Module: | FCNR(B) & Loan Regulations
Q17: Ajay decides to transfer ₹10 lakhs from his NRE savings account to his NRO savings account, to pay for local renovation expenses. Later, he wishes to move the remaining unspent amount back to his NRE account. He consults his banker, regarding the implications of the initial transfer. Which of the following statements are correct?
1. The initial transfer from NRE to NRO is permitted, under FEMA regulations.
2. Once the funds are credited to the NRO account, they lose their status as "fully repatriable" NRE funds.
3. The funds can be freely transferred back, from NRO to NRE, without any documentation.
4. Future interest earned on these funds, while they sit in the NRO account, will be subject to Income Tax.
2. Once the funds are credited to the NRO account, they lose their status as "fully repatriable" NRE funds.
3. The funds can be freely transferred back, from NRO to NRE, without any documentation.
4. Future interest earned on these funds, while they sit in the NRO account, will be subject to Income Tax.
✅ Correct Answer: B
NRE to NRO transfer is permitted.
Once in NRO, funds lose free repatriation status and become taxable.
Transferring back from NRO to NRE is restricted and requires documentation.
Once in NRO, funds lose free repatriation status and become taxable.
Transferring back from NRO to NRE is restricted and requires documentation.