NRI and PIO can invest in India
Non-Resident Indian (NRI) and Person Of Indian Origin (PIO) can invest in real estate in India
A non-resident Indian (NRI) and person of Indian origin (PIO) can acquire residential property in India. They can rent it out, transfer it, or sell it as well. They can take the rental income and their investments in the property out of the country , subject to the foreign exchange regulations.
Under the present relaxed conditions, NRIs can invest in property in India easily. A NRI is an Indian citizen residing outside India. A PIO is an individual who at any time held an Indian passport, or whose father or grandfather was a citizen of India. However , a PIO who is a citizen of Pakistan, China or Bangladesh has restrictions in acquiring property.
Also, NRIs and PIO cannot buy agricultural land, plantation property and farm house. A NRI/PIO may use his own funds to acquire immovable property. He can also avail a housing loan from a bank.
Own funds is money received in India through an inward remittance from overseas out of income earned overseas, personal savings outside India, and funds held in non-resident external (NRE), non-resident ordinary (NRO), or a foreign currency - non-resident (FCNR) bank account.
In addition to own funds, he may also avail a housing loan from a bank. The authorised banks have been permitted to provide housing loans to NRIs and PIO for acquisition of a residential property in India. It is to be noted that this is subject to certain conditions.
However , the quantum of loan, margin money and the period of repayment are on par with the housing loans provided to residents in India. The loan amount cannot be credited to the NRE/FCNR account of the NRI/PIO. It has to be fully secured through an equitable mortgage of the property proposed to be acquired.
If required , the bank may also have a lien on the other assets of the buyer in India. Further, the instalments of the loan, interest and other charges should be paid by the NRI/PIO through remittances from outside India through normal banking channels or out of funds in his NRE/FCNR/NRO account in India.
The loan and interest can also be repaid out of the rental income of the property purchased. The NRI/PIO may transfer the property without any approval from the Reserve Bank of India (RBI) to anybody - either a resident of India or another NRI/PIO.
In case the property is let-out , the rental income can be credited into the NRO/NRE account. In case of sale, the sale proceeds of upto two properties can be remitted outside India without any RBI approval. Remittance for third and subsequent properties requires an RBI approval .
The remittance of the sale proceeds depends upon the mode of acquisition - whether it was acquired out of funds remitted from outside or out of rupee funds. A property can be acquired out of rupee funds by a NRI before leaving India, or acquired after leaving India but from his savings bank account here.
It should be with income earned in India. The proceeds can be repatriated provided the amount does not exceed either the amount paid for acquiring the property in foreign exchange received from overseas, the amount paid from the FCNR account, or the foreign currency equivalent of the amount paid from the funds held in a NRE account .
In case the property is acquired from rupee funds held in India, the remittance depends on the holding period of the property. In case the property has been held for more than 10 years, up to one million USD per calendar year can be repatriated without any RBI approval. If the property is sold after being held for less than 10 years, remittances can be made if the sale proceeds were held for the balance period in a NRO account or other eligible investments.
For remittance of sale proceeds of assets acquired through inheritance or settlement , there is no lock-in-period . In all other cases, specific approval of the RBI is required.
Wherever a specific approval of the RBI is not required, the sale proceeds of the property as well as the rental income may be remitted outside India through normal banking channels, after obtaining an appropriate certificate from a chartered accountant, certifying that applicable taxes have been paid or provided for.
From ET Bureau - by-Ashish Gupta, November-22-2008
A non-resident Indian (NRI) and person of Indian origin (PIO) can acquire residential property in India. They can rent it out, transfer it, or sell it as well. They can take the rental income and their investments in the property out of the country , subject to the foreign exchange regulations.
Under the present relaxed conditions, NRIs can invest in property in India easily. A NRI is an Indian citizen residing outside India. A PIO is an individual who at any time held an Indian passport, or whose father or grandfather was a citizen of India. However , a PIO who is a citizen of Pakistan, China or Bangladesh has restrictions in acquiring property.
Also, NRIs and PIO cannot buy agricultural land, plantation property and farm house. A NRI/PIO may use his own funds to acquire immovable property. He can also avail a housing loan from a bank.
Own funds is money received in India through an inward remittance from overseas out of income earned overseas, personal savings outside India, and funds held in non-resident external (NRE), non-resident ordinary (NRO), or a foreign currency - non-resident (FCNR) bank account.
In addition to own funds, he may also avail a housing loan from a bank. The authorised banks have been permitted to provide housing loans to NRIs and PIO for acquisition of a residential property in India. It is to be noted that this is subject to certain conditions.
However , the quantum of loan, margin money and the period of repayment are on par with the housing loans provided to residents in India. The loan amount cannot be credited to the NRE/FCNR account of the NRI/PIO. It has to be fully secured through an equitable mortgage of the property proposed to be acquired.
If required , the bank may also have a lien on the other assets of the buyer in India. Further, the instalments of the loan, interest and other charges should be paid by the NRI/PIO through remittances from outside India through normal banking channels or out of funds in his NRE/FCNR/NRO account in India.
The loan and interest can also be repaid out of the rental income of the property purchased. The NRI/PIO may transfer the property without any approval from the Reserve Bank of India (RBI) to anybody - either a resident of India or another NRI/PIO.
In case the property is let-out , the rental income can be credited into the NRO/NRE account. In case of sale, the sale proceeds of upto two properties can be remitted outside India without any RBI approval. Remittance for third and subsequent properties requires an RBI approval .
The remittance of the sale proceeds depends upon the mode of acquisition - whether it was acquired out of funds remitted from outside or out of rupee funds. A property can be acquired out of rupee funds by a NRI before leaving India, or acquired after leaving India but from his savings bank account here.
It should be with income earned in India. The proceeds can be repatriated provided the amount does not exceed either the amount paid for acquiring the property in foreign exchange received from overseas, the amount paid from the FCNR account, or the foreign currency equivalent of the amount paid from the funds held in a NRE account .
In case the property is acquired from rupee funds held in India, the remittance depends on the holding period of the property. In case the property has been held for more than 10 years, up to one million USD per calendar year can be repatriated without any RBI approval. If the property is sold after being held for less than 10 years, remittances can be made if the sale proceeds were held for the balance period in a NRO account or other eligible investments.
For remittance of sale proceeds of assets acquired through inheritance or settlement , there is no lock-in-period . In all other cases, specific approval of the RBI is required.
Wherever a specific approval of the RBI is not required, the sale proceeds of the property as well as the rental income may be remitted outside India through normal banking channels, after obtaining an appropriate certificate from a chartered accountant, certifying that applicable taxes have been paid or provided for.
From ET Bureau - by-Ashish Gupta, November-22-2008