genuinely Changed

The FEMA guidelines for Non-Resident Indians (NRIs) govern how you bank, invest, hold property, and move money across India's borders once you stop being a resident.

This guide sets out the FEMA rules for NRIs as they stand in 2026, and flags what has genuinely changed this year.

The Foreign Exchange Management Act, 1999 (FEMA) sorts every cross-border transaction into capital and current account transactions under FEMA, and your rights differ across the two.

Compliance is as much a question of enforcement as of the rulebook, so this guide is honest about where it bites and where it does not.

These six rules decide what FEMA allows and forbids; each is detailed below.

• Bank accounts: As an NRI you cannot keep a resident savings account: redesignate it as an NRO (Non-Resident Ordinary) account, and hold foreign earnings in an NRE (Non-Resident External) or FCNR (Foreign Currency Non-Resident) account.
• Repatriation: NRE and FCNR balances are freely repatriable; from an NRO account you can send up to USD 1 million per financial year in capital and asset-sale proceeds, while current income such as rent or pension has no cap, net of Indian tax.
• Investments: You can hold Indian equities, mutual funds, and property, but not a new Public Provident Fund (PPF) account or new Sovereign Gold Bonds; listed-company holdings are capped under the Portfolio Investment Scheme (PIS).
• Property: You can buy residential and commercial property, but not agricultural land, farmhouses, or plantations, which you may only inherit.
• Remittance paperwork: Outward remittances now use Form 145 and Form 146, which replaced Form 15CA and 15CB from 1 April 2026, filed before the money moves.
• Penalties: Non-compliance is civil, not criminal, and is usually settled through RBI compounding, so correcting a lapse late beats never.

Under FEMA, a Non-Resident Indian (NRI) is an Indian citizen who is a person resident outside India. What trips people up is the "resident outside India" test, which has two limbs:

Day-count test

You are a non-resident if you were outside India for more than 182 days during the preceding financial year.

Intent or purpose override

Regardless of the day count, you are a non-resident if you left India for employment, business, or any purpose indicating an intention to stay abroad for an uncertain period (Section 2(v), FEMA, 1999).

So intent can override the calendar: someone who moves abroad for a job in November is a non-resident under FEMA from that point, even after most of the year in India. (The Income-tax Act uses a different test, below.)

If you are a resident freelancer or exporter receiving payments from overseas clients rather than an NRI, this page does not apply. That is a separate track, the realisation and repatriation of export proceeds, where platforms such as Xflow operate.

NRI, PIO, and OCI: what's the difference?

These three statuses get used interchangeably, but they are not the same.

• NRI (Non-Resident Indian): a citizen of India who is resident outside India.
• PIO (Person of Indian Origin): a citizen of another country (other than Bangladesh or Pakistan) who was themselves an Indian citizen, or whose parent or grandparent was, or who is the spouse of an Indian citizen or of a PIO.
• OCI (Overseas Citizen of India): a person of Indian origin who is a foreign national and holds an OCI card registered under Section 7A of the Citizenship Act, 1955.

For banking, investment, and property, FEMA broadly treats PIOs and OCIs on par with NRIs, so most rules below apply to all three. (A narrower PIO definition applies to immovable property, excluding citizens of a few named countries.)

Two confusions cause most NRI compliance mistakes: conflating FEMA residency with income-tax residency, and conflating FEMA with "RBI rules". Neither holds.

FEMA vs income tax: two residency tests

Your FEMA status decides what you can do with your money; your income-tax status decides how you are taxed. They are settled separately and can disagree in the same year.

The difference that catches people is intent. FEMA can treat you as non-resident from the day you leave for a job abroad.

The Income-tax Act uses a pure day-count test (182 days in the year, or 60 days plus 365 across the prior four years), with no intent test, so it may still count you as resident that year.

Where the same income is taxed twice, a Double Taxation Avoidance Agreement (DTAA) may give relief; see double taxation.

FEMA vs the RBI: law versus regulator

FEMA is the statute; the RBI is the regulator that implements it and clears each transaction through your Authorised Dealer (AD) bank.

