| NRI
Investment In The Indian Property Market
Defination
1. Indian citizens
who stay abroad for employment or for carrying on business or
vocation or for any other purpose in the circumstances indicating
a definite intention to stay outside India for an indefinite
period,
2. Indian citizens
working abroad on assignment with Foreign Government or International
Agencies,
3. Officials of
Central and State Government and Public Sector undertakings
deputed abroad on temporary assignments or posted to their offices
abroad,
4. Indians who have
settled abroad permanently or gone abroad on immigration. Non-
resident Indians become residents of India when they return
to India for employ ment or for carrying on any business or
vocation or for any other purpose indi cating a definite intention
to stay in India for an indefinite period. However, during their
short visits to India for holidays or business, non-residents
are not to be regarded as persons ordinarily resident in India.
Acquisition, Holding,
etc. of Immovable Property in India by Certain Persons
11E.1 In terms of
Section 31(1) of FERA 1973, persons who are not citizen of India(whether
resident in India or not) and companies (other than banking
companies) which are not incorporated under any law in force
in India are required to obtain prior permission of Reserve
Bank to acquire, hold, transfer or dispose of by sale, mortgage,
lease, gift, settlement or otherwise any immovable property
situated in India.
The work relating
to the permission for acquisition etc. of immovable property
is centralized in the Central Office of Reserve Bank (Foreign
Investment Division) at Mumbai.
Notes:
A. The above restrictions
do not apply to immovable property taken or given on lease for
a period not exceeding five years.
B. Prior permission
of Reserve Bank is necessary for acquisition, disposal etc.
of flats in co-operative housing societies.
C. Nepalese or Bhutanese
nationals, whether resident in India or not, as well as Nepalese
companies in Bhutan should obtain, prior permission of Reserve
Bank for acquisition, holding etc. of immovable property in
India even though the transactions may be settled in Indian
Rupees .
D. In case of partnership
firms, if any of the partner is a Foreign citizen, the firm
should obtain permission of Reserve Bank for acquisition /disposal
of the immovable property. Likewise, if any member of the governing
body of an association/organisation or any trustee of a trust
is a Foreign citizen, such, a body/trustee should obtain Reserve
Bank's permission under Section 31(1) of FERA 1973.
Acquisition, Sale
etc. of Immovable Property by Foreign Banks
11E.2 The acquisition,
sale ect. Of immovable properties in India by Foreign banks
operating in India is governed by the relevant provisions of
Banking Regulation Act,1949 and the policy of Reserve Bank in
this regard in force from time to time. Foreign banks should
ensure while undertaking such transactions in immovable property
that they are in accordance with the provision of the Act and
directions issued, in any, by the Department of Banking Operations
and Development of Reserve Bank.
Application forms
11E.3 Application
for fresh acquisition or holding of immovable property in India
(other than those covered under the general permission granted
by Reserve Bank) should be made to Reserve bank in form IPI
1 and for sale/transfer of property (other than tea, coffee,
rubber, etc. plantation or those covered by general permissions
granted by Reserve Bank) in form IPI 2. Application for sale/transfer
of tea, coffee, rubber etc. plantation should, however, be made
in form IPI 3 together with the particulars of productivity,
income, etc. in form IPI 4.
General permission
for Acquisition of Property for Carrying on Activities permitted
by the Reserve Bank
11E.4. By its Notification
No. FERA 1343/93-RB dated 26th April 1993, Reserve Bank has
granted general permission to companies, (other than banking
companies), which are not incorporated under any law in force
in India, to acquire or hold activity permitted by Reserve Bank
under Section 28 or Section 29 of FERA 1973. Companies which
acquire or hold any immovable property in India in terms of
the general permission are required to submit to Reserve Bank
a declaration in form IPI 5 not later than 90 days from the
date of acquisition of the immovable property.
Note: The above
general permission does not apply to Foreign companies that
have been permitted under Section 29 of the Act to open liaison
offices or to post representatives in India.
Properties held
at the commencement of the Act
11E.5 In terms of
Section 31(4), properties held since prior to 1st January 1974
i.e. the date of coming into force of FERA 1973, were required
to be declared to Reserve Bank. Applications for the purpose
were required to be made in form IPI 6. Holding licences have
been issued by Reserve Bank on the basis of declarations received
by it in terms of this provision.
