Forex Remittances allowed upto US $125,000; FPIs can trade in currency derivatives; and NRIs allowed INR upto Rs. 25,000

RBI in a bi-monthly Monetary Policy Statement on June 3, 2014, announced 3 important measures related to Non Resident Indians (NRI), Foreign Portfolio Investors (FPI) and foreign exchange remittances by Resident Indians:

1. Last year, to stem rupee depreciation and restrict outward remittances, the eligibility limit for foreign exchange remittances under the Liberalized Remittance Scheme (LRS) was reduced to US$ 75,000 last year. With the recent stability in the foreign exchange market, RBI decided to enhance the eligible limit to US$ 125,000 without end use restrictions, except for prohibited foreign exchange transactions such as margin trading, lottery, and the like.

2. RBI allowed foreign portfolio investors to participate in the domestic exchange traded currency derivatives market to the extent of their underlying exposures plus an additional US$ 10 million. The measure was announced with a view to improving the depth and liquidity in the domestic foreign exchange market. RBI also allowed domestic entities similar access to the exchange traded currency derivatives market.

3. Non-residents visiting India were not permitted to take out any Indian currency notes (INR) while leaving the country. Only Indian residents were allowed to take Indian currency notes up to Rs. 10,000 out of the country. With a view to facilitating travel requirements of non-residents visiting India, RBI allowed all residents and non-residents except citizens of Pakistan and Bangladesh to take out Indian currency notes up to Rs. 25,000 while leaving the country.

Detailed operating guidelines for all the above measures will be issued separately.

Category: Investments in India, NRI Investments, RBI / FEMA / Other Updates - Analyzed Tags: , , , , , , , , , , , , , ,


  • Gpindy

    Hello ,
    We are currently residing in AZ ,USA and planning to buy a property using funds from sale of property in India ( $250K) . I would like to know the best option to transfer this to US . Are there any tax implications in US for the money transferred from India.Appreciate your input .

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      As you are a NRI the forex remittance limit of $125,000 would not apply to you. This is for residents only. Your limit for transfer of funds is US $1 million. You would need to pay the tax before transferring the after-tax amount or take a chance (ready for multiple years and/or rounds of appeals) if you want to claim deduction of buying property abroad to save capital gains tax in India. Thanks.

  • Pavneesh

    Hi, I am a NRI living in Anchorage, AK. Recently on my visit to India, I wanted to buy mutual funds from ICICI and Axis. The ICICI branch manager told me that the NRIs living in USA and Canada cannot buy Indian mutual funds. It does not seems right. Can you please clarify? Kindly let me know the procedure for buying MF for US-NRI, since they did not opened my demat account.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      As per RBI rules, any NRI can invest in or buy Indian mutual funds. Due to regulatory or bank specific issues, certain bank may not offer the service to NRIs or to NRIs from certain countries. Also, certain mutual funds may or may not accept funds from NRIs of certain countries. While you are allowed to buy Indian mutual funds, you may not be able to invest in ICICI mutual funds as they do not allow US based NRIs (ICICI has a JV with Prudential and Prudential being a US based company is not allowed to solicit funds from US residents outside US). However, you may be able to invest in schemes of other fund houses such as Birla, HDFC (no NFO), IDFC, Sundaram, etc. Let me know if you need any help with investments. Thanks.

  • rajesh

    Hello ! I am taking loan of around $40k from my relatives and friends in US which I will return in a few months. Is it ok to receive money in my savings bank account in India thru online transfer and then return after sometime. Is there any tax or foreign exchange issue involved

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      I would assume that you want to borrow funds in US, transfer the funds to India and then payback after sometime. If you will be using the funds you sent to India to payback loan, I would suggest to transfer the funds in your NRE account as you would be able to repatriate without any restrictions or documentation. For India, you brought in dollars and you are taking the dollars back. Unless you make money on the funds you sent to India, no tax is involved. Thanks.

  • Raj Kumar


    You have mentioned that one may not remit foreign exchange for margin trading.

