Which FEMA Rules Should Every NRI Know About?

I'd add investments to the list.

NRIs and eligible persons of Indian origin can invest in certain Indian securities and other permitted instruments, but the rules aren't identical for every investment.

For example, the account from which an investment is funded can affect the treatment of the investment and its proceeds. You shouldn't assume that using an NRE account automatically makes every investment and every future sale proceeds freely repatriable.

I also found it useful to distinguish FEMA rules from income-tax rules.

FEMA determines whether a particular foreign-exchange transaction, investment, account or repatriation is permitted and under what conditions. Income-tax law determines how the resulting income or capital gain is taxed.

So if you're selling property, redeeming investments or transferring a large amount abroad, you may need to consider both sets of rules.

For anything involving a significant amount, I'd verify the current FEMA position with an authorised dealer bank and, where tax certification is relevant, a CA.

Property is another area where FEMA becomes important.

As an NRI, you can generally purchase residential or commercial property in India under the applicable FEMA rules, but agricultural land, plantation property and farm houses are treated differently. RBI guidance specifically excludes those categories from the general permission to purchase.

The payment route also matters. RBI guidance allows qualifying property purchases by an NRI to be funded through normal banking channels or by debiting an NRE, FCNR(B) or NRO account.

Selling the property is another matter. Repatriating sale proceeds depends on how the property was acquired, the source of funds and the applicable FEMA conditions. RBI guidance also places specific conditions on repatriation of proceeds from residential property.

So I'd treat buying property and sending the sale proceeds abroad as two separate FEMA questions.

The first thing I learned is that FEMA isn't just about foreign currency exchange. It affects many transactions involving persons resident outside India, including banking, investments, property and repatriation.

One of the most practical rules is what happens to an existing resident savings account after becoming an NRI. You generally shouldn't continue treating a normal resident savings account as though your residential status hasn't changed. The appropriate NRO/NRE structure should be discussed with the bank.

NRE and NRO accounts also have different purposes.

NRE is generally used for overseas funds brought into India, while NRO is commonly used for Indian income such as rent, pension, dividends and other legitimate rupee receipts.

The RBI's current FAQ states that NRO balances are generally not freely repatriable, although eligible NRIs/PIOs can remit up to USD 1 million per financial year, subject to the applicable conditions.

So I think the biggest FEMA lesson is: don't assume that money being in an Indian bank account automatically means you can send it overseas whenever you want.