General Permission
for Acquisition/Disposal of Residential/Commercial properties
by Foreign Citizens of Indian origin
11E.6 (i) By its
Notification No.FERA.152/93-RB dated 26th May 1993, Reserve
Bank has granted general permission to Foreign citizens of Indian
origin, (whether resident in India or not), to acquire and dispose
of immovable properties (other than agricultural land/farm house/plantation
property) situated in India subject to the fulfilment of the
following conditions:
A) Acquisition/Disposal of Residential Property/ies in India
other than by way of Gift
1.Property is acquired
by way of purchase or inheritance for the person's bonafide
residential use and transferred by way of sale. (No restrictions
are placed on the number of residential properties that can
be acquired/disposed of under the general permission except
what is mentioned against condition 6 below).
2.Consideration
for the property purchased is met out of Foreign exchange remitted
from abroad through normal banking channels of funds withdrawn
from the purchaser's NRE/FCNR account maintained with a bank
in India.
3.Property purchased
is not let out, except where it is not immediately required
for the purchaser's own residential use.
4.A declaration
is submitted to Reserve Bank (Central Office) about such acquisition
in form IPI-7 within a period of 90 days from such acquisition/final
payment of purchase consideration along with a certified of
the document evidencing the transaction and bank certificate
regarding the consideration paid.
5.Income accruing
by way of rent or sale proceeds of the property or income arising
out of investment of such proceeds is credited to the person's
NRO account (if the property is held by a non-resident Foreign
citizen of Indian origin) or to the Resident Rupee Account i.e.
Q.A.22 Account )if the property is held by a Foreign citizen
of Indian origin resident in India) with a bank in India.
6.In respect of
residential properties purchased on or after 26th May 1993,
Reserve Bank would consider applications for the repatriation
of sale proceeds up to the consideration amount remitted in
Foreign exchange for the acquisition of the property (only up
to two such properties) provided the sale takes place after
three years from the date of final purchase deed or from the
date of payment of final instalment of consideration amount,
whichever is later. Applications for the purpose should be made
to Reserve Bank (Central Office) in form IPI 8 within 90 days
of the sale of the property.
B) Acquisition/Disposal
of Residential property by way of Gift
1.Properties (up
to two houses) are acquired, transferred or disposed of by 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.
2.Gift tax, if any,
has been paid.
C) Acquisition by
way of purchase or inheritance or Disposal by way of Sale of
commercial Property/ies in India
1.Property (not
being agricultural land/farm house/plantation property) situate
in India is acquired by way of purchase or inheritance and transferred
or disposed of by way of sale (No restrictions are placed on
the number of such properties acquired/disposed of under the
general permission except what is mentioned against condition
4 below).
2.Consideration
for the property purchased is met out of Foreign exchange remitted
from abroad through normal banking channels or funds withdrawn
from the purchaser's NRE/FCNT account maintained with banks
in India.
3.A declaration
of submitted to Reserve bank (Central Office) about acquisition
of the commercial property in form IPI-7 within a period of
90 days from such acquisition/final payment of purchase consideration
along with a certified copy of the document evidencing the transaction
and bank certificate regarding the consideration paid.
4.Reserve Bank would
consider applications for repatriation of original investment
in commercial property in respect of properties purchased on
or after 26th May 1993 up to the consideration amount remitted
in Foreign exchange for the acquisition of the property provided
the property is sold after a period of three years from the
date of the final purchase deed or from the date of payment
of final instalment of consideration amount, whichever is later.
The balance amount
of sale proceeds of the property/ies should be credited to the
seller's NRO account or Resident Rupee Account (Q.A. 22 Account)
in the case of resident Foreign citizens maintained with a bank
in India. Applications for repatriation of the amount should
be made to Reserve Bank (Central Office) in form IPI-8 within
90 days of the sale of the property.
