A Non Resident Indian (NRI) is a
person of Indian origin but not residing in India.
Under the Income Tax Act to be assessed as a "resident", an individual should fulfill either of the two conditions:
Under the Income Tax Act to be assessed as a "resident", an individual should fulfill either of the two conditions:
- He should have been present in
India in the previous year for at least 182 days. This period of 182 days
need not be continuous.
- He should have been in India
for at least 365 days in the preceding four years and he stayed in India
for not less than 60 days in the previous year in consideration.
All
those persons who are not 'residents' are called 'Non Residents'.
For
the purpose of transfer of immovable property a Person of Indian Origin (PIO)
origin' means an individual (not being a citizen of Pakistan or Bangladesh or
Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan) who fulfils any
of the conditions given below:
- He has held an Indian passport
or;
- He or either of his parents or
any of his grand-parents was a citizen of India by virtue of the
Constitution of India or the Citizenship Act, 1955 (57 of 1955); or
- The person is a spouse of an
Indian citizen or a person referred to in sub-clause (a) or (b).
Rules relating to NRI / PIO
investment in real estate have been considerably liberalized and
simplified. Foreign citizens of Indian origin (PIOs) have been permitted
to invest without the need to obtain approval from the Reserve Bank of India.
With the passage of FEMA, the power to effect repatriation proceeds has been
decentralized and delegated to authorized foreign exchange dealers. What is
more, even the rental income can be repatriated now. It makes sense for NRIs
now to earmark a portion of their investment portfolio in real estate and earn
competitive return on investment.
In exercise of the powers conferred
by clause (i) of sub-section (3) of Section 6, subsection.
Overseas corporate body means
- Companies, partnership firms,
societies and other corporate bodies
- Owned, directly or indirectly,
- To the extent of at least 60%
by individuals of Indian nationality or origin resident outside India as
also overseas trusts in which at least 60% of the beneficial interest is irrevocably
held by such persons.
The various facilities granted to
NRIs are also available, with certain exceptions, to OCBs so long as the
ownership/beneficial interest held in them by persons of Indian
nationality/origin resident outside India continues to be at or above the level
of 60%.
FDI provides for 100% foreign
participation by NRI/OCB's in housing and real estate development sector in
following areas:
- Development of serviced plots
and construction of residential premises
- Construction of residential and
business premises including business centres and offices
- Development of townships
- City and urban infrastructure
facilities
- Manufacture of building
material
- Participatory ventures in all
of the above
- Investment in housing finance
institutions
A
person resident outside India who is a citizen of India may
- Acquire any immovable property
in India other than agricultural/plantation/farm house.
TRANSFER OF PROPERTY
IN INDIA BY AN NRI:
A
person resident outside India who is a citizen of India may –
- Transfer any immovable property
in India to a person resident in India.
- Transfer any immovable property
other than agricultural or plantation property or farmhouse to a person
resident outside India who is a citizen of India or to a person of Indian
origin resident outside India.
A
person of Indian origin resident outside India may –
·
Acquire any immovable property other
than agricultural land/farm house/ plantation property in India by purchase,
from out of
·
Funds received in India by way of
inward remittance from any place outside India or Funds held in any
non-resident account maintained in accordance with the provisions of the Act
and the regulations made by the Reserve Bank under the Act.
·
Acquire any immovable property in
India other than agricultural land / farm house /plantation property by way of
gift from a person resident in India or from a person resident outside India
who is a citizen of India or from a person of Indian origin resident outside
India
·
Acquire any immovable property in
India by way of inheritance from a person resident outside India who had
acquired such property in accordance with the provisions of the foreign
exchange law in force at the time of acquisition by him or the provisions of
these Regulations or from a person resident in India
·
It is necessary for a PIO to
purchase property through NRE or NRO accounts.
A
person of Indian origin resident outside India may –
- Transfer any immovable property
in India other than agricultural land/farm house/plantation property, by
way of sale to a person resident in India
- Transfer agricultural land/farm
house/ plantation property in India, by way of gift or sale to a person
resident in India who is a citizen of India
- Transfer residential or
commercial property in India by way of gift to a person resident in India
or to a person resident outside India who is a citizen of India or to a
person of Indian Origin resident outside India.
- Transfer an immovable property
being agricultural land or plantation property or farmhouse in India by
way of a gift or sale to a person resident in India without any permission
from the RBI provided that the purchaser is a resident as well as a
citizen of India.
A
person resident outside India who has established in India in accordance with
the Foreign Exchange Management (Establishment in India of Branch or Office or
other Place of Business) Regulations, 2000, a branch, office or other place of
business for carrying on in India any activity, excluding a liaison office, may
–
- Acquire any immovable property
in India, which is necessary for or incidental to carrying on such
activity; Provided that
- all applicable laws, rules,
regulations or directions for the time being in force are duly complied
with; and
- the person files with the
Reserve Bank a declaration in the form IPI annexed to these regulations,
not later than ninety days from the date of such acquisition
- Transfer by way of mortgage to
an authorised dealer as a security for any borrowing, the immovable
property acquired in pursuance of clause (a).
