For the covered overseas property-sale commission, RBI’s prior-approval threshold is the higher of USD 25,000 and 5% of the relevant inward remittance. Paragraph 4.2 of the current Other Remittance Facilities Direction applies to remittances by persons other than individuals to agents abroad for sales of residential flats or commercial plots in India. An amount exceeding that higher threshold requires prior RBI approval under this provision.
This guide is checked on 23 October 2026 against the Master Direction displayed as updated on 1 October 2026. The examples assume an Indian resident company or other resident non-individual, ordinary rupee-funded drawal, verified covered property-sale transactions and no applicable funding exemption. They do not apply the rule to every brokerage, individual remitter or overseas property transaction.
Use the higher amount and retain the underlying rule
RBI Master Direction paragraph 4.2 and the annexed Current Account Transactions Rules, Schedule III paragraph 2(ii) use the same higher-of comparison. Calculate both limbs explicitly. A commission above USD 25,000 does not necessarily exceed the threshold when 5% is higher; conversely, a small 5% result does not reduce the USD 25,000 limb. Exactly the computed threshold does not exceed it.
This is an approval trigger, not a prescribed commercial commission rate, a tax deduction certificate or a conclusion that every below-threshold payment is otherwise permissible. Preserve the agency terms and evidence of the actual service. Fees must still be genuinely payable for the identified transaction, and the AD bank must be able to match the payment with a lawful purpose and beneficiary.
Map the commission to the relevant inward remittance
The wording refers to inward remittance, not simply the rupee agreement value, an unreceived foreign-currency receivable or a headline project price. Obtain bank-supported linkage between the covered sale and the inward receipt used in the computation. Where a receipt covers several properties, there are partial receipts, a refund, or several currencies, resolve the allocation and USD-equivalent basis with the AD before relying on a headroom figure.
The examples expressly stipulate the relevant inward-remittance base. They do not invent a rule for netting refunds, using future instalments or choosing an exchange rate. If the base has not been established, the responsible conclusion is that the threshold cannot yet be finalised, rather than selecting the largest contractual amount to make the fee fit.
Preserve the transaction identity across invoices and banks
The unit is per transaction. Keep the underlying sale, agent invoice, commission entitlement, prior remittances and proposed payment in one register. As a practical control, splitting the commission into payment instalments should not be treated as proof of fresh underlying transactions. Separately documented independent sales need their own computations; an annual aggregate alone does not answer each transaction’s test.
Present the full commission profile to the AD if payment splitting or multiple agents create doubt about the transaction boundary. The register is a control derived from the stated unit, not an additional numerical aggregation rule supplied by the Direction. Obtain the required RBI approval before a remittance that needs it; do not assume only the numerical excess is subject to review.
Funding and tax require separate conclusions
Rules 5 and 6 in the annexed Current Account Transactions Rules address RFC/EEFC funding and their qualifications. Therefore, a payment out of a foreign-currency account needs a separate account-eligibility and exemption analysis; the rupee-funded examples do not decide that issue. An account exemption also does not remove every other transaction requirement.
Paragraph 7 of the Direction requires AD compliance with applicable tax laws. Analyse income-tax characterisation, treaty relief and any GST consequences independently for the payment date. This article neither treats the commission as automatically tax-free nor assumes a universal withholding rate or legacy remittance form.
Worked illustrations
These illustrations use fictional facts and expressly stated assumptions. Amounts are Indian rupees unless a different currency or unit is specified. They are independent examples, not findings about any actual client.
Illustrative example 1: The USD 25,000 limb can be larger
The AD-verified relevant inward remittance is USD 200,000. Five per cent is USD 10,000; the higher threshold is USD 25,000. A genuinely payable commission of USD 20,000 is USD 5,000 below that threshold. Although the fee is 10% of the stipulated receipt, this particular higher-of approval test is not a standalone 5% fee cap.
Illustrative example 2: A fee above USD 25,000 can remain below the threshold
Relevant inward remittance is USD 1,000,000, so 5% is USD 50,000. The threshold is USD 50,000, and commission of USD 40,000 has USD 10,000 headroom. Treating USD 25,000 as the only limit would incorrectly flag this case under paragraph 4.2. Other transaction and banking conditions remain necessary.
Illustrative example 3: At the crossover, equality is not an excess
On relevant inward remittance of USD 500,000, 5% equals USD 25,000. Both limbs coincide. Commission of USD 25,000 is exactly at the threshold; commission of USD 25,001 exceeds it by USD 1. This is a threshold illustration, not permission to fragment the excess into another payment.
Illustrative example 4: Calculate the actual excess without treating it as the whole approval scope
Relevant inward remittance is USD 800,000. Five per cent is USD 40,000, larger than USD 25,000. A USD 42,000 commission exceeds the threshold by USD 2,000. Prior approval is required on the stated facts; the USD 2,000 arithmetic excess is not an instruction that only that slice needs an approval file.
