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Your NRI tax refund, which account it lands in, and how to keep it repatriable

My capital-gains refund got paid into my NRO account, and now I am worried the repatriable money is stuck there.

You filed your Indian return, claimed a refund of the extra TDS on your NRO interest or a property sale, and the money was credited to your NRO account. Now you are unsure whether a refund can even go to an NRE account, and whether money sitting in NRO can still be sent abroad. The refund is not stuck, but the account it lands in changes how easily you can move it out.
Last reviewed: 30 July 20266 min readReviewed by Preetesh Maloo, CA

The short answer

The income-tax portal pays refunds only to a pre-validated, PAN-linked NRE or NRO savings account, never to an FCNR account or an NRE fixed deposit. For a refund on Indian income, an NRO account is the safer choice, because some banks reject a refund credited to NRE, which is meant for money earned abroad. Money that lands in NRO is not stranded. You can repatriate it, along with other NRO funds, up to USD 1 million per financial year under the RBI remittance-of-assets route, using Form 15CA and 15CB.

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Which account a refund can be credited to

A refund is released only to a bank account you have pre-validated on the income-tax portal, linked to your PAN and enabled for e-verification. You add it under My Profile, then My Bank Account, then validate it, and the status updates in about ten to twelve working days.

Two limits matter for an NRI. The account has to be a savings account, NRE or NRO, not an FCNR account and not an NRE fixed deposit. And it has to be active. A dormant or closed account is one of the most common reasons a refund fails and has to be reissued, so validate a live account well before the refund is processed.

Why an Indian-income refund is safest in NRO

On paper the portal accepts either an NRE or an NRO savings account. In practice, when the refund relates to Indian income, such as NRO interest or a gain on an Indian property, a refund credited to an NRE account is sometimes flagged or bounced by the bank. An NRE account is meant to hold money earned abroad, and Indian-source income does not fit that, so the safer default for this kind of refund is a pre-validated NRO account.

This is why you often hear that refunds can only go to NRO. It is not strictly true, but for Indian-source income NRO is the choice that avoids a bounce.

NRO does not mean the money is stuck

The worry that money in NRO is trapped is the part that is genuinely wrong. You can send NRO balances abroad, up to USD 1 million per financial year, under the RBI remittance-of-assets route (RBI Master Direction 13/2015-16). A tax refund sitting in NRO is part of that. Above USD 1 million in a year you need prior RBI approval, but few refunds get near that.

Money that originally came from repatriable NRE funds does not lose its repatriability just because a refund passed through NRO. It simply counts towards your USD 1 million for the year, and the transfer out needs Form 15CA and, above five lakh rupees, a chartered accountant's Form 15CB. These become Form 145 and 146 from FY 2026-27.

A worked example

Ravi, an NRI in Dubai, sells a Pune flat and the buyer over-deducts TDS. He files his return and a refund of eight lakh rupees is due, including interest under Section 244A (Section 437 from FY 2026-27) at 6% a year. He had linked his NRE account, and the bank bounced the credit because the refund was on Indian income.

He pre-validates his NRO savings account instead, the refund lands cleanly, and a few weeks later he repatriates it to Dubai within his USD 1 million limit for the year, using Form 15CA and a CA's Form 15CB. The money reaches him abroad in full, decided by one account-routing choice.

What's involved

What the CA actually does

  1. 1

    Pre-validate the right account

    We tell you which of your NRE or NRO savings accounts to pre-validate for the refund and check it is active, so the credit does not bounce or get held up.

  2. 2

    File so the refund is correct

    We file your return with the refund and the Section 244A (Section 437) interest computed correctly, and reconcile the TDS against your 26AS and AIS so nothing is missed.

  3. 3

    Repatriate what lands in NRO

    We prepare the Form 15CA and Form 15CB (Form 145 and 146 from FY 2026-27) and move the refund out within your USD 1 million limit for the year.

  4. 4

    Fix a failed refund

    If a refund already failed because of a dormant or wrong account, we raise the refund-reissue request and get it re-credited.

