Foreign exchange and management act- remittances into resident saving bank a/c

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A client received a USD 5,000 foreign remittance into their resident savings account in June 2021 and later opened an NRE account in September 2021. They wish to transfer the converted INR amount from the resident savings account to the NRE account. While funds can generally be transferred from an NRO account (which a resident savings account can be converted to) to an NRE account, the key issue is the timing. The remittance was received before the NRE/NRO account existed. The guidance suggests not treating it as the same fund, as the Liberalised Remittance Scheme allows significant annual remittances for various transactions.

rmalhotra

rmalhotra (Querist)

14 September 2021 Sir,
My client had gone US and remitted some foreign remittance of 5000 USD in convertible currency in his resident saving bank a/c.in the month of June 2021. But now he has opened NRE a/c in Sept 2021.

Can he now transfer that amount of converted INR from resident saving a/c to his NRE a/c.
Pls guide

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

14 September 2021 His resident sav account is to be converted to NRO account by informing bank about his residential status.
He can transfer funds from an NRO account to an NRE account. The Reserve Bank of India allows the transfer of funds up to USD 1 million a year from an NRO to an NRE account.

rmalhotra

rmalhotra (Querist)

14 September 2021 Sir thanks for your prompt reply. But here point is of time sequencing. Whereas the funds are received in his resident saving bank a/c first and at that time no NRE /NRO a/c was existing. subsequently when NRE & NRO a/c are opened . Now is there any restriction / rule that funds previously received in resident saving a/c cannot be transferred to NRE a/c which is opened on subsequent date. Is Date of remittances and date of transfer any hindrance.
Pls enlighten on that also

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

14 September 2021 Do not treat it as the same fund, which was deposited earlier.
Under the Liberalised Remittance Scheme, all resident individuals, including minors, are allowed to freely remit up to USD 2,50,000 per financial year (April – March) for any permissible current or capital account transaction or a combination of both.

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rmalhotra

rmalhotra (Querist)

14 September 2021 Thank You Sir. Have a great time .

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Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

22 September 2021 My Pleasure ...

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