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NRI Guidelines

Who is a NRI under the provisions of Foreign Exchange Management Act?

Acquest Expert: An Indian Citizen who stays abroad for employment/carrying on business or vocation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad or a person who is not resident in India for a period over 182 days is a non-resident Indian. Persons posted in U.N. organizations and officials deputed abroad by Central/State Governments and Public Sector undertakings on temporary assignments are also treated as non-residents.

Who is a person of Indian Origin under the provisions of Foreign Exchange Management Act?

Acquest Expert: Generally, under the provisions of Foreign Exchange Management Act a person of Indian Origin is an individual (other than a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan) who

  • At any time held an Indian passport, or
  • He or his father or his grandfather was a citizen of India by virtue of the Constitution of India or Citizenship Act, 1955(57 of 1955).

Is NRI/PIO who has purchased residential or commercial property in India under general permission required to file any documents with Reserve Bank of India?

Acquest Expert: NRI/PIO who has purchased residential or commercial property under general permission is not required to file any documents with the Reserve Bank.

Is there any restriction on number of residential or commercial property that NRI/PIO can purchase under the general permission available?

Acquest Expert: There is no restriction on number of residential or commercial property that NRI/PIO can purchase under the general permission available.

Do NRIs and PIOs require permission of Reserve Bank to acquire residential/commercial property in India?

Acquest Expert:NRIs and PIOs do not require permission from Reserve Bank to acquire residential/commercial premises in India (other than agricultural land/farm house/plantation property). A person resident outside India acquiring property to carry on business from India has to file with the RBI a declaration in Form IPI within 90 days from the date of acquisition of immovable property. A citizen of  Pakistan, Nepal, China, Bhutan, Srilanka and Iran cannot acquire immovable property without the prior permission of RBI. Howecer, he can take an immovable property on lease, but not more than 5 years.

Can the sales proceeds of residential / commercial premises be remitted out of India?

AcquestExpert:The repatriation of sale proceeds of immovable property other than agricultural land / farmhouse / plantation property may be remitted out of India on fulfilling the following conditions.

  • 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.
  • The amount to be remitted does not exceed (a) the amount paid in foreign exchange for purchase of the immovable property received through normal banking channels or out of funds held in Foreign Currency Non-Resident account or (b) the foreign currency equivalent as on date of payment made for acquisition of property out of funds held in Non Resident External account.
  • The remittance of sale proceeds in case of residential property is restricted only to two properties.Reserve Bank has further liberalised the provisions regarding remittance. Accordingly, Authorised Dealers may allow the repatriation of funds out of balances held by NRIs/PIOs in the Non-Resident Ordinary Rupee (NRO) Accounts up to US$ 1,00,000 per year, representing sale proceeds of immovable property, held by them for a period of not less than 10 years subject to payment of applicable taxes.

Has the Reserve Bank of India issued