Once you become an NRI, FEMA (the Foreign Exchange Management Act, 1999) -- not the Income Tax Act -- governs which Indian bank accounts you can hold, how you can invest, and how you move money between India and the UK. The core obligations are: re-designating resident accounts to NRO/NRE on becoming an NRI, using the correct account type for the correct purpose, and following the RBI's remittance limits and reporting requirements when repatriating funds out of India.
NRE, NRO, and FCNR accounts -- what each is for
An NRE (Non-Resident External) account holds foreign earnings remitted into India; both
principal and interest are freely repatriable, and interest is tax-exempt while NRI status is maintained. An
NRO (Non-Resident Ordinary) account is for income that arises in India (rent, dividends,
pension) and existing resident-account balances re-designated on NRI status; interest is taxable, and
repatriation is subject to specific limits and documentation. An FCNR (Foreign Currency
Non-Resident) account holds foreign-currency term deposits, avoiding exchange-rate risk. Continuing
to operate an ordinary resident savings account after becoming an NRI is a FEMA violation -- it must be
converted to NRO (or closed) once residency status changes.
The USD 1 million repatriation scheme for NRO funds
Under RBI's remittance facility for NRIs, balances in an NRO account -- including sale proceeds of
inherited or purchased property -- can generally be repatriated up to USD 1 million per financial year,
subject to payment of applicable taxes and submission of the prescribed certificates (typically Form
15CA/15CB, certified by a Chartered Accountant). This limit and the supporting documentation requirements
are set by RBI and can be revised, so the current limit should be confirmed with the remitting bank.
PAN and Aadhaar for NRIs
A Permanent Account Number (PAN) is required for most financial transactions in India -- opening NRO/NRE
accounts, buying property, filing tax returns, and investing in securities. Aadhaar is generally not
mandatory for NRIs the way it is for resident Indians, though banks and other institutions may still ask for
it as one acceptable form of KYC -- carrying valid, current KYC documents (passport, OCI card, overseas
address proof) avoids friction with Indian banks and registrars.
Investment compliance -- what NRIs can and cannot hold
NRIs can invest in most listed securities, mutual funds, and non-agricultural property on a repatriable
or non-repatriable basis depending on the funding source (NRE vs. NRO), and can invest in Indian companies
under the FDI/portfolio investment framework. NRIs generally cannot purchase agricultural land, plantation
property, or farmhouses (these can typically only be inherited, not purchased).
Annual compliance checklist for an NRI with Indian assets
- Confirm accounts are correctly designated as NRO/NRE/FCNR, not left as resident accounts.
- File an Indian income tax return if Indian-sourced income exceeds the applicable threshold.
- Keep Form 15CA/15CB documentation current for any planned repatriation during the year.
- Review whether any FEMA reporting is pending for property purchases, gifts received, or business
investments made during the year.
- Re-confirm residential status for the year under Section 6, since it can change year to year based
on days spent in India.
What happens if I forget to convert my savings account to NRO after becoming an NRI?
Continuing to operate a resident account after becoming an NRI is a technical FEMA violation. Banks
generally allow regularization by converting the account to NRO once the NRI status is disclosed.
Is the USD 1 million repatriation limit per account or per person per year?
It applies per NRI individual per financial year across their NRO holdings taken together, not per
account -- confirm the current mechanics and required certification with the remitting bank.
Do I need a PAN card if I only have an NRE account and no other Indian income?
Banks may still require PAN (or Form 60 in limited situations) for account opening and transaction
reporting purposes even without taxable Indian income -- check the specific bank's requirement.
Can I keep my old resident-status mutual fund investments after becoming an NRI?
Existing investments generally don't need to be liquidated, but new investments and redemptions should be
routed correctly based on current NRI status, and the fund house/registrar should be notified of the status
change.
