FEMA Hub — NRI, Remittances, FDI & Cross-Border 2026

No. FEMA residence under §2(v) is a purpose-and-facts test based on your intention and reason for staying in or leaving India, assessed on the transaction date. Income-tax residence uses a day-count test for a financial year. A person can be a non-resident under FEMA while still being resident under the Income-tax Act (or vice versa). Always apply the FEMA test for FEMA questions.

The Liberalised Remittance Scheme permits a resident individual to remit up to USD 250,000 per financial year for permitted current and capital account transactions. The limit is aggregated across ALL remittances by that individual in the year (education, travel, gifts, overseas investment, property, etc.) and across all authorised dealers. Remittances above the ceiling for education or medical treatment may be permitted with documentary support. Family members cannot pool limits for a transaction that is essentially by one person.

NRE (and FCNR-B) balances — principal and interest — are freely repatriable. NRO balances represent India-source income and are repatriable only up to USD 1 million per financial year (net of applicable taxes) with the prescribed CA certification (Form 15CA/15CB), subject to permissible-transaction conditions. Routing business receipts through a personal NRO, or assuming NRO is fully repatriable, are common and costly mistakes.

FC-GPR must be filed on the RBI FIRMS portal within 30 days of allotment of shares/convertible instruments to a non-resident investor, supported by a valuation certificate and the required declarations. Separately, every Indian company (and LLP) that has received FDI or made overseas investment must file the annual Foreign Liabilities and Assets (FLA) return by 15 July each year. Late reporting is a contravention that may require compounding.

Under the 2022 overseas investment framework, Overseas Direct Investment (ODI) is investment giving control or a strategic stake in a foreign entity (e.g. 10%+ of equity, or any stake with control), routed with Form FC and annual APR reporting. Overseas Portfolio Investment (OPI) is investment without control (e.g. below 10%, listed securities, ESOPs). The classification determines the route, limits, reporting and permissible instruments — determine it before investing.

No. An authorised dealer processes a transaction within its authorisation and RBI directions, but operational acceptance by a bank or portal does not cure an impermissible underlying transaction. Substantive permission comes from the Act, rules, regulations and directions applicable on the transaction date — keep a legal-source memo, not just a bank acknowledgement.

Compounding is a voluntary process to regularise a FEMA contravention by admitting it and paying a compounding amount, without prolonged litigation. Apply to the RBI (or the Directorate of Enforcement for certain matters) with a full chronology, the contravention details, supporting evidence and the prescribed fee. Suo-motu compounding — coming forward before detection — generally reflects better than waiting for a notice. Contraventions are civil under FEMA, but enforcement, confiscation and recovery mechanisms still apply.