Outward remittance to Sweden - FEMA

Hi Sibhi,

Thanks for your question about outward remittance of funds to Sweden related to your property acquisition proceeds in India. Let me break down the key points under FEMA and tax laws:

1️⃣ Your Residential Status & Tax Filing

• Since you are employed and living in Sweden for 4 years with no income in India, you are likely a Non-Resident Indian (NRI) for tax purposes.

• As an NRI, your income in India is taxable in India, but foreign income is not taxable here.

2️⃣ Tax on Compulsory Acquisition of Property

• The RFCTLAAR Act, 2013 provides exemption from capital gains tax on compulsory acquisition of property by government authorities.

• Ensure you have claimed exemption correctly by filing relevant tax returns or declarations.

• If exempted, no capital gains tax liability arises in India on this transaction.

3️⃣ Repatriation of Sale Proceeds to Sweden

• Under FEMA (Liberalised Remittance Scheme - LRS), resident individuals can remit up to USD 250,000 per financial year for any permissible current or capital account transactions.

• Since you are a Non-Resident Indian, LRS limits do not apply.

• NRIs can remit proceeds from the sale of immovable property in India subject to conditions.

• The remittance can be done after payment of applicable taxes or after submission of exemption certificates.

4️⃣ Procedure for Repatriation by NRI

• Step 1: Ensure all applicable taxes and TDS on property sale proceeds are complied with.

• Step 2: Approach your authorized dealer bank (usually your NRO/NRE account bank) with:

  • Documents like sale deed, tax payment proof, exemption certificates, no-objection certificates.

  • Form 15CA/15CB as required under Income Tax rules for foreign remittance.

• Step 3: Bank will process the remittance under FEMA guidelines.

5️⃣ Limits & Tax Rates

• No fixed limit for repatriation of property sale proceeds by NRI, but aggregate repatriation limit is up to USD 1 million per financial year for foreign exchange remittance from sale of immovable property.

• Tax rates depend on capital gains (if applicable). Since you have exemption under RFCTLAAR, no tax should apply.

• TDS at applicable rates may be deducted initially and can be refunded after filing income tax return.

Summary Table:

Suggestion:

• Consult your authorized dealer bank or tax consultant before remittance for smooth processing.

• Ensure proper documentation of tax exemption and file returns if needed to claim refund or exemption.