What changed
This Master Circular No. 04/2008-09 consolidates all existing instructions on remittance facilities for NRIs, PIOs, and foreign nationals into a single document. It replaces earlier circulars and includes a sunset clause, meaning it will be withdrawn on July 1, 2009, and replaced by an updated version. The circular does not introduce new rules but organizes existing FEMA regulations for easier reference.
What it means for you
Banks must ensure all remittance requests from NRIs/PIOs/foreign nationals comply with the consolidated instructions, including proper documentation and tax certification. The USD 1 million per financial year cap for asset repatriation applies only to specific foreign nationals of non-Indian origin (retired, inherited, or widow) and remains a key limit to monitor. Authorised dealers should update their internal procedures to align with this master circular and prepare for its annual renewal.
What you must do
- Verify NRI/PIO status using the definitions provided (Indian citizen or person of Indian origin excluding Bangladesh/Pakistan).
- Allow free remittance of current income (rent, pidend, pension, interest) only with a Chartered Accountant certificate confirming tax compliance.
- Cap asset repatriation for foreign nationals of non-Indian origin at USD 1 million per financial year only if they have retired from employment in India, inherited assets from a resident, or are widows of an Indian citizen, ensuring proper documentation.
- Ensure NRO account credits for current income are permitted only after verifying tax deduction/provision.
- Prepare for the sunset clause by tracking the circular's validity until July 1, 2009, and anticipate updated instructions.
Who it affects
All Authorised Dealer Category – I banks, Authorised banks handling NRI/PIO remittances, Regional Rural Banks (RRBs) authorised for remittance services, Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs), Foreign nationals of non-Indian origin residing in India
What is the USD 1 million limit for foreign nationals?
A foreign national of non-Indian origin who has retired from employment in India, inherited assets from a resident, or is a widow of an Indian citizen can remit up to USD 1 million per financial year (April-March) for asset repatriation.
Can NRIs/PIOs remit current income without any limit?
Yes, remittance of current income like rent, pidend, pension, and interest is freely allowed, but requires a Chartered Accountant certificate confirming eligibility and tax payment/provision.
What is the sunset clause in this circular?
The master circular has a sunset clause of one year, meaning it will stand withdrawn on July 1, 2009, and be replaced by an updated version consolidating any new instructions.