(ii) For the purpose
of above general permission, a Foreign citizens is deemed to
be of Indian origin if (a) he held an Indian passport at any
time, or (b) he or his father or paternal grandfather was a
citizen of India by virtue of the constitution of India or the
citizenship Act, 1955 (57 of 1955) provided that the citizen
of Pakistan, Bangladesh, Afghanistan, Bhutan, Sri Lanka and
Nepal shall be deemed to be not of Indian origin.
(iii) Non-resident
Indian nationals are also eligible for the facility regarding
repatriation of sale proceeds of the properties referred in
terms A.6 and C.4 above of sub-paragraph (i), provided the other
conditions referred to in the said sub-paragraph are satisfied.
General Permission
for letting out of Residential Property in India by Non-resident
Indians and Persons of Indian origin
11E.7 By its Notification
No.FERA.155/93-RB dated 16th September 1993, issued under Section
29(1) of FERA 1973, Reserve Bank has granted general permission
to non-resident Indian citizens and Foreign citizens of Indian
origin to let out any immovable property in India held by them.
The rental income
or proceeds of any investment of such income shall not be repatriable
outside India at any time in future and such funds should be
credited to the owner's Ordinary Non-Resident Rupee (NRO) account
maintained with a bank in India.
Purchase of Immovable
Property in India by Foreign Citizens of Non-Indian origin/Foreign
Companies
11E.8 (i) Foreign
citizens of Non-Indian origin (whether resident in India or
not) and Foreign companies including trusts, societies and associations
incorporated/registered abroad will be permitted by Reserve
Bank, on application, to acquire immovable property in India,
provided the following conditions are satisfied.
a.The property to
be purchased is for residential use only.
b.The consideration
for purchase of the property is met out of Foreign exchange
remitted from abroad in any convertible currency through normal
banking channels.
c.Income accruing
by way of rent from the property purchased, or the sale proceeds
of such property/income arising out of investment of such sale
proceeds at any future date shall be credited only to the Ordinary
Non-resident rupee (NRO) account of the non-resident purchaser
and will not be allowed to be repatriated outside India.
Applications for
necessary permission under Section 31(1) of FERA, 1973 for purchase
of immovable property in India should be made in form IPI 1
together with the documents indicated therein the chief General
Manager, Exchange control Department, (Foreign Investment division-III),
Reserve Bank of India, Central Office, Mumbai-1.
Acquisition, Transfer
of Property in India by way of Lease, Mortgage, Gift, Inheritance,
etc.
11E.9 Applications
for permission to acquire or transfer immovable property by
way of lease exceeding 5 years or by way of mortgage, gift,
inheritance, settlement, etc. other than those covered by general
permissions referred to in paragraphs 11E.4 and 11E.6 should
be made to Reserve Bank in the appropriate form together with
relevant documents indicated therein (see paragraph 11E.3).
Documents Required
for Housing Loan
1. Latest Work Permit/Employment
Contract attested by Embassy/Employer.
2. Copy of Visa stamped on passport.
3. Salary particulars of last three months.
4. Identity Card.
5. C.D Certificate for Merchant Navy employees.
6. General Power of Attorney holder in India (for those institution
not having office in the respective country of loanee) .
7. Letter from Bank stating Account type and Number, balance
in account and rate of exchange of currency .
8. Repayments through NRE Account.
NRI Investment In
The Indian Property Market
What I need to know
to invest in real estate as NRI in India
Following rules
are required to be known by you to invest in real estate in
India:
1. Exchange Control
Regulations affecting the acquisition of residential property
in India Consequent to the liberalisation in Exchange Control
policy and procedures, certain relaxations in the existing regulations
and procedures governing the acquisition, holdings, etc. of
Immovable property in India, have been announced.
Immovable property
may be a residential house, a residential flat or a plot of
residential house.
The current position
therefore is as under:
1.1. Non-resident
Indian holding Indians passport do not require any permission
from RBI for acquiring Immovable Property for bona fide residential
purposes, as section 31 of FERA 1973 is not applicable to them.
1.2. Non-resident
Indians holding Indian passport may pay the purchase consideration
either by remittance of funds from abroad through normal banking
channels or out of NRO Account or out of NRE Account or out
of FCNR Account.
