How-to NRI redemption repatriation

How to redeem mutual fund and repatriate proceeds (NRI)

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Redeeming MF and repatriating proceeds as NRI depends critically on whether the folio was NRE-funded (repatriable) or NRO-funded (non-repatriable). Both involve Section 195 TDS; the difference is repatriation mechanics.

Conflict-of-interest disclosure. This guide is published by WebNotes Editorial Team for informational purposes. WebNotes has no commercial relationship with any AMC, bank, or CA. No affiliate commission is earned. For substantial repatriations, engage a CA familiar with NRI taxation.

Step-by-step procedure

See the procedure infobox above.

Section 195 TDS rates

IncomeTDS rate (default)DTAA-adjusted (if applicable)
Equity LTCG (>12 months)12.5% above Rs 1.25LPer DTAA
Equity STCG (<12 months)20%Per DTAA
Debt MF (post FA 2023)30% (max marginal)Per DTAA
IDCW20%Per DTAA

AMC deducts at source; investor can claim DTAA benefit by submitting Tax Residency Certificate (TRC) and Form 10F to the AMC.

NRE-funded redemption flow

  1. Redeem via platform.
  2. AMC deducts Section 195 TDS.
  3. Net proceeds credited to NRE bank.
  4. From NRE: bank wires abroad freely.
  5. ITR filed claiming TDS credit.
  6. Refund (if TDS > tax) or balance pay.

No additional FEMA documentation required.

NRO-funded redemption flow

  1. Redeem via platform.
  2. AMC deducts Section 195 TDS.
  3. Net proceeds credited to NRO bank.
  4. To repatriate: complete Form 15CA / 15CB.
  5. Bank processes outward remittance within USD 1M/year cap.

Form 15CA / 15CB are mandatory for taxable remittances > Rs 5 lakh.

Form 15CA / 15CB process

StepDetail
1. Compute taxable incomeCapital gains / dividend during repatriation period
2. Pay Indian taxSelf-assessment tax on Indian portion
3. CA’s Form 15CBCA certifies tax was paid on the funds being repatriated
4. Investor’s Form 15CASelf-declaration referencing 15CB
5. Bank’s outward remittanceBank processes per Form 15CA + supporting docs

Engaging a CA for 15CB is mandatory; cost ~Rs 5,000-15,000 per certificate depending on complexity.

USD 1M/year cap

Per FEMA: NRO outward remittance capped at USD 1M per FY per investor.

  • Per FY: 1 April to 31 March.
  • All NRO outward remittances aggregate toward cap.
  • Exceeding cap: requires RBI special approval (rare).

For most retail NRIs: USD 1M/year is sufficient.

DTAA tax saving

If your country of residence has DTAA with India:

  • TDS rate may be lower than 12.5% / 20% / slab.
  • Submit TRC + Form 10F to AMC for DTAA-adjusted TDS at source.
  • ITR filing claims any over-deduction.

See how-to-claim-dtaa-benefit-mf-nri.

See also

External references

References

  1. Foreign Exchange Management Act, 1999.
  2. Income Tax Act, 1961, Sections 195, 90.
  3. RBI FEMA Master Direction on outward remittance.
  4. CBDT Forms 15CA / 15CB.

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