As an NRI you cannot keep running an ordinary resident savings account. FEMA gives you three account types, each with a different job.

NRE interest is exempt under Section 10(4)(ii) and FCNR interest under Section 10(15)(iv)(fA) of the Income-tax Act while you hold non-resident status. NRO interest is fully taxable, with tax deducted at source under Section 195.

For a full account-by-account breakdown, see NRE vs NRO vs FCNR.

Why your resident account must be redesignated

When a resident becomes a person resident outside India, the existing resident account must be redesignated as an NRO account (Section 6.10, RBI Master Direction on Deposits and Accounts).

Running it on as a plain resident account is a FEMA contravention.

This is the single most-asked NRI question online: must you convert, and does anyone get penalised for not converting? The honest answer is in the penalties section below; for now, the obligation is clear even where enforcement is inconsistent.

Moving money the other way, NRO to NRE, is a separate, document-heavy process, precisely because NRE funds are freely repatriable and the bank must satisfy itself about the source; see NRO to NRE transfer.

LRS does not apply to you (myth-buster)

A common and costly misconception: the Liberalised Remittance Scheme (LRS) is not how NRIs send money out of India.

LRS is available only to resident individuals, up to USD 250,000 per financial year, and expressly excludes NRIs, corporates, partnership firms, HUFs, and trusts (RBI LRS FAQ).

As an NRI you move funds through your NRE and FCNR accounts (freely repatriable) and your NRO account (capped, as above), not LRS.

It matters to you only in reverse, when a resident family member remits to or for you. If you have recently returned and become resident again, see the LRS liberalized remittance scheme.

This turns on keeping apart two things that are easily conflated.

Capital and asset-sale remittances draw on the USD 1 million ceiling (Para 5.1, RBI Master Circular on Remittance Facilities for NRIs).

Current income is a permissible NRO debit that sits outside that ceiling (Para 3.1, same circular), so a retiree drawing Indian rent and pension is not squeezed into the same ceiling as someone selling a flat.

The USD 1 million figure is NRI-specific. For how remittance limits work more broadly, see foreign remittance limit.

Repatriating under this limit now requires Form 145 (the remitter's declaration) and, where applicable, Form 146 (the Chartered Accountant's certificate).

These replaced Form 15CA and Form 15CB for remittances made on or after 1 April 2026, under Rule 220 of the Income-tax Rules, 2026.

Form 145 and 146 are income-tax forms, not FEMA or RBI forms. For the full filing mechanics and history, see what is Form 15CA and 15CB.

Worked example: repatriating sale proceeds from an inherited property

Most guides skip the mechanics, so this scenario walks through a common case.

Suppose you inherit a residential flat from a resident parent and decide to sell it and take the proceeds abroad. The sequence runs as follows.

Step 1: Prove the inheritance

You need documentary evidence of inheritance or legacy, such as a will or a legal-heir certificate (Para 5.3, RBI Master Circular on Remittance Facilities).

Step 2: Get the tax position certified

You need a remitter's undertaking plus a Chartered Accountant's certificate in the CBDT-prescribed format, confirming applicable Indian tax has been paid or provided for (Para 9, same circular).

Step 3: Fit within the ceiling

The sale proceeds count toward the same USD 1 million per financial year limit as any other NRO-linked remittance that year, not an extra allowance on top.

Step 4: Watch the two-property cap

Repatriation of residential-property sale proceeds is permitted for up to two residential properties in total (Regulation 5(A)(b)(iii), FEMA Immovable Property Regulations, 2018). If this is the third you are repatriating from, that ceiling bites.

Step 5: File the form first

Form 145, and Form 146 where a CA certificate is required, must be filed before the money leaves India.

The two-property cap and the USD 1 million cap are one overall limit expressed two ways, not two allowances you can stack.