1.3. As per the
recent relaxation RBI has granted General Permission to Non-resident
Indians holding Foreign Passport (i.e. Foreign Citizens of Indian
Origin) to acquire, hold, transfer or dispose of by way of sale
or inheritance immovable properties situated in India provided;
a) the property is for the purchasers bona fide residential
purpose.
b) the purchase
consideration is met either by remittance of funds from abroad
through normal banking channels or out of NRE/FCNR Account or
out of FCNR Special Account.
c) income accruing
by way of rent from the properties purchased or acquired by
inheritance will have to be credited to the non-resident ordinary
(NRO) account even if the purchase consideration was met out
of NRE / FCNR Account.
1.4. Foreign citizens
of Indian origin are however required to declare the properties
to RBI within a period of 90 days from the date of purchase
in Form IPI 7.
The following documents
must be submitted along with the declaration.
a) A certified copy of the purchase deed or a certificate from
the Co-operative Housing Society or an Association of the apartment
owners as an evidence of transfer / registration of the property
in the declarant's name.
b) Certificate from
the declarant's bankers in India evidencing receipt of inward
remittance(s) in Foreign exchange through normal banking channel
or withdrawal of funds from the declarant's NRE / FCNR account
/ FCNR Special Deposit Account and payment of consideration
for the property out of those funds.
1.5. Where a Foreign
Citizen of Indian origin wishes to acquire a property out of
funds held in NRO Account then the aforesaid general permission
does not hold and a prior permission from RBI will be required
which can be applied for in Form IPI.1.
1.6. Where a Foreign
Citizens of Indian origin wishes to acquire a property from
the sale proceeds of another property prior permission of RBI
is essential and may be obtained by applying in Form IPI I.
1.7. Any number
of properties can be acquired by a non-resident Indian regardless
of whether they are holding Indian passport provided they are
required for bona fide residential purposes.
Frequently Asked Questions
Is it possible for
me to apply for a loan at HDFC or any other source from United
States. If so How?
Yes. It is possible
for you to apply for a loan through HDFC or any other financial
institution from USA. You will have to approach HDFC or any
other financial institution directly and request them to send
you the rules and regulations for such loan.
What is an NRI/NRE
account and how one can set one up?
NRIs are permitted
to maintain accounts in rupees and Foreign currency. NRE account
is Non-resident (External) Rupee Account permitted to be maintained
by NRIs. This account can be opened by an authorised Bank without
the prior permission of Reserve Bank. Funds for opening of or
credit to NRE accounts shall, however, have to be remitted from
abroad or FCNR account or tendered in the form of Foreign currency
notes, travellers cheques etc., while on a visit to India. Further,
that amounts deposited in NRE accounts are allowed to be repatriated.
Repatriate the sale
proceeds:
Repatriate the preceeding
as the RBI has vide Notification No.FERA/152/152/93-RB dtd.26.5.93
allowed repatriation of Investment in Residential property to
persons of Indian origin whether holding Indian passport or
a Foreign passport (NRI) after obtaining the prior approval
from the RBI and this facility is restricted to a maximum of
two houses.
The above permission
allowing repatriation is subject to the following conditions
:-
a) The residential properties are purchased on or after 26.6.1993.
b) the residential properties are not transferred or sold for
a period of 3 years from the date of the final purchase deed
or from the date of the payment of final instalment, where the
agreement for purchase so provides.
c) only the amount of sale proceeds equivalent to the original
investment in Foreign exchange will be allowed to be repatriated
outside India; balance if any will have to be credited to the
NRO Account of the NRI.
i)The repatriation is subject to prior approval from RBI which
is required to be obtained in Form IPI 8, within a period of
90 days of the sale of the property. Form IPI 8 must be accompanied
by a copy of the Form IPI 7 submitted earlier at the time of
acquisition of the property.
ii) As regard the property which you may inherit from your parents
after their death you shall be entitled to hold the same subject
to the rules and regulation of Foreign Exchange Manuals but
repatriation shall not be allowed as aforementioned.
I am a US citizen
of Indian origin. What legal steps do I need to take to purchase
property in India? Can I hold property under a living trust
that I have in USA?
1. Non-resident
Indians holding Indian passport do not require any permission
from RBI for acquiring immovable property for bonafide residential
purposes, as Section 31 of FERA 1973 is not applicable to them.
