Q1) What are the Direct Investment options available to me on Non-repatriation basis? Will I need RBI permission for the same?

A) The following direct investments (on Non repatriable basis) can be made without RBI permission-

  • New issues of Shares/ Debentures of Indian companies (not engaged in plantation/agricultural/real estate business or chit fund/Nidhi business).
  • Units of Mutual funds/Money market Mutual funds
  • Existing shares/debentures of Indian companies by private arrangements (Form FNC 7 and undertaking in the form NRY have to be submitted to RBI for their permission).
  • Commercial paper - (Non-transferable) issued by Indian companies.

Q2) What are the rules and procedures governing Repatriation of income/interest earned on investments made on Non-repatriation basis?

A) Subject to the following limits, NRIs can repatriate the income/interest on investments made on non-repatriable basis as follows:

  • Upto $1000 or its equivalent in full and one-third of the balance income earned during the financial year 1994-95
  • Upto $1000 or its equivalent in full and two-third of the balance income earned during the financial year 1995-96
  • The entire income earned during the financial year 1996-97 and onwards

NOTE: The investment/principal amount of deposits made/held on non-repatriation basis will however not be allowed to be repatriated abroad.

Q3) What is the procedure to be followed for seeking repatriation in such cases?

A) NRIs should designate a branch of an authorised dealer through whom the remittance of income is to be made and make an application in form RCI to the designated branch giving details of incomes earned during the previous financial year alongwith a Chartered Accountant's Certificate.
The designated branch will allow the remittance of net amount (i.e- after payment of tax and credit it to NRE/FCNR account of the applicant).

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