An NRI is a person who is not residing presently in India. And according to the Foreign Exchange Management Act (FEMA), 'a person resident in India' includes an individual who is residing in India for more than 182 days during the period of the preceding financial year.
It does not include a person who has gone out of territories of India on employment, business or vocation for any uncertain period.
NRIs are allowed to buy and sell properties in India. The NRIs should do the acquisition and transfer of property in accordance with the FEMA. The properties should be purchased or aquired through a registered conveyance deed.
It case of a purchase being made on a power of attorney ,there should be an agreement to sell and the power of attorney are executed by the seller in favor of the buyer.
RBI Permission not needed NRIs do not require permission of the Reserve Bank of India (RBI) in acquisition of a residential or commercial property in India. The RBI has granted general permission to foreign citizens of Indian origin, whether resident in India or abroad, to purchase property in India for their residential purposes. The due payment has to be made either in forms of inward remittances in foreign exchange through normal banking channels or out of funds in a NRE or FCNR account maintained with a bank within India.
Declaration mandatory Foreign nationals of Indian origin, who are interested in purchasing a residential property in India under the general permission are required to file a declaration with the central office of the RBI at Mumbai within 90 days from the date of purchase of the property or final payment of amount. This needs to include a certified copy of the document as an evidence of the transaction and bank certificate regarding the amount paid.
Sale possible The RBI has granted an approval for sale of such property without its prior permission. However, where the property is being purchased by another foreign citizen of Indian origin, the funds towards this purchase should either be remitted to India or paid out of the balance in a NRE or FCNR account. The remittance of the sale proceeds depends on 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 after leaving India, but from a savings bank account in an Indian bank out of income earned in India.
Repatriation The proceeds can be repatriated provided the amount does not exceed the amount paid to acquire the property in foreign exchange received from overseas, the amount paid from a FCNR account, or the foreign currency equivalent of the amount paid from funds held in a NRE account.
On residential properties purchased, the RBI considers applications for repatriation of sale proceeds up to the consideration amount remitted in foreign exchange for the acquisition of two properties. The balance amount of sale proceeds, if any, will have to be credited to an ordinary non-resident rupee account of the owner of the property.
Applications for the repatriation of sale proceeds are considered provided the sale takes place after three years from the date of final purchase deed or from the date of payment of final installment of consideration amount, whichever is later.
Gifting property The RBI has granted general permission to all the foreign citizens of Indian origin, to acquire or sell -off properties - up to two - by the 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.
It also permits foreign nationals of Indian origin to transfer by way of gift property held by them in India to relatives subject to the condition that the provisions of all other laws, including the Foreign Contribution (Regulation) Act, are complied with.
Finance The RBI granted its approval to the financial institutions lending home loans to the NRIs in the process of acquiring residential property for self –possession under strict guidelines and conditions. The underlining purpose of home loans, the margin money clause and the loan quantum shall be on similar lines as compared with those applicable to housing loans to residents.
The loan repayment period should not exceed a tenure of 15 years out of inward remittances or out of funds held in the investors' NRE, FCNR or NRO account. The amount of the loan cannot be credited to any NRE or FCNR account of a NRI or a PIO. The loan amount needs to be fully secured by equitable mortgage of the proposed property under acquisition.
Also, the loan installments, interest and other miscellaneous charges shall be paid by the NRI or PIO as remittances from outside India. The RBI has granted a general permission to lease out a property in India. The rental income coming in from such investments are also eligible for repatriation.