2. Non-resident
Indians holding Indian passport may pay the purchase consideration
either by remittance of funds from abroad through normal banking
channels or out of NRO Account or out of NRE Account or out
of FCNR Account.
3. As per the recent
relaxation RBI has granted general permission to Non-resident
Indians holding Foreign passport (i.e. Foreign citizens of Indian
origin) to acquire, hold, transfer or dispose of by way of sale
or inheritance immovable properties situated in India provided
(a) the property is for the purchasers bonafide residential
purpose;
(b) the purchase consideration is met either by remittance of
funds from abroad through normal banking channels or out of
NRE/FCNR Account or out of FCNR Special Deposit Account;
(c) income accruing by way of rent from the properties purchased
or acquired by inheritance will have to be credited to the non-resident
ordinary (NRO) account even it the purchase consideration was
met our of NRE/FCNR Account.
You cannot hold property under a living Trust that you have
in USA as FERA 1973 cannot be extended to Foreign branches of
societies, institutions, firms, bodies corporate not registered
or incorporated in India.
I am an NRI and
I wish to buy a house in India which is coming up for sale.
My family also resides with me. I need to send some money (more
than US $ 10,000) to purchase the same.
1) How do I send money to India?
2) Can I send this money to an SB account of my wife as a gift?
3) If I send this money to an SB account, is this taxable?
4) If I send this money to an SB account, can I issue cheques
of that account to the sellers?
5) Can I send rupee drafts to settle for the sellers directly
from here?
6) I wish to buy the property in my daughters' names who are
minors. What should I do for this?
7) Are there any other formalities?
8) Can I send the whole amount by one single cheque? Will that
be a problem?
1) You can remit
funds through any normal banking channels in NRE/FCNR Account.
2) & 3) In answer to your query we advise you to remit the
funds in your wife's account abroad and pay for the flat by
funds in your wife's account through any normal banking channels
as aforementioned and as then in that event the question of
Tax does not arise.
4) Yes.
5) Yes.
6) Father as a guardian can buy the house in the name of minors.
As such, in your case you can buy the house in the name of your
minor daughters.
7)(i) Non-resident Indian holding Indians passport do not require
any permission from RBI for acquiring Immovable Property for
bonafide residential purposes, as section 31 of FERA 1973 is
not applicable to them.
(ii) Non-resident Indians holding Indian passport may pay the
purchase consideration either by remittance of funds from abroad
through normal banking channels or out of NRO Account or out
of NRE Account or out of FCNR Account.
(iii) As per the recent relaxation RBI has granted general permission
to Non-resident Indians holding Foreign passport (i.e. Foreign
citizens of indian origin) to acquire, hold, transfer or dispose
of by way of sale or inheritance immovable properties situated
in India provided
(a) the property is for the purchasers bonafide residential
purpose;
(b) the purchase consideration is met either by remittance of
funds from abroad through normal banking channels or out of
NRE/FCNR Account or out of FCNR Special Deposit Account;
(c) income accruing by way of rent from the properties purchased
or acquired by inheritance will have to be credited to the non-resident
ordinary (NRO) account even it the purchase consideration was
met our of NRE/FCNR Account.
(iv) Foreign citizens of Indian origin are however required
to declare the properties to RBI within a period of 90 days
from the date of purchase in Form IPI 7. The following documents
must be submitted alongwith the declaration.
(a) A certified copy of the purchase deed or a certificate from
the Co-operative Housing Society or an Association of the apartment
owners as an evidence of transfer/registration of the property
in the declarant's name.
(b) Certificate from the declarant's bankers in India evidencing
receipt of inward remittance(s) in Foreign exchange through
normal banking channerl or withdrawal of funds from the declarant's
NRE/FCNR account/FCNR Special Deposit Account and payment of
consideration for the property out of those funds.
(v) Where a Foreign citizen of Indian origin wishes to acquire
a property out of funds held in NRO Account then the aforesaid
general permission does not hold and a prior permission from
RBI will be required which can be applied for in Form IPI 1.
8. You can send the whole lot of money by one single cheque
and there is no problem on that.
