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NRI Corner

NRI Corner

The Indian real estate sector plays a significant role in the country’s economy as it is one of the top growing sectors in terms of agriculture, employment generation and contributes heavily towards the Gross Domestic Product (GDP). Around five to six per cent of the country’s GDP is contributed to by the housing sector. Over the next five years, this contribution to the GDP is expected to rise further.
The realtors have portrayed property investment as an element of lifestyle resulting in a splurge of luxurious apartments with beautiful commercial complexes and extraordinary retail ventures. There are two angles of looking at the property investment in India. First is the ROI (Return on Investment); second, the location and the surrounding environment. Due to these factors, there has been an increase in the number of NRI property buyers in Tier II cities who are planning to reconnect with their roots and experience the wealth of Indian culture and traditions by settling down and investing in real estate.

According to the Foreign Exchange Management Act (FEMA) of 1999, an Indian Citizen who stays abroad for employment/business or stays outside the country for an indefinite period of time is considered to be an NRI. (Persons Posted in U.N. organizations and official deputed abroad by Central/State Governments and Public Sector undertakings on temporary assignments are also treated as nonresidents). Non-resident foreign citizens of Indian Origin are treated on par with non- resident Indian citizen (NRIs).

A Person of Indian Origin (PIO) is whose ancestors were born in India and he/she has an Indian ancestry but not an Indian citizenship. As per the FEMA of 1999, a person of Indian origin can avail bank accounts, invest in shares and securities in India. So, he or she

  • Has had Indian Passport at any time
  • Himself/herself, parents or grandparents were Indian citizens (of the Constitution of India or Citizenship Act, 1955 (57 of 1955)
  • Is a spouse of an Indian citizen or a person who held an Indian Passport at any time
  • Is a spouse of a person who either was a citizen of India or his parents or grandparents were a citizen of India
Under the Foreigners Act of 1946 a foreigner means a person who is not a citizen of India.
Owning a property in India is one of the greatest assets and is one of the most profitable investments. There are very less chances of a loss, as the real estate growth graph is escalating day by day.The constant expansion of the IT sectors; MNC and corporate firms have given way for the growth of the real-estate sector particularly in the commercial sectors. Financial support from the Indian government in regards to revised FDI policies, easy access to bank loans & growth in Indian economy has resulted in the arrival of foreign investors in the Indian real estate market. Real estate in India creates huge returns and most NRIs are making a huge profit out of it.
Yes, in the past few years, the government of India has adopted a new stand regarding the foreign direct investment (FDI) policies which has encouraged other countries to invest in Indian properties. The country has attracted three times the foreign investment in the past few years towards real estate due to rapid growth in the commercial, residential and retail sectors of India in metro cities like Mumbai, Delhi, NCR, Bangalore and Chennai.
According to the RBI guide lines, an NRI/PIO can acquire a residential property in India by a way of gift from an Indian, or purchase it. He or she can even acquire residential property by way of inheritance from a person who is a resident of India as stated in the FEMA, 1999.For NRI/PIO there are no restrictions and no approval is required from RBI on purchase of residential or commercial property in India. Although, in case of PIO, form IPI-7 might be required to be submitted with RBI within 90 days of purchase.For a foreigner, RBI approval is required.
Under the general permission, an NRI/PIO may purchase a residential property in India by funds remitted to India through normal banking channel or funds held in his/her NRE/FCNR or NRO accounts.For foreigners, only direct remittance is applicable.
In accordance to RBI guidelines, an NRI/PIO can also apply for property loans against NRE/ FCNR deposits for residential property only. Repayment of the loan should be made within a period not exceeding 15 years. Although, you might need a guarantor for a loan mainly for collateral security. The guarantor will have to demonstrate appropriate net worth to cover for the loan. Usually one can have a guarantor in any city where the loan issuer has a branch. The best way is to talk to loan issuers as they may work something out for NRIs/PIOs.

RBI permits NRIs/PIOs to rent their property in India. The rental income of any such investment is eligible for repatriation.

Although, foreigners may require RBI approval.

As an NRI you can easily sell your property in India to an Indian resident/NRI/PIO. Although, as a PIO you can only sell your residential property in India to an Indian citizen. In accordance to RBI guidelines NRI/PIO can also transfer the property as a gift to an Indian resident/NRI/PIO.

Repatriation outside India means buying or drawing of foreign exchange from an authorised dealer in India and remitting it outside India through normal banking channels or crediting it to an account denominated in foreign currency or to an account in Indian currency maintained with an authorised dealer from which it can be converted in foreign currency.

NRIs/PIOs are eligible to repatriate sale proceeds outside India, provided that the proceeds are equivalent to the original investment. In the case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties, as well as commercial property after 3 years of acquisition (i.e. possession) or payment of last instalment, whichever is later , provided the investment is out of direct remittance or NRE/FCNR account. Form IPI-8 is to be submitted to RBI within 90 days of sale of the property.

NRI/PIO are allowed by the authorised dealers to repatriate an amount up to $(US)1 million per financial year. This is subject to production of documentary evidence in support of acquisition, inheritance or legacy of assets by the remitter, and a tax clearance / no objection certificate from the Income Tax Authority for the remittance. Remittances exceeding US $1,000,000 in any financial year requires prior permission of the RBI.

Foreigners are not eligible to repatriate sale proceeds outside India.