What changed
RBI issued a clarification following a committee recommendation, stating that income and sale proceeds from assets held abroad by NRIs who have returned to India for permanent settlement need not be repatriated. Similarly, income earned on investments made under the Liberalised Remittance Scheme can be retained and reinvested without repatriation.
What it means for you
Banks can now advise returning NRIs that they are not required to bring back foreign income or sale proceeds from assets acquired while they were non-resident. For LRS investors, the clarification removes the obligation to repatriate earnings, allowing them to reinvest abroad, which may encourage greater use of the scheme.
What you must do
- Update internal advisory notes for returning NRI customers on repatriation exemptions.
- Inform LRS customers that income from foreign investments can be retained and reinvested.
- Ensure staff are trained on the clarifications under FEMA sections 6(4) and 8.
- Monitor customer queries and provide written confirmations if needed.
Who it affects
Authorised Dealer banks, Returning NRIs with foreign assets, Resident individuals using Liberalised Remittance Scheme
Do returning NRIs need to repatriate income from foreign assets?
No, RBI has clarified that income and sale proceeds from assets held abroad by NRIs who have returned to India for permanent settlement need not be repatriated, as per FEMA section 6(4).
Can LRS investors keep foreign income abroad?
Yes, investors can retain and reinvest income earned on investments made under the Liberalised Remittance Scheme without repatriating it to India.