Do you owe TCS on NRO repatriation? (myth-buster)

No. Tax Collected at Source (TCS) and the threshold that triggers it attach to the Liberalised Remittance Scheme, a resident-only route. Because NRIs do not repatriate through LRS, TCS does not apply to your NRO-to-NRE or NRO-to-foreign-account transfers.

Budget 2026 cut the TCS rate on LRS remittances for education and medical treatment from 5% to 2%, effective 1 April 2026.

That is a resident-side change, affecting a resident family member remitting to or for you, not your own repatriation. For depth, see TCS on foreign remittance.

As an NRI you can hold most Indian investments and own most property, within a few clear limits.

Listed company shares: the Portfolio Investment Scheme caps

Under the Portfolio Investment Scheme (PIS), how much you can hold turns on whether you invest on a repatriation or a non-repatriation basis.

These caps were raised from 5% and 10% by the Foreign Exchange Management (Non-Debt Instruments) (Third Amendment) Rules, 2026, notified on 12 June 2026. The same amendment widened eligibility beyond NRIs and OCIs to any individual person resident outside India.

Off-market transfers of capital instruments (shares, convertible debentures, warrants) between a resident and a non-resident are reported to the RBI on Form FC-TRS (Foreign Currency Transfer of Shares) through the FIRMS portal, generally within 60 days of transfer.

PPF, Sovereign Gold Bonds, and other restricted instruments

PPF: you cannot open a new Public Provident Fund (PPF) account as an NRI.

One opened while still resident runs to its original 15-year maturity and can receive contributions until then, but cannot be extended in five-year blocks afterwards as a resident's can. Proceeds go to your NRO account on maturity.

Sovereign Gold Bonds: NRIs cannot subscribe to new Sovereign Gold Bond (SGB) issues. A holding acquired during your resident years can run to maturity.

You can invest in Indian mutual funds and equities through your NRE or NRO accounts, subject to some fund houses' restrictions on US- and Canada-based investors.

For how such income is reported at filing, see receipt of foreign remittance in the ITR.

Property: what you can and cannot own

Real estate: you can freely buy, hold, and sell residential and commercial property in India. You cannot buy agricultural land, plantation property, or a farmhouse (Regulation 2(A)(i), FEMA Immovable Property Regulations, 2018).

You can, however, inherit and hold agricultural land, a plantation, or a farmhouse (Regulation 2(B)(ii)(b)); the purchase bar does not extend to inheritance.

When you sell residential property and want the proceeds abroad, the same USD 1 million per financial year ceiling applies, and repatriation is limited to two residential properties (Regulation 5(A)(b)(iii)). The worked example above covers the documentation.

The penalty is real for the ordinary NRI, though administrative rather than criminal. FEMA contraventions are civil, and most are resolved through compounding, a voluntary settlement with the RBI rather than prosecution.

Community threads are full of people who converted late, or never, and report no penalty. That is real, but not risk-free.

Enforcement is inconsistent rather than absent, and the exposure sits on your file until you regularise. Treat "nobody I know got caught" as enforcement patchiness, not permission.

How RBI's compounding proceedings process works

Section 15 of FEMA empowers the RBI to compound most contraventions defined under Section 13. The exception is Section 3(a), broadly unauthorised dealing in foreign exchange, which the Enforcement Directorate handles instead.

The current framework is the RBI's Master Direction on Compounding of Contraventions under FEMA, 1999 (April 2025), issued under the Foreign Exchange (Compounding Proceedings) Rules, 2024:

• You apply voluntarily to the RBI, through a Regional Office, the Compounding Cell, or the PRAVAAH portal, with an application fee of ₹10,000 plus 18% GST.
• There is no fixed public penalty matrix; the RBI sets the amount at its discretion, weighing any gain from the contravention and your compliance record. For non-reporting-type contraventions, it is capped at ₹2,00,000 per contravention.
• The RBI must pass its compounding order within 180 days of a complete application. You then pay within 15 days, failing which the application is treated as not made and the case can move to the Enforcement Directorate.

Compounding lets an honest slip be regularised for a defined, bounded cost.