I am an NRI. I want to buy a flat in India in my mother's name.
Does my mom have to pay tax on it or are there other complications?
My mom has no other source of income.
Under Section 31
(1) of FERA 1973, General Permission has been granted to persons
of Indian origin whether holding Indian passports or Foreign
passports to acquire, transfer or dispose of residential properties
(restricted to two houses) situated in India by 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.
For enabling you
to buy the house in your mother's name you must transfer the
money through normal banking channels in her account in India
and she should buy the flat in her name from the money remitted
by you. As the money remitted by you will be considered a gift
to your mother, there will be no tax payable by her.
Is it difficult
for a US citizen to purchase property in India?
Consequent to the
liberalisation in Exchange Control policy and procedures, certain
relaxations in the existing regulations and procedures governing
the acquisition, holdings, etc. of immovable property in India,
it is not very difficult for a US citizen of Indian origin to
purchase property in India subject to the following:
As per the recent
relaxation, the RBI has granted General Permission to Non-Resident
Indians holding Foreign passports (Foreign citizens of Indian
origin) to acquire, hold, transfer or dispose off by way of
sale or inheritance immovable properties situated in India provided
(a) the property
is for the purchaser's bona fide residential purpose
(b) the purchase consideration is met either by remittance of
funds from abroad through normal banking channels or out of
NRE/FCNR Account or out of FCNR Special Deposit Account
(c) income accruing by way of rent from the properties purchased
or acquired by inheritance will have to be credited to the Non-Resident
Ordinary (NRO) Account even if the purchase consideration was
met out of the NRE/FCNR Account.
Foreign citizens of Indian origin are, however, required to
declare the properties to RBI within a period of 90 days from
the date of purchase in Form IPI 7.
I need information
on investment in property by NRIs.
Consequent to the
liberalisation in exchange control policy and procedures, certain
relaxations in the existing regulations and procedures governing
the acquisition, holdings, etc., of immovable property in India
have been announced.
Immovable property
may be a residential house, a residential flat or a plot of
land. The current position is as under. A Non-Resident Indian
holding Indian passport does not require any permission from
RBI for acquiring immovable property for bona fide residential
purposes, as section 31 of FERA 1973 is not applicable to them.
Non-Resident Indians holding Indian passports may pay the purchase
consideration either by remittance of funds from abroad through
normal banking channels or out of NRO Accounts or out of NRE
Account or FCNR Account.
As per the recent
relaxation, RBI has granted General Permission to Non-Resident
Indians holding Foreign Passport (i.e., Foreign citizens of
Indian origin) to acquire, hold, transfer or dispose of by way
of sale or inheritance immovable properties situated in India
provided
(a) the property
is for the purchaser's bona fide residential purpose (b) the
purchase consideration is met either by remittance of funds
from abroad through normal banking channels or out of NRE/FCNR
Account or out of FCNR Special Deposit Account (c) income accruing
by inheritance will have to be credited to the Non-Resident
Ordinary (NR) Account even if the purchase consideration was
met out of NRE/FCNR Account.
Foreign citizens
of Indian origin are however required to declare the properties
to RBI within a period of 90 days from the date of purchase
in Form IPI 7.
Does an NRI holding
Indian passport need permission from Reserve Bank to purchase
immovable property in India?
No. There is no
provision in FERA 1973 which puts any restriction on NRIs holding
Indian Passports to acquire any immovable property in India
provided the NRI does not engage in any agricultural/plantation
activity or real estate business i.e. dealing in land and immovable
property with a view to earning profit or income therefrom.
Are Foreign passport
holders of Indian origin allowed to purchase immovable property
in India?
Yes. Foreign nationals
of Indian origin whether resident in India or abroad, have been
granted general permission to purchase immovable property in
India for their bonafide residential purposes, if the consideration
is paid out of inward remittances in Foreign currency or by
debit to NRE/FCNR accounts. However if the consideration for
the property purchased is proposed to be paid in Indian rupee,
prior permission of Reserve Bank is necessary.
How many properties
can be acquired by a Foreign national of Indian origin in India
without the permission of Reserve Bank of India ?
