A Non Resident Indian ( NRI ) is a person of Indian origin but not residing in
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
- He should have been in
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
- He has held an Indian passport or;
- He or either of his parents or any of his grand-parents was a citizen of
- 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
In exercise of the powers conferred by clause (i) of sub-section (3) of Section 6, subsection.
OVERSEAS CORPORATE BODY (OCB)
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
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
FOREIGN DIRECT INVESTMENT IN REAL ESTATE
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 centers 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
ACQUISITION OF PROPERTY IN
A person resident outside
- Acquire any immovable property in
TRANSFER OF PROPERTY IN
A person resident outside
- Transfer any immovable property in
- Transfer any immovable property other than agricultural or plantation property or farmhouse to a person resident outside
ACQUISITION OF PROPERTY IN
A person of Indian origin resident outside
- Acquire any immovable property other than agricultural land/farm house/ plantation property in
- Funds received in
- 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
- Acquire any immovable property in
- It is necessary for a PIO to purchase property through NRE or NRO accounts.
TRANSFER OF PROPERTY IN
A person of Indian origin resident outside
- Transfer any immovable property in
- Transfer agricultural land/farm house/ plantation property in
- Transfer residential or commercial property in
- Transfer an immovable property being agricultural land or plantation property or farmhouse in
ACQUISITION OF IMMOVABLE PROPERTY FOR CARRYING ON A PERMITTED ACTIVITY:-
A person resident outside
- Acquire any immovable property in
- 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 authorized dealer as a security for any borrowing, the immovable property acquired in pursuance of clause (a).
REPATRIATION OF
- 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 authorised 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
- 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
No person being a citizen of
GENERAL INFORMATION REGARDING REAL ESTATE:
- NRIs and PIOs may acquire any immovable property for residential/commercial purposes in
- 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
- 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
- NRI / PIO can avail housing loan in rupees from an authorized dealer or housing finance institution in
- 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 favour 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
- 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.
TAX RULES
- 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.