- A person referred to in
sub-section (5) of Section 6 of the Act, or his successor shall not,
except with the prior permission of the Reserve Bank, repatriate outside
India the sale proceeds of any immovable property referred to in that
sub-section
- In the event of sale of
immovable property other than agricultural land/farm house/plantation
property in India by a person resident outside India who is a citizen of
India (NRI) or a person of Indian origin (PIO), the authorized dealer may
allow repatriation of the sale proceeds outside India, provided the
following conditions are satisfied, namely
- The immovable property was
acquired by the seller in accordance with the provisions of the foreign
exchange law in force at the time of acquisition by him or the provisions
of these Regulations
- The amount to be repatriated does not exceed
- The amount paid for
acquisition of the immovable property in foreign exchange received through
normal banking channels or out of funds held in Foreign Currency
Non-Resident Account or
- The foreign currency equivalent,
as on the date of payment, of the amount paid where such payment was
made from the funds held in Non-Resident External account for
acquisition of the property.
- In the case of residential
property, the repatriation of sale proceeds is restricted to not more than
two such properties.
- In the case of the sale of an
immovable property, other than an agricultural land/farm house/ plantation
property in India by an NRI or PIO, repatriation of the sale proceeds
outside India (including credit to RFC, NRE or FCNR Accounts), is allowed.
- Sale proceeds of any immovable
property inherited by NRI/PIO from a person resident in India may be
remitted abroad but the amount not to exceed USD one million, per calendar
year subject to production of documentary evidence in support of
inheritance and Tax clearance certificate/no objection certificate from
Income Tax authority to authorized dealer for remittances.
- The RBI has also now permitted
authorized dealers to allow the facility of repatriation of funds by
NRI/PIO in their Non-resident Ordinary Rupee (NRO) Account up to US $
1,00,000 per year representing the sale proceeds of the immovable property
held by them for a period of not less than 10 years subject to payment of
the applicable taxes.
Prohibition on acquisition or transfer
of immovable property in India by citizens of certain countries.
No person being a citizen of
Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan
without prior permission of the Reserve Bank shall acquire or transfer immovable
property in India, other than lease, not exceeding five years.
- NRIs and PIOs may acquire any
immovable property for residential/commercial purposes in India, other
than agricultural/plantation/farm house, without the permission of Reserve
Bank of India.
- No declaration is required to
be made to the RBI. Only information regarding details of the property and
costs incurred should be given to the RBI. This will help at the time of
repatriation.
- No permission from the RBI is
required to transfer any immovable property other than the agricultural
land or plantation property or a farm house in India by way of sale to a
person resident in India.
- The lock-in period of 3 years
has been done away with.
- If property has been acquired
through NRE account then repatriation is allowed only for 2 residential
properties.
- NRI/PIO is permitted to
transfer by way of mortgage his residential commercial property in India
to an authorized dealer/housing finance institution in India.
- NRI/PIO can avail housing loan
in rupees from an authorized dealer or housing finance institution in
India approved by the National Housing Finance Bank for purchase of
residential accommodation or for the purpose of repairs/renovation/improvement
of residential accommodation, subject to certain terms and conditions.
- Sale proceeds of
residential/commercial property received by way of gift by NRI/PIO can
only be credited to NRO account.
- Sale proceeds of any immovable
property in India inherited, by a person resident outside India (i.e. NRI
or PIO or foreign national of non-Indian origin resident outside India),
from a person resident outside India cannot be repatriated by him or his
successor without prior permission of the RBI.
- NRI/PIO can rent out the
residential/commercial property purchased out of foreign exchange/rupee
funds.
- The purchase consideration
should be met either out of inward remittances in foreign exchange through
normal banking channels or out of funds from NRE/FCNR accounts maintained
with banks in India.
- The non-resident Indians who
are staying abroad may enter into an agreement through their relatives
and/or by executing the Power of Attorney in their favor as it is not
possible for them to be present for completing the formalities of purchase
(negotiating with the builder or Developer, drafting and signing of
agreements, taking possession, etc.) These formalities can be completed
through some known person who can be given the Power of Attorney for this
purpose. Power of Attorney should be executed on the stamp paper before
the proper authorities in foreign countries. Power of Attorney cannot be
drafted on the stamp paper bought in India.
- Residential property can be
given on rent if not required for immediate residential use. Rental income
cannot be remitted abroad and will have to be credited to the ordinary
non-resident rupee account of the owner of the property.
- No taxes to be paid while purchasing
property.
- Certain taxes to be paid when selling property. If NRI/PIO has held property for less than 3 years then he would have to pay 30% tax. If property has been held for more than 3 years then tax payable is 20%. Tax is payable on rental income too.
At the time of renting out property
or repatriation PAN card is required.
For More Information:
No comments:
Post a Comment