NRIs connected to Nepal follow the same FEMA-governed NRE, NRO, and FCNR account framework as NRIs anywhere else, with net proceeds from Indian property sales typically routed through an NRO account and repatriated abroad up to USD 1 million per financial year, subject to Form 15CA/15CB certification -- readers should note the special open-border relationship with Nepal does not change any of these India-side FEMA rules.
FEMA rules apply the same way regardless of the open border
India's Foreign Exchange Management Act (FEMA) framework -- NRE, NRO, and FCNR accounts, the
residential-status test for NRI classification, and repatriation limits -- applies identically to NRIs
connected to Nepal as it does to NRIs connected to any other country. This platform explicitly flags
that the 1950 Treaty of Peace and Friendship's open-border and free-movement privileges, discussed in
this platform's Immigration guide for Nepal, have no bearing on FEMA compliance: a person's obligations
under FEMA turn on their residential status for tax and exchange-control purposes, not on whether they
needed a visa to enter Nepal.
Repatriating sale proceeds, and the NPR-INR currency peg's practical relevance
Net proceeds from selling Indian property are typically credited to the NRI's NRO account in India.
FEMA rules permit repatriation abroad of up to USD 1 million (or equivalent) per financial year,
cumulative across eligible remittances from that account, subject to the authorized dealer bank
receiving Form 15CA (and Form 15CB where applicable, generally after a chartered accountant has
certified the tax position). Readers moving funds specifically between India and Nepal, rather than
repatriating further abroad, should be aware that the Nepali Rupee is pegged to the Indian Rupee at a
fixed rate of 1 INR = 1.6 NPR -- a genuinely distinctive practical fact among the countries this
platform covers, though this platform recommends confirming the current peg rate before relying on it
for a transaction, since it did not independently re-verify the rate in this round of research.
DTAA relief, and the flagged gaps in the India-Nepal treaty
Where compliance questions touch on TDS or double-taxation relief on income connected to Nepal,
readers should refer to this platform's Tax guide for Nepal, which sets out the India-Nepal DTAA's
confirmed dividend, interest, and royalty rates alongside two flagged gaps -- the absence of a separate
Fees for Technical Services article, and an MFN clause narrowly confined to royalties -- that make
professional confirmation of the applicable provision especially worthwhile for any transaction beyond
a straightforward property sale.
Common mistakes people connected to Nepal make with compliance questions:
- Assuming the 1950 Treaty's open-border privileges affect FEMA residential-status rules or
repatriation limits -- they do not; FEMA applies the same way regardless of visa-free travel status.
- Leaving Form 15CA/15CB paperwork until after proceeds reach the NRO account, rather than preparing
it in advance of the sale closing.
- Not confirming the current NPR-INR peg rate before a cross-border transfer specifically involving
Nepal.