Illustrative example 5: A contract figure is not evidence of inward receipt
The sale contract mentions USD 1,200,000, but assume the AD has established USD 300,000 as the relevant inward-remittance base for this computation. Five per cent of that base is USD 15,000, giving a USD 25,000 threshold. Commission of USD 30,000 exceeds it by USD 5,000. Using the unverified full contract amount would produce a USD 60,000 limb and conceal the issue. Any later receipt or different allocation needs fresh supported analysis.
Illustrative example 6: Two instalments remain linked to one stipulated transaction
Assume one covered transaction has relevant inward remittance of USD 300,000 and total commission of USD 30,000, payable as two USD 15,000 instalments. Its higher threshold is USD 25,000 and total commission exceeds it by USD 5,000. Present the complete arrangement for AD review and required approval before proceeding; the two payment instructions do not themselves establish two independent sale transactions.
Illustrative example 7: Two independent sales need two comparisons
For independently substantiated sale A, inward remittance is USD 1,000,000 and commission USD 40,000: threshold USD 50,000, no excess. For independent sale B, inward remittance is USD 200,000 and commission USD 30,000: threshold USD 25,000, excess USD 5,000. The combined commission is USD 70,000, but an annual aggregate calculation cannot replace the separate conclusion that B crosses its applicable transaction threshold.
Ten-step verification table
| Step | Verification | Evidence to retain |
|---|---|---|
| 1 | Confirm resident non-individual remitter status | Entity and FEMA-residence analysis |
| 2 | Confirm the covered Indian property-sale and overseas agency purpose | Sale documents and agency engagement |
| 3 | Identify the underlying transaction boundary | Property/sale identifiers and linked fee invoices |
| 4 | Establish the relevant inward-remittance base | Bank receipt evidence and supported allocation |
| 5 | Document currency conversion if necessary | AD-confirmed USD-equivalent methodology |
| 6 | Calculate USD 25,000 and 5% separately | Two-limb calculation with the higher amount highlighted |
| 7 | Reconcile earlier and proposed commission payments | Transaction-wise commission register |
| 8 | Analyse funding and any separate account exemption | Rupee funding or supported RFC/EEFC analysis |
| 9 | Secure required prior approval and complete banking documentation | AD correspondence and RBI approval where required |
| 10 | Complete separate tax review and reconcile actual remittance | Payment-date tax file, bank advice and settled agency ledger |
Sixteen practitioner FAQs
1. Is the threshold the lower of the two amounts?
No. The current paragraph 4.2 and Schedule III wording use whichever is more. Calculate and retain both limbs.
2. Is USD 25,000 always the maximum without approval?
No. Five per cent of the relevant inward remittance may produce a larger threshold.
3. Does exactly the threshold trigger the exceeds condition?
No. Equality does not exceed it. Other legal and banking requirements still apply.
4. Is 5% a compulsory agency fee?
No. This provision supplies an approval comparison, not the commercial amount that must be paid.
5. Does this apply to every property abroad?
No. The stated category concerns agents abroad for covered sales of residential flats or commercial plots in India.
6. Can an individual copy this company calculation?
Not automatically. The provision discussed here expressly addresses persons other than individuals.
7. Can the full contract price be used without receipt evidence?
Do not substitute a contractual figure for the inward-remittance base. Establish the relevant receipt and allocation with the AD.
8. What if one receipt covers several flats?
Prepare a supported transaction allocation before computing headroom. Do not allocate the entire receipt repeatedly to each fee.
9. What if the inward receipt is in a currency other than USD?
Document the bank’s applicable USD-equivalent basis. The article does not prescribe an unsupported exchange rate or date.
10. Can instalments create fresh allowances?
Payment splitting alone does not establish independent underlying transactions. Present the full linked commission arrangement.
11. Should payments through two banks be tracked together?
The transaction register should reconcile all related payments. Bank choice does not by itself change the underlying sale.
12. Is only the numerical excess subject to approval?
Do not assume that. Follow the AD/RBI approval scope for the transaction and proposed remittance.
13. Does an EEFC account automatically make these examples applicable?
No. Foreign-currency-account funding requires its own Rule 5/6 and exception analysis; the examples stipulate rupee funding.
14. Is a below-threshold payment guaranteed to be released?
No. The bank still needs a permissible and adequately supported transaction and beneficiary.
15. Does RBI approval establish tax exemption?
No. Income-tax, treaty and GST analysis remain independent of the exchange-control threshold.
16. Can a refunded sale receipt be silently retained in the base?
No silent assumption should be made. Reconcile the changed facts and obtain AD treatment before finalising a revised threshold.
Conclusion
Use bank-supported inward receipts and the higher-of formula for each covered transaction. Present the full commission arrangement and obtain any required prior approval before releasing the remittance.