Who is a Non Resident Indian?
An Indian Citizen who stays aboard for employment/carrying on business or vocation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad is a non-resident.
Non-resident foreign citizens of Indian Origin are treated on par with non-resident Indian citizen (NRIs).
Who is a Person of Indian Origin (PIO)?
A Person of Indian Origin (PIO) is a citizen of any other country but whose ancestors were Indian nationals at least four generations away.
Can a NRI invest in immovable property in India?
Yes, An NRI/PIO can invest a residential or commercial property by purchasing it under the general permission granted by the RBI. Payment for purchasing the property should be made only out of funds remitted to India through normal banking channels or funds held in NRE/ FCNR/NRO accounts maintained in India. No payment can be made outside India.
Can foreign citizen of Indian Origin acquire or dispose of residential property by way of gift?
Yes. Reserve Bank has granted general permission to foreign citizen of Indian Origin to acquire or dispose of properties up to two houses by way of gift from or to a relative who may be an Indian Citizen or a person of Indian origin whether resident in India or not, subject to compliance with applicable tax laws.
Agricultural land/plantation property/farmhouse in India cannot be acquired by way of gift. A foreign national of non-Indian origin resident outside India cannot acquire any immovable property in India by way of gift.
Can immovable property held in India, be transferred by way of gift to relatives/registered charitable trusts/organizations in India?
Yes. General permission has been granted by Reserve Bank to non-resident persons (foreign citizen) of Indian Origin to transfer by way of gift immovable property held by them in India to relatives and charitable trust/organizations subject to the conditions that the provisions of any other law, including Foreign Contribution (Regulation) Act, 1976, as applicable, are duly complied with.
What are the documents Required for Acquisition of Property?
- Title Deed
- Tax Receipt
- Encumbrance Certificate
- Document showing measurement of Land
- Registration Papers
What are the Key factors to be followed on acquisition of property by NRI by Purchase/Gift/Inheritance?
- There is no lock-in period now for any acquisition of immovable property.
- All the sale proceeds of residential/commercial property received by way of gift by NRI should be credited to NRO accounts only.
- Sale proceeds of property inherited from a resident Indian not exceeding USD 1 million can be remitted abroad in one calendar year.
- Sale proceeds of property inherited from an NRI cannot be repatriated.
- Sale proceeds of residential/commercial property received by way of gift by NRI/PIO can only be credited to NRO account.
- NRIs can seek an agreement with their relatives in the form of Power of Attorney in their resident country. This way, in their absence their relatives can represent them during the proceedings.
Note:The information contained on this site is for information purposes only, and may not apply to your situation. The author, publisher and provider provide no guarantee about the content or accuracy of content enclosed. Information provided is subjective.
What is meant by Repatriation?
Repatriation is the transfer of funds from India to accounts held overseas. Repatriation pertaining to Real Estate in India is in accordance with the provision of the Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2000 as defined in Sections 6 and 47 of FEMA, 1999 and Notification No. FEMA 21/2000-RB dated May 3, 2000.
What are the Conditions for Repatriation of Sale Proceeds from property?
- Property against which remittance is sought should be acquired as per the applicable laws and in accordance with the provisions of foreign exchange law in force.
- Documentary evidence in support of the acquisition of the funds/assets proposed to be remitted should be produced. It is required by banks for the same.
- Undertaking and Certification relating to tax compliance are mandatory.
- Proceeds should not exceed the amount paid for acquiring the property.
- Subject to fulfillment of few conditions, proceeds should be credited to NRE account.
- Repatriation of sale proceeds of residential properties is restricted to two such properties.
- Repatriation of sale proceeds of immovable property acquired out of Rupee fund (inward remittance) is available only if the property is held for a minimum period of 10 years. If such a property acquired out of Rupee fund is sold within 10 years, remittance can be made, only if the sale proceeds have been held by the NRI/PIO for the balance period in an NRO Account (Savings/Term Deposits) or in any other eligible security provided such investment is traced to the sale proceeds of the immovable property.
- Repatriation should be done via ‘authorised person’. Authorised person means an authorized dealer/offshore banking unit or any other person for the time being authorised to deal in foreign exchange or foreign securities, by the RBI.
- Citizens of Pakistan, Bangladesh, Sri Lanka, China, Afghanistan, Iran, Nepal and Bhutan shall require prior approval from RBI to apply for repatriation.
What are the NRI banking norms?
Repatriation of sales proceeds of an immovable property is allowed by banks, subject to fulfillment of the following points:
- Sale proceeds of property purchased with native currency by an NRI do not qualify for repatriation.
- Sale proceeds of property purchased with foreign currency qualifies for repatriation amount not exceeding $ 1 million, subject to two conditions:
- Remittance for the concerned property was done outside India, in accordance with regulation of FEMA, 1999.
- Property in question is registered with RBI within 3 months of purchase.
- Property purchased on loan also falls under repatriable investment if the loan has either been repaid per norms or an undertaking by a Chartered Accountant is enclosed.
What are the Channels of Repatriation?
- NRE (Non Resident External Account) account (Savings/Current/ Fixed Deposits): Is freely repatriable (principal and interest) and does not require prior permission from RBI. Many banks like HDFC, PNB, SBI, ICICI etc. all offer NRE facilities.
- FCNR (Foreign Currency Non Resident Account) (Deposits): FCNR Deposits are fully repatriable (principal and interest). And the entire deposit is exempt from tax. All major banks HDFC, ICICI, SBI offer this facility.
- NRO account Non- Resident Ordinary Account(Savings): NRO deposits are not repatriable (principal) except on current NRI income like rent, dividend, pension, etc. and remittances indicated under “Repatriation of NRO Funds” only after payment of taxes due in India. Interest is freely repatriable. The NRI may remit up to USD one million per calendar year.
- RFC account (Resident Foreign account): This account is available for returning Indians only, that is Indian who have permanently returned to India after holding NRI status. Funds can be repatriated on a need basis.
What is the procedure for Repatriation?
To apply for repatriation, an NRI should make an application in the prescribed format to an authorized dealer only, that is, a bank/dealer authorised to deal in foreign exchange by the RBI. The authorized dealer on satisfying itself with the particulars/documents submitted by the concerned NRI may allow the repatriation of the same.
What are the documents required while seeking Repatriation?
- Application for permission in prescribed format in Form IPI 8 to repatriate the original investment made in immovable property held in India.
- Certified copy of the purchase agreement.
- Certified copy of the sale agreement.
- Original bank documents proving that the purchase has been made from abroad or from an NRE account held by the seller.
- Proof of the Capital gain tax, if any, deducted at source and paid to the Government by the purchaser of the property.
Note: The information contained on this site is for information purposes only, and may not apply to your situation. The author, publisher and provider provide no guarantee about the content or accuracy of content enclosed. Information provided is subjective.