Consider a client who moved to the UAE for work last year and now asks how much of the Liberalised Remittance Scheme limit is left for a US investment. The honest answer is none, because the scheme no longer applies. The RBI's LRS FAQ describes it as a facility for resident individuals, and an NRI is not one. What replaces it depends on where the money sits, and for money held in India the question becomes one of NRO repatriation.
Once a client is an NRI, the advisor's questions change. They are no longer about the LRS limit and the TCS covered in the guide to TCS on foreign remittance. They are about which money funds the investment, whether foreign earnings, NRE balances or NRO balances capped at USD 1 million a financial year. They are also about the forms the bank needs. The move changes the US side too, because the UAE has no income tax treaty with the US. The dates given below are those of the latest official version of each rule.
Why the LRS stops applying once a client is an NRI
The RBI's FAQ says the scheme allows "all resident individuals, including minors" to remit up to USD 250,000 a financial year. Residence for this purpose is decided under FEMA, not the Income-tax Act. As the explainer on RNOR status notes, FEMA looks at intention rather than a count of days. A client who leaves to take up a job in the UAE can therefore become an NRI under FEMA before the tax position settles.
The bank accounts must follow the change. The RBI's Master Direction on deposits and accounts, updated as on 2 September 2026, says a resident's existing account should be designated as an NRO account when the holder becomes non-resident. The change matters for TCS as well. Kotak Mahindra Bank's remittance FAQ says TCS does not apply to NRIs holding NRE or NRO accounts. It advises a resident who has moved abroad to convert the account to avoid TCS on repatriation.
Three sources of money and the rules for each
The first source is money the client earns and holds in the UAE. It never passes through an Indian bank, so the LRS, TCS and Indian remittance forms do not arise. The client's UAE bank and the US sponsor's own checks on identity and source of funds apply instead.
The second source is an NRE account, which holds money earned abroad and deposited in India. The same deposits direction permits remittances outside India from an NRE account, and the annual cap described below applies to NRO money, not NRE. The third source is the NRO account, which holds the client's Indian income and the proceeds of Indian assets. That direction allows current income, such as rent, dividends, pension and interest, to be remitted abroad. Other NRO balances are where the limit applies.
The NRO repatriation limit and the forms the bank needs
The rule sits in the RBI's Master Direction on remittance of assets, updated as on 29 June 2026. It lets banks allow an NRI, on documentary evidence, to remit up to USD 1 million a financial year. The money can come from NRO balances, the sale proceeds of assets and assets acquired in India by inheritance or legacy. Transfers from NRO to the client's own NRE account count within the same limit. Amounts above it need the RBI's prior approval, and a remittance made in instalments must go through the same bank.
For NRO money, the direction requires an undertaking from the account holder. It must say the funds are the client's own balances and are not borrowed from another person or moved from another NRO account. The direction also says remittances are subject to Indian tax, and it leaves the tax procedure to the bank and the tax rules.
That procedure now uses new form numbers. From 1 April 2026, Form 15CA became Form 145 and the CA's certificate, Form 15CB, became Form 146, as the explainer on Form 145 sets out. The Income Tax Department's Form 145 user manual describes four parts, with Part C used when a taxable remittance above ₹5 lakh in a tax year is backed by Form 146. Its Form 146 user manual calls that form the certificate in which a CA confirms the tax position on money sent abroad. In practice, Kotak's NRO repatriation guide of 20 May 2026 lists Form A2, Form 145, Form 146, PAN, a recent NRO statement and proof of where the money came from. It says taxes, including TDS, must be cleared first.
How the move changes the US side
A US tax treaty applies by residence, not by nationality. The IRS list of income tax treaty countries, last updated on 3 January 2026, includes India but not the UAE. A client resident only in the UAE therefore cannot claim the India treaty rate on dividends from the US corporation that holds a deal.