What to have ready

Documents you'll typically need

  • PAN and the bank account you want the refund in
  • Your filed return and the refund amount
  • Bank statement showing the account is active
  • For repatriation, proof the tax on the funds is paid

References on this page

  • Section 244A (Section 437 from FY 2026-27)
  • RBI Master Direction 13/2015-16 (Remittance of Assets)
  • Form 15CA and 15CB (Form 145 and 146 from FY 2026-27)

Frequently asked questions

Common questions

An NRE savings account can receive a refund in principle, but not an FCNR account or an NRE fixed deposit. For a refund on Indian income, some banks reject a credit to NRE because that account is meant for money earned abroad, so a pre-validated NRO savings account is the safer choice.

No. NRO balances, including a tax refund, can be sent abroad up to USD 1 million per financial year under the RBI remittance-of-assets route, using Form 15CA and Form 15CB. The refund is not trapped, it just goes out through that window.

The most common reasons are that the account was not pre-validated on the portal, or it was dormant or closed. Validate an active NRE or NRO savings account linked to your PAN, then raise a refund-reissue request.

Yes. A refund carries interest under Section 244A (Section 437 from FY 2026-27) at 0.5% a month, which is 6% a year, from the relevant date, as long as the refund is at least 10% of the tax determined. The interest itself is taxable in the year you receive it.

No. It stays repatriable. Passing through NRO only means it counts towards your USD 1 million limit for that financial year and needs Form 15CA and 15CB to go out.

The exceptions that change the answer

Where the general rule stops applying to you

Every rule below has a carve-out, a cut-off date or a condition that flips the answer. These are the ones that decide real cases.

NRO account: what it costs and what it caps

Right now: Interest taxed at 30% plus surcharge and cess; repatriation capped at USD 1 million a financial year

Where it works differently

A TRC and Form 10F (Form 41 from 1 Apr 2026) are furnished
The treaty rate applies to the interest, commonly 10-15% under Article 11 instead of 30% plus surcharge.
s.90(2). This is the single largest recurring recovery item for most NRIs.
Remitting out
Form 15CA is needed, plus Form 15CB from a CA where the remittance is chargeable and above Rs 5 lakh in the year.
Rule 37BB.
Joint holders
The USD 1 million ceiling is per person per financial year, so joint holders each have their own.
FEMA 13(R).

Commonly got wrong

  • NRO interest is taxed at 30%. Incomplete. Surcharge and 4% cess sit on top, and a treaty can cut it to 10-15%.30% plus surcharge and cess by default, but 10-15% under most treaties if you hold a TRC and file Form 10F.

NRO repatriation ceiling

Right now: USD 1,000,000 per financial year, per person

Where it works differently

The sale proceeds exceed USD 1 million
The balance waits for the next financial year. Joint holders each have their own limit.
The cap is per person per financial year.
The property was bought with foreign-currency funds
Sale proceeds of up to two residential properties may be repatriated outside this cap, limited to the original foreign-currency investment.
FEMA 21(R). Requires the original remittance trail.
Remitting
Form 15CA and, above Rs 5 lakh of taxable remittance, Form 15CB from a CA are required.
Rule 37BB.

Commonly got wrong

  • NRIs can remit USD 250,000 a year. That is the LRS limit for RESIDENTS. NRIs use the Remittance of Assets route at USD 1 million.An NRI does not remit under LRS. NRO balances and sale proceeds go out under the Remittance of Assets route, capped at USD 1 million per financial year, with Form 15CA and 15CB.

Form 15CB requirement threshold

Right now: Rs 5,00,000 in the financial year, where the remittance is chargeable to tax

Where it works differently

The remittance is not chargeable to tax
Part D of Form 15CA only. No 15CB.
Rule 37BB structure.
The remittance falls in the specified exempt list
No Form 15CA at all.
Rule 37BB(3) specified list.

Commonly got wrong

  • Every outward remittance needs Form 15CB. Only where chargeable to tax and above Rs 5 lakh in the year.Form 15CB is needed only where the remittance is chargeable to tax AND exceeds Rs 5 lakh in the financial year. Otherwise Part D of Form 15CA is enough.

Refund in the wrong account, or worried it is trapped in NRO?

Send us the refund details and your accounts. A practising CA will get it credited cleanly and repatriate what lands in NRO. Free call, no obligation.

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