There are no restrictions
on the number of properties that a Foreign national of Indian
Origin can acquire for residential purposes, provided the purchase
price is paid in Foreign currency remitted to India. Partial
repatriation out of sale proceeds, limited to the original investments
in respect of only two properties will be allowed, provided
such properties were acquired after 26-5-1993 and sold only
after a period of three years from the date of their acquisition.
Can a Foreign national
of Indian origin pay the purchase price of the residential property
out of his NRO account?
No. The purchase
price should either come from remittances from abroad or by
debit to his NRE/FCNR account.
A Foreign national
of Indian origin does not require his flat immediately for his
residential use. He therefore wants to give on rent. Can the
rent be credited to his NRE / FCNR account?
No. The rental income
should be credited only to his NRO account.
A Foreign citizen
of Indian origin wants to give his immovable property in gift
to resident in India who is his friend. Can he do so?
Property (Upto to
a limit of two houses) can be acquired, transferred or disposed
of by 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 provided Gift tax is paid and the donee falls in the
category of a relative within the meaning of Section 6 of the
Companies Act, 1956.
Does a Foreign citizen
of non-Indian origin require permission of RBI for acquisition
of immovable property?
Yes. Reserve Bank
may grant necessary permission to Foreign citizens of non-Indian
origin/Foreign Companies, if the property is purchased for residential
use and the consideration is paid by way of Foreign exchange
. Income accruing by way of rent etc. from such properties will
be credited only to the NRO account. Sale Proceeds will not
be allowed to be repatriated but are to be credited in NRO account
only. The application by Foreign citizen be made in form IPI
1.
Can Nepalese / Bhutanese
acquire immovable property in India, without any restriction?
No. They are treated
as Foreign nationals of Non-Indian Origin. Permission under
section 31 of FERA is must. RBI gives permission only after
getting clearance from Ministry of Finance, Govt. of India,
New Delhi.
Stamp Duty and Annual
taxes.
As far as payment
of taxes are concerned, it is Rs 1 per square feet approximately
of the super built-up area of the premises comprised in the
buildings constructed on or before 1983-84. Taxes for the buildings
constructed after the year 1985 vary from building to building
depending on the year of construction, amenities, location of
building, etc., and usually varies from Rs 1-3 per square feet
approximately.
NRI News
Overseas Corporate
Bodies enter Real Estate business
Non Resident Indians
(NRIs) are now permitted to invest upto 100% in the new issues
of equity shares/convertible debentures of Indian companies
engaged/proposing to engage in the following areas:
Real Estate covering construction of residential and commercial
premises including business centres and offices.
Development of township.
Development of serviced plots and construction of built-up residential
premises.
Manufacturing of building materials.
Financing of housing development.
City and regional level urban infrastructure facilities including
roads and bridges.
On "non-repatriable" basis, investment in proprietary or partnership
firms engaged in real estate development is permitted.
The Reserve Bank
of India (RBI) has permitted Overseas Corporate Bodies (OCBs)
to enter the sector by relaxing certain provisions with regard
to investment in Indian companies engaged in housing and real
estate development. It can be done by either forming a partnership
firm or investing in a company incorporated in India.
RBI has permitted
limited repatriation facility to the interest or income portion
on the investment subject to the terms and conditions that capital
invested shall not be repatriable.
Investment in real
estate development has since been extended to OCBs predominantly
owned by NRIs.
Repatriation of
the original investment in Foreign exchange made by NRIs/OCBs
will be permitted with prior permission of RBI, only after a
lock in period of three years from the date of issue of shares/debentures.
In addition, they will be permitted to repatriate the net profit
(upto 16%) arising from the sale of such investment after the
lock in period of three years.
Housing loans for
NRIs
Housing and Urban
Development Corporation (HUDCO) has decided to enter into retail
financing for the non-resident Indian (NRI) category and will
announce an NRI-oriented scheme offering credit up to Rs.50
lakh in the next three months.
HUDCO has already
received the necessary approvals from the Reserve Bank of India
for this scheme, which should be launched by March 2000. The
loans would be given for purposes involving purchase of plots,
improvement of existing property and construction on plots with
a repayment facility in both, Indian currency and Foreign exchange.
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