US law sets the default at 30 per cent of US dividends paid to a non-resident under section 871 of the Internal Revenue Code. The IRS instructions for Form W-8BEN treat a move out of the treaty country as a change in circumstances. The client must tell the withholding agent within 30 days and give a new form. The explainer on K-1 and Form 1042-S covers the form that reports the withholding.
What advisors should check when a client becomes an NRI
The advisor's first check is the date the client became an NRI under FEMA, and whether every Indian account has been designated accordingly. The next is a map of the money. UAE earnings can be invested directly and NRE balances can be remitted.
NRO capital must fit within the financial year limit, through one bank, with the undertaking and with Form 145 and Form 146 prepared with the client's CA. A client planning to use the proceeds of an Indian flat, for example, may need to spread the remittance across two financial years or seek RBI approval. The W-8BEN on file must match the new residence. The client's Indian tax residence should be worked out separately, because it follows its own test.
None of this changes the investment's own risks. A private US real estate interest is illiquid, its value can fall, tenants can leave, distributions may not be paid and capital can be lost. Rupee balances converted for a dollar investment carry currency risk, and withholding at the full US rate leaves less of each distribution for the client.
Raveum offers US real estate to eligible investors outside the US under Regulation S. They invest through a US corporation, a blocker, that holds the property interest, and typically receive Form 1042-S. Raveum handles KYC, agreements and US tax forms, while the source of the client's money and its Indian paperwork remain with the client, the bank and the CA. Advisors can see how introductions work on Raveum's partner page.
The client who asked how much LRS limit was left was asking the right kind of question about the wrong rule. For an NRI the useful question is which account the money sits in, because that decides what stands between it and the investment. The guide to TCS on foreign remittance remains the reference for clients who are still resident.
Frequently Asked Questions
Can an NRI use the Liberalised Remittance Scheme?
No. The RBI's LRS FAQ describes the scheme as open to resident individuals, and residence for this purpose is decided under FEMA. An NRI invests abroad from money earned and held overseas, from an NRE account, or from NRO balances within the USD 1 million a financial year limit under the RBI's direction on remittance of assets.
What is the NRO repatriation limit per financial year?
The limit is USD 1 million a financial year under the RBI's Master Direction on remittance of assets, updated as on 29 June 2026. It covers NRO balances, sale proceeds of assets and inherited assets, including transfers to the NRI's own NRE account. Current income such as rent, dividends and interest is remitted separately. Larger amounts need RBI approval.
What documents does the bank need for NRO repatriation?
Banks ask for an undertaking that the money is the client's own, Form A2, Form 145 filed on the income tax portal and, usually, a CA's certificate in Form 146. Kotak's NRO guide of 20 May 2026 also lists PAN, a recent statement and proof of source, such as a sale deed, with taxes cleared first.
Is TCS collected when an NRI repatriates money from an NRO account?
TCS under section 394 of the Income-tax Act, 2025 applies to remittances under the LRS, which an NRI does not use. Kotak Mahindra Bank's remittance FAQ says TCS does not apply to NRIs holding NRE or NRO accounts, and advises clients who have moved abroad to convert resident accounts to NRO.
Does the India-US tax treaty apply to an NRI living in the UAE?
Usually not. Treaty benefits follow residence, and an Indian citizen resident in the UAE is not an Indian resident for the treaty. The UAE does not appear on the IRS list of US income tax treaty countries, so US dividends to a UAE resident generally face the 30 per cent statutory withholding rate.
What risks should an NRI client weigh before investing in US real estate?
The investment is illiquid, its value can fall, distributions may not be paid and capital can be lost. NRO capital can leave India only within the annual limit, rupee money carries currency risk, and a UAE resident faces full US withholding on dividends. A single deal concentrates all of this in one property.
This article is for general education and is not tax, legal or investment advice. Rules change and depend on individual circumstances. All investing involves risk, including loss of capital, illiquidity and currency movements. Offerings on Raveum are available to eligible investors only and are not open to the general public.