The contraventions NRIs stumble into are predictable. Four account for most:

• Not redesignating your resident account. Continuing to run your old resident savings account after leaving India is the most common. Redesignate it as an NRO account (Section 6.10, RBI Master Direction on Deposits and Accounts); doing so voluntarily is exactly what compounding is for.
• Skipping the remittance form before repatriating. Money gets stuck at the bank counter when the form was not filed first. Repatriations to a non-resident need Form 145, and Form 146 where a CA certificate applies, filed before the remittance.
• Assuming LRS applies to you. Routing outward transfers through the Liberalised Remittance Scheme, or assuming its TCS threshold governs your NRO repatriation, is a category error. LRS is for residents; your channels are NRE, FCNR, and NRO.
• Exceeding the repatriation ceiling without documentation. Remitting above USD 1 million in a financial year without prior RBI approval, or repatriating asset-sale proceeds without the inheritance evidence and CA certificate, are contraventions. Stay within the ceiling or seek approval before crossing it, and keep the paperwork ready.

Paperwork is where compliance most often stalls. Many NRIs find KYC friction the most frustrating part: notarised signatures, rejected address proofs, the demand for an Indian phone number.

Much of that is bank operating practice rather than FEMA itself, but it is the practical face of these rules.

Purpose codes for inward remittance

Every inward remittance carries an RBI purpose code that tells the banking system what the money is for; getting it right keeps the transaction clean and the reporting accurate.

For the full list and how to choose, see the RBI purpose code for inward remittance.

Form A2 and the authorised dealer bank's role

Almost every outward remittance requires Form A2, the RBI-mandated declaration you file with your Authorised Dealer (AD) bank, stating the purpose code so the bank can confirm the transaction is permissible under FEMA.

Since a July 2024 RBI circular, online Form A2 submission has no minimum-amount threshold.

Your AD bank clears each transaction, which is why account type and forms matter. The income-tax Form 145 and 146 requirement covered earlier sits alongside this, not inside it.

The rules run in reverse when you move back, a stage easy to get wrong.

What is RNOR status and how long does it last?

Resident but Not Ordinarily Resident (RNOR) is a transitional tax status you usually pass through on return.

Under the Income-tax Act, you are RNOR if you were a non-resident in 9 of the preceding 10 years, or present in India for 729 days or less in the preceding 7 years.

A further category deems certain Indian citizens or PIOs with Indian income above ₹15 lakh, present for 120 to 182 days, to be RNOR.

It typically lasts two to three financial years, depending on how long you were an NRI before returning.

During RNOR, income earned and received outside India generally stays outside the Indian tax net, unlike for an ordinary resident, which is why timing your return matters.

RFC accounts: holding foreign currency after you return

A Resident Foreign Currency (RFC) account lets a returning resident keep money in foreign currency rather than convert everything to rupees.

You are eligible where the foreign exchange came from pension or other overseas-employer benefits, from assets acquired while non-resident or inherited or gifted from a non-resident, or from certain insurance proceeds settled in foreign currency (Section 3.2, RBI Master Direction on Deposits and Accounts).

RFC balances are free from restrictions on use of foreign currency outside India.

Converting NRE and NRO back to resident accounts

On your return to India for a purpose indicating an intention to stay for an uncertain period, your NRO account is redesignated as a resident account (Section 6.10, same Master Direction).

NRE and FCNR balances typically move to an RFC or resident account. The trigger is the same intent-plus-purpose test that made you a non-resident, now running the other way.

Compliance is mostly habit: redesignate accounts the moment your status changes, file the remittance form before you move money, and keep inheritance and tax-clearance documents ready before selling an asset.

If you manage Indian property or assets from abroad, a registered Power of Attorney stops routine steps from stalling while you are overseas.

If you are a resident Indian exporter or freelancer separately receiving payments from overseas clients, a different FEMA track from the personal NRI repatriation covered here, Xflow's receiving accounts credit inward payments at the mid-market rate, with automated electronic Foreign Inward Remittance Advice (eFIRA) generation.