    I have a unique issue. I am an NRI about to return to India. I trade in margin instruments and derivatives at the moment. So I already have a fx trading account right now. If I were to return to India and become a resident Indian, can I continue trading in FX, margin trading etc with my funds already abroad? I will not be sending out any money outside India. However, any profit will be brought into India and tax paid.
    Please advise. Thanks.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      1. When you return to India, your status would not change immediately to Resident depending on when you return. Also, residency requirement is different under Income tax Act and FEMA.
      2. Whether you will be able to invest in Indian or Foreign securities or not would depend on the FEMA. Any trading in foreign securities on the exchange is allowed by residents. Also, NRIs are allowed to invest in exchange traded derivatives in India.
      3. Taxability of income will be determined by the Income tax Act. Please contact your CA for details. If any question, do let us know.

  • Iyer V S

    Great article and very informative site. I have a situation and would appreciate if you can help please:
    I am US Citizen with OCI and came to India on vacation, however I lost my US job in this period and now I want to stay in India for few years to be able to spend time with parents and extended family and go back to US maybe after 5 or 10 or 15 years.
    I do not have any job now and hence no salary, so I was thinking of transferring my US bank account savings to India.
    Questions I have are:
    1. If I transfer $ from US Bank to NRE a/c, do I have to transfer it from NRE to NRO since I wish to stay in India for few years.
    2. Will I be able to transfer all this invested or unused money from India to US when I go back in future? Will there be any tax implication or legal issue since I would have earned interest on the money I transferred to India?
    3. Actually it will be a big thing for me if I am able to get the US $ to India now since I will get decent interest to manage day to day expenses. Is there any other point or tax implication that I need to consider?
    Thanks & Regards.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      1. If you have come to India and wants to stay in India for an uncertain period, you would become “Resident” in India under FEMA. As a result, you can not maintain the NRO, NRE or FCNR accounts but need to transfer funds to your resident account (in INR) or Resident Foreign Currency (RFC) account (in foreign currency).

      2. There is no tax on transfer. Tax is on the income. And, as per current provisions, if taxes have been paid, NRI can remit upto US $1 million. The provision may change in future.

      3. Yes you can bring the money to India. If you need any help with investment consulting to get better after-tax return, let us know. Thanks.

      • Iyer V S

        Thanks Much for your prompt response.
        Per your response to point 2, it is good to know that we can remit upto US$ 1 million from India to US as of now.
        I will need help with some investment consulting, will reach out to you on your contact # in few days time.
        Once again, appreciate your help.

  • Ronald M

    Hi Mr Patel,

    Thank you for your very informative blog.

    My elderly parents are in the process of selling their home in India and moving all of their funds to the U.S.A. They are both green card holders .

    Can they move all the funds (after taxes) from the India bank account to their US bank account or does the RBI rules subject them to a limit ?.


    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      Your parents will be able to move all their funds to the USA after payment of taxes. As they are NRI, TDS needs to be deducted of the tax amount. For them The limit for transferring funds to USA is $1 million. The limit for $125,000 is for residents. Contact us if you need any help with TDS, taxation of sale of property or transferring funds to USA. Thanks.

  • parag

    can an indian resident trade in U.S commodity futures doing intraday trading by remitting margins from india by taking permission from Rbi

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      After taking permission from RBI, you can do anything as permitted. Thanks.

  • Kamlesh D Mewada

    Respected Sir,

    I have formed a pvt ltd company (One Person Company) specially for trading binary options and broker is cyprus based, but yet i have not yet started trading because application for business commencement certificate is not submitted.

    Am i contravention any law if i remit outside india but i am trading as a corporation. Please suggest.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      What is the person who approached with this plan say? Also, Cyprus is a “Notified Jurisdiction Area” i.e. blacklisted by India for not providing information on tax evaders. Thanks.

  • Rakesh

    I’m an Indian citizen and opened a forex account with an international broker. At the time of opening account I got $15 as bonus. Today, I have $ >1500. Did I do anything illegal if I withdrew some of it and bought it back to India and paid tax on it here?
    Best Regards,

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      1. The question of legality comes when you invest through international broker and trade in forex. It does not arise at the time of withdrawal.
      2. You would pay the tax on the transactions entered by you during the year. Income tax is on income and not on withdrawal. Thanks.
      ithdrawal is

  • Jayant

    Thanks for this helpful blog, truly informative. I am an OCI in US. My cousin, resident in India, has recently lost his job and is trying to sell his flat to pay off his mortgage, but selling will take time. I am thinking of helping him out with a personal loan (preferably by remitting from my US bank account via directly to his mortgage lender bank in India) to pay off the Rs 35 Lac balance of his mortgage. This will relieve him of monthly mortgage payments while he is in the process of selling the flat which could take a few months. After sale, he will repay me the amount I sent. Would he be able to repay by means of outward remittance directly from his Indian bank account to my US bank account ? We’re wondering how best to go about this so that there would be no problem with outward/return remittance, and no tax implications for me. I don’t currently have any NRE/NRO accounts – would these be even necessary for this scenario ? Would very much appreciate your insight.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      1. You and your cousin are not a close relative under FEMA and as a result, you may not give loan on a repatriation basis. Your loan to him would be on non-repatriation basis only.
      2. The best way to go about the transaction would be that you transfer the funds as a loan to your cousin’s savings account. He would make payment to the mortgage lender bank; instead of directly transfering funds to the bank.
      3. I would suggest you to wire the funds (pay $40 or so for international wire) and NOT use a third party money changes. For higher amount, you can negotiate with the bank where you are transferring the money for better exchange rate. My experience is that your average saving would be 50 paise (75+ paise also) and if the transfer is $50,000, you end up saving 25,000 (way more than 2500 spent on international wire).
      4. Only when any income is involved, you need to consider the tax implications. If there is no interest or other benefit, there is no income and no tax implications.
      5. You do not need NRO/NRE account for transferring funds to your cousin. As your loan will be on a non-repatriable basis, when the amount is returned to you, it can only be credited to NRO account. Thanks.

      • Jayant

        Thank you very much for the guidance. Just a couple of follow-ups, if I may (thanks!).
        On #2: sending the funds to my cousin’s account is suggested — it this because it establishes more clearly (for any documentation/proof purposes) that I’m making the loan to him ? [ Sending to his mortgage lender bank has one small advantage in that it would ensure that the funds reach the final destination ].
        On #3: My bank (HSBC USA) quoted me a Rs53 (!) exchange rate yesterday for USD, whereas and remit2india show about Rs60. I guess I will need to shop around other wiring banks. If, hypothetically speaking, exchange rates are approx equal (between Wire Vs, does Wire still hold some advantage in terms of any documentation/proof that may be needed later ?
        On #5 : Once the amount is returned to my NRO account, can I then repatriate it back to my US account ? (The amount is well under the $1M limit, but you’ve mentioned ‘non-repatriable’, which seems to imply I cannot bring the amount back to US).

        I would be very grateful for any clarifications on the above. Thanks !

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

          1. That is the right way and establish a good money trail. Also, you need to comply with other RBI regulations.
          2. I sincerely doubt that. You need not contact your bank in USA but the bank in India where you plan to transfer funds. You would definitely get better rates as banks in India are in need of foreign exchange. If you convert in USA, as they may not have INR, they give you really bad rate.
          3. Yes you can but only through NRO. Thanks.

  • dinena

    i need your response for this information

    sir,i use to have capital for forextrading in overseas by posting on forums or else by winning in contests

    so i trade with it and earn

    but since several days,as forex is told illegal in india.this making me worry

    but confidence i have is,i never used indian currency for deposit or trading in forex.
    i only use my contest winnings and bonus posting capital
    (as far as i am concerned i am not harming indian currency as i have not used it for deposit and trading and rather i do earn dollars and trade with it so when i bring that it will add economy to country as bringing in currency-i am not sure the matter i said was true or not but its my feeling)

    so i want information from you now that
    can i withdraw to my indian bank and pay taxes for it?
    will there be any problem if we do like that?

    and also if i want to pay tax when earned more than rs.2,50,000 within a year

    then what are needed for paying tax?
    i.e do i need to show the statement of trading or what

    i.e i mean what are things i need to submit while filing a tax return

    please answer me all questions and i really appreciate your answer
    and thanks in advance

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      Your query is confusing. Please repost with your situation and questions. Thanks.


    Dear Sir/Madam,

    I am Indian resident and i invest through foreign currency broker ‘FXCM’ long days i want to receive through my saving accounts…..USD 20000. kindly help me how can i show this amount as legally.. and what is tax calculation..

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      As long as you invested legally and shown any profit or loss on your investments in your income tax returns annually, it is a legal amount. Tax is only on the income and not on investment. Thanks.

  • Digambar


    I was worked in Australia from 2007 to 2010 and i have some money in superannuation.

    now i am planning to with draw that money, please let me should i need to pay tax in India for that money.

    Thank you

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      As you have been in India since 2010, your residential status as per Income tax act is “Ordinary Resident”. As a result, your global income is taxable in India. Your money in superannuation or any account, earned while you were a non-resident is not taxable in India. However, any gain may be taxable as global income is taxable for Ordinary Residents. Thanks.

  • Amit

    Hi, I am an NRI living in Dubai. Every month I save a little portion of my salary and remit back to India for future savings. My question is Can I book forward contracts for my future receivables (salary) as I am of a view that INR will strengthen against USD in future. Am I allowed to do so, if yes than how should I go about it.

    I checked this with some of my bankers in India, however I am unable to get a view on this.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      NRIs can only invest in exchange traded derivatives in India. Please contact your bank in Dubai and they may be able to help you. Thanks.

  • rajan

    hi sir,

    i have got some savings which i want to invest in forex, eru/usd market. my broker is based in uk FXPRO LTD.

    how can i do this?
    can you help me stating the process??

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      Please check with your broker. Thanks.

      • rajan

        brokers are okay with it but as my account is in usd i have to make deposit in usd but rbi doesnt allow remit for trading as they dont want currency conversion….so is der any way i can make depositss??

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

          You may want to contact a bank that handles foreign exchange. I think Interactive Brokers allow and has a process for residents to trade online in foreign securities. However, if RBI doesn’t allow, you may not be able to trade. Thanks.

  • dinena

    hello sir,ok to say you understand

    in india it is told not allow to trade foreign exchange in overseas

    but my question is

    i am not using my indian currency for trading in overseas market,i am using money from contests winning and other program which are earned online
    and which are in dollars

    so if we trade with these dollars and after i withdraw profits to india will there be any problem?

    is this a violation?

    if not a violation,then how to pay taxes on it and also what needed to submit to tax department for filing taxes

    the above is my question and hope you understand this time

    now,the below is my view on my above question:
    as far as i belive i am not using indian rupee or converting it and trading,so i am not harming indian economy

    and rather when the earned dollars are brought in india,it adds the economy what i feel

    so,finally please answer your view on my topic because i need perfect answer

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      The first question is Whether a law applies to you or not. And, it depends on whether you are a resident or non-resident as per FEMA/Income tax Act. If you determine that you are not allowed, the source of funds is immaterial. Thanks.

      • dinena

        sir,i am resident indian only and i wnat to know what exactly you mean

        actually i earn through contests online and thus want to withdraw money earned in forextrading by investing capital from contests winnings

        i never used indian rupee to trade in forex

        so say me clearly will it a violation?

      • dinena

        this is what rbi says

        i.e they are worried when rupee invest in forex and if people lose in forex then rupee was lost

        but in my case i am not using rupee and at same time when i earn and withdraw to bank in india,it adds additional money to india as those will be in dollars

        please try to understand my question and answer

  • Charlie Thomas

    I am an NRI presently working in Dubai. I want to know is NRI allow to transfer his Lottery winning ( $1 Mil. ) to his NRE Account in India. What will be legal issues, do I need to pay the Income tax on this Amount. Do I allow to use this funds
    1. To Make FD.
    2. To Buy Immovable Property
    3. To Invest in Shares.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      Yes, he can transfer. Any income outside India is not taxable in India for NRI. He can do whatever. If you need our advise about investing in India, let us know. Thanks.

  • Venkatesh

    Excellent and very informative site. Thanks for very neat and detailed explanation on the FOREX Trading part.
    I have been an active Day Trader for the last 2 years, and have been wanting to trade in FOREX.
    If I understood correctly, I can open and trade in FOREX even as a Resident Indian as long as I am not converting INR to say USD to fund my account.
    I being a consultant also get paid in USD and Euro, Can I open an offshore account in say USD, get my bills deposited to this offshore account and use that to fund my FOREX account?
    Will that be legal? Can I show the profits arising from FOREX Trading as income in India, pay taxes and be able to enjoy my earnings without any issues?
    Thanks in advance.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      I would suggest you discuss with your CA and/or your RBI/FEMA consultant. Thanks.

  • anie

    Hi, JP,

    My questions is on legality & withdrawal of forex profit from offshore broker into NRE/NRO account in india for NRIs.

    I am an NRI and wanted to do some investments in forex trading via offshore broker. as a being NRI – i am staying outside of india. and i can fund initial deposits into my acc account as my local currency – otherthan-INR. my question is, is it legal to withdraw profit via NRE/NRO indian bank a/c. and is NRI participation in offshore forex trading considered to be legal.

    Thank you.!

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      As an NRI, you are free to do anything that is allowed as per your country of residence. As an NRI, you are allowed to transfer funds from NRO to NRE and also remit funds out of NRE to abroad in any foreign currency. Also, your limit to transfer funds is $1 million per year. $125,000 limit is for residents. Thanks.

  • Ashok I

    Dear Sir,

    Am an Indian Citizen, currently residing in the US under a H1B Visa and working there for over 8 months now. I have the following question.

    If I win a lottery in any one of the States in US, (say out of funds from my salary paid to me in the US) and receive the money (prize money) into any bank account in the US. Can I then transfer some of these lottery winnings to my NRE account in India ? If so, should I do it in USD or INR? Is there a limit?.Is it taxable?..Is there any way to do this at all ?

    I did read in the FEMA Act that withdrawal of foreign exchange for the purposes of remittance out of lottery winnings and remittances for the purchase of lottery tickets are prohibited under FEMA.

    Grateful if you can respond to my query ?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      1. As you have stayed outside India on an employment visa for more than 6 months, you are an NRI. For an NRI, only Indian income is taxable so your salary or lottery would not be taxable in India. However, you would have to pay tax in the USA.
      2. You are allowed to transfer ANY amount to NRE account in India. There is no tax on transfer of funds. Tax is on the income.
      3. NRE account is denominated in INR so while you may transfer the funds in USD, it will be converted into INR and credited in Rupees in the bank account. The interest on NRE accounts is exempt from tax. However, as global income is taxable for US residents, you would have to pay tax on the interest income in USA. Thanks.

  • Vd2621

    I am currently on h4 visa and would like to remit $50,000 from my Indian account (not NRO) which is a joint account with my dad. Once I get the funds here I would like to transfer the same amount as a gift to my first cousin who is a U.S. citizen. Is this legally allowed or is there any other way I can give him the money. Also is there any tax implication at my end.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      In India, the first holder owns the money. So if you are the first holder, it is your money and you can remit funds to USA. If not, you would need to determine the nature of transfer (e.g. gift/loan/income, etc.). Any foreign gift received is not taxable for US residents but you would need to inform IRS. Also, if it is your money, you would have declared it in the FBAR/Form 8938 in earlier years. Once money is in your account, you can give gift of $14,000 per person per year as a taxfree gift to anyone. For any higher amount, either you would need to pay gift tax or declare to IRS to count it against your lifetime gift limit of $5milion. I suggest you look at all the aspects of transaction, consult your CPA and make a decision. Thanks.

  • Vinod

    Very informative article and question answers. Thank you.

    My query is this. I’m an NRI in the US. Can a US national remit funds to my NRE account as a gift by wire transfer?
    If so, is there a limit?
    Am I free to use these gifts as I please in India without any taxes?
    Thank you.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      Yes. and Yes. The limit is $14,000 per person per year.
      However, I would advise you to accept gift in the USA only (limit and provisions are the same) and credit it in your account and then transfer to your NRE account. Thanks.

  • Shiv

    Hi..Can an Indian student in Europe play legally european or any international lotttery. Due to FEMA one cannot transfer foreign lottery win to indian banko account so can I open any foreign bank account legally & invest the money in the country where the ticket was purchased or any other country. However with foreigen lottery win can one open foreign bank account after disclsing this fact to the country of residence. Is it legal to play any foreign lottery outside of India by residing abroad as a student?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      1. As you have gone out of India as a student, you are considered an NRI under FEMA. As an NRI under FEMA, you are allowd to open NRO and NRE account with a bank in India.
      2. If you stay outside India of 182+ days in a financial year, you are considered an NRI under Income Tax Act. For NRIs, foreign income is not taxable in India.
      3. You would need to check the country of your residence (Europe) for participating in the lottery, lottery winning and use of the money. Thanks.

  • vasudevan


    i want to invest in Uk ,to trade CFD ,but also they have forex product , but under the purpose code investment in foreign share portfolio is allowed ,so if i invest and while withdrawing i need to mention from which share i got profit.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      I would assume you are a resident. As a resident, all your income would be taxable in India. Also, you would need to report any foreign assets in your income tax return in India. I don’t think you would need to declare which share you mad profit at the time of transferring or withdrawing from UK. However, you would need to calculate the profit/loss for income tax purpose. Also, please note that the restrictions are usually on outward remittance. There is no restrictions for inward remittance (foreign exchange coming into India). Thanks.

  • sudhir


    I have recently moved to US on H1visa.
    I want to send money from US to india , to pay for the home loan emis.
    Should I open NRE/NRO account for remitting or remit to my existing savings account in india?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      I would strongly suggest NRE account. Thanks.

  • Santosh P

    Dear Sir, I have recently transferred about 20K USD to my ICICI Bank Account (Normal Saving Account) from my overseas Bank in Myanmar. Myanmar Bank account shows money debited but it is still not credited in my ICICI Bank Account. Now almost 5 days. Please advice how to take this ahead.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      Please check with your ICICI bank in Myanmar and obtain the fund transfer (TT transfer) information and then fllow up with your bank in India. Thanks.

  • Ignatious D'Souza

    I am a Non Resident Indian for the last 33 years. I occasionally play EuroMilllions through Sydnicates. i.e. I am not playing directly but somebody is playing on my behalf who is a resident of Euro Zone. In case of a Big Win, Will I be able to receive the proceeds to my NRE Account.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      As an NRI, you are not taxed in your foreign income. I would suggest you to transfer the winning amount to your foreign account and then transfer the funds to NRE. Please also contact your CA or us if the amount is BIG for better planning for transferring money. Thanks.

  • KSNeeranj

    Hi Jigar,

    I have two questions:
    1. I am visiting US on business. I had spend some time with my cousin who is US citizen and has OCI. He bought me a Powerball ticket and smiled at me and said that if I win I can take the money back. That set me thinking as I have heard of FEMA rule. Now if the Lottery ticket is a gift (as he paid for it) and in case I won this how do I bring this money back to India? While the ticket is a gift and the outcome is from the gift, how does FEMA treat such cases and Income tax. Lottery winning in US is perfectly legal, they deduct the tax and give you the money.

    2. Again can my cousin (who is US citizen) gift me (India Citizen) cash? What is the limit? I understand there is a 40% gift tax in US under the hands of “gifter”. Why under DTAA, it says the 1st right of taxing gift is at the hand of India. So in this case since my cousin is gifting me, Under DTAA he need not pay tax and the tax will be at hands of me in India, right? Again if he is taxed at 40% in US, do I have to pay tax again in India?

    Appreciate your comments.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      1. As an Indian resident, your global income is taxable in India. If any tax is paid in foreign country, you may claim it as a credit while filing your tax return in India. Also, gift received from your close relative is exempt from tax. Your cousin is not your close relative.
      2. In USA gift tax is on giver so your cousin has to pay tax. As per Indian income tax, tax is on receiver. While your cousin may avoid paying tax in USA (provided he complete certain formalities), any gift from non-relative is included in your income any you would have to pay the tax. Thanks.

      • KSNeeranj


        Thanks a ton.

        If I understand you right. My cousin does not pay tax under DTAA or based on his life time exemption on gift tax? I am sorry to be persistent but just curious. As per DTAA the first right for taxation lies with India.

        One another thing is if there is a limitation in US to the amount to give tax and in India to receive?

        Once again thanks for your wonderful post.

        • KSNeeranj

          I am sorry, my previous question, last paragraph was if there is a limit of amount you can gift to a non citizen by US Citizen and/or Indian Citizen to receive amount as gift from US as per FEMA (Exemption being non relative).

          • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

            There is no distinction of US citizen or not. The rule apply to any individual. Also, FEMA would always allow foreign exchange coming in to India. The limit for gift from non-relative is under Income Tax in India and is Rs. 50,000 per year. Thanks.

          • KSNeeranj

            Jigar, Not to beat the issue to death… based on several comments above looks like,
            1. Any “inward” remittance into India from lottery won abroad (though it is legal there) is not permitted as per FEMA rules.

            2. Indian resident cannot open US account to keep that money there as you need to declare the global income and thus source of income would be lottery and would be against FEMA rules.

            3. Also, we cannot have someone who is citizen (Cousin) of that country claim the money on your behalf and gift you as you are only allowed to receive Rs.50,000.00 per FY from them? Anything more would be considered money laundering.

            Is there a way out? Like contact your firm or any of attorney or CPA firm to help us with this? Also, I do not understand why FEMA is taking high “moral stand” rather than “economical stand” when it is not illicit money coming in to the country but the FEMA provision in fact forcing the resident Indian to take coercive approach.

            Comments on above would be greatly appreciated.

          • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

            1. As you are not allowed any outward remittance for purchase of lottery ticket, you can not win a lottery. And, any lottery winning would be illegal.
            2. Indian resident is allowed to send money abroad for foreign assets/investments of upto $250,000 per year. But not for buying lottery ticket, which is specifically prohibited in FEMA.
            3. Receiving gift from non-relative is considered as a taxable gift and included in your income in India as per income tax act.

            Economically, logically and statistically, it is proven that the percentage of winning a lottery is very small and many more people have to lose so that one can win. If FEMA allows inward remittance of lottery winning, FEMA would also allow outward remittance of purchasing lottery tickets, which would be a lot more than winning (on an average over a long term period). There may be other reasons, but this is my understanding of economical/logical reason; in addition to the moral ground. Thanks.

          • KSNeeranj


            Thanks. That clarifies and clear. I will ask this last question and would cease from asking any more.

            Based on your answer 3. I can receive any amount of money as gift from non relative, correct? The tax exemption is up to Rs.50,000.00, rest of the money will be taxed. In essence, if my cousin or someone in US citizen (non relative) gifts me large sum, I am allowed to receive them (without Limit) but needs to pay tax as it would included in my overall income. Where is the question of money laundering here?

          • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

            You would need to prove genuineness. Why a non-relative would give gift to you and not his/her family/close relative. Also, his networth/income. Income tax may inquire. The question of money laundering come when you have unaccounted income/cash that you give him and he would give you gift. Also, when you receive gift of Rs. 51,000, whole 51,000 is included as income and not just 1,000. Thanks.

  • Rapu

    what i understand is that Indian resident can not do forex in overseas currency (EUR/USD, GBP/USD). but some people saying that NRI can do forex. is it true? from online i have found that if someone don’t stay in India for 180 days he will be NRI. so isn’t like people can take 180days vacation in Bangladesh or Pakistan and become NRI? assume someone started overseas currency trade and after 5~10 years he want to withdraw the money. so last year of withdraw, he can stay outside of India to become NRI.

    now is NRI status permanently or if he lives in india for 6 month+ for an year in future his NRI will be canceled?
    here i got another suggestion. if i make money from online in USD or other currency than INR and use that foreign currency to trade it will consider as legal. is it true?

    in that case how can i fill tax return, how can i proof that invested currency was in USD. assume someone invested 100USD and make 50K USD or more after 20~30 years.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      You have to be very careful for the definition of residential status. It is not that easy. For Indian resident on visit outside India, the person is resident even if he stays 60 days in India as per income tax. However, it is not important as the foreign investments are governed by FEMA. Under FEMA, if your intention is not of moving out of India, you will still be a resident of India under FEMA and all related rules will apply. I would suggest you contact your CA. Thanks.

  • Mahesh Kumar

    Greetings Jigar,

    Please let me know can i play online australian lottery from india with payments made via credit card ?
    As iam currently in Delhi so would I be able to play online australian from my PC with credit card ?

    please let me know.

    thanks and regards


    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      Remitting money outside India for gambling or lottery is prohibited and not allowed under FEMA. Thanks.

  • nadh

    Great article and very informative site. I have a situation and would appreciate if you can help please:
    I am an Indian resident. suppose my friend playing European lottery on my behalf & hit big jackpot. Now I want to go that country on tour visa for 6/12 months to receive the amount. Can I open foreign bank account after reaching European countries? And how can I send the money to my Indian bank account? can I open NRE account in India? I will be ready to pay the tax also..
    Please advise…. Thanks.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      the visitor visa is max for 6 months. Also, as you have lived in India your entire life until now, even if your stay in India is 60 days, you are considered a resident of India for tax purpose. As a resident, you would need to pay tax on your global income in India. Also, if you argue that lottery winning is by your friend, transfer of money from your friend to you would be considered as a gift from non-relative and would be included in your income and you would have to pay tax on the same.
      I would suggest you to be very cautious at it has all the red flags going up for the perfect case of money laundering.


    Respected Sir,
    My son is unemployed, and without investing any Indian / Foreign currency he is earning in Indian currency through foreign country (they provide us in Indian currency after converting USD) by providing FOREX services.

    I want to know that whether it is taxable or non-taxable. Kindly suggest me.


    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      I am not clear about your son’s situation or your question. If your son is an NRI, any income outside India is exempt. If your son is a resident, his global income is taxable in India. And, if he is unemployed and earning without any investment, I would be very cautious. Thanks.

  • Suhas Gowda

    Hi Jigar,

    I am living in the US for more than 3 years now working on H1B visa. I saw the rules on many of these big lottery websites(Powerball & MegaMillions) and see that it is completely legal for foreign nationals to play and win the jackpots.

    Now my question is if I win the jackpot, say approx. $100 Million.
    1. Will I be able to transfer the same to India after paying all the taxes in US?
    Should I pay the gift tax of 40%(after federal/state taxes) to be able to transfer to India?
    2. What are the taxes if any I would have to pay in India if the answer to the first one is YES?

    Thanks – Suhas Gowda

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      Indian residents are not allowed to remit (transfer) funds out of India for playing lottery. As you are an NRI, rules are different. You are allowed to buy and play the lottery and also win and transfer the funds to India. If you win big, please contact us and we can help you with the transfer and taxation. Please note, there is no double taxation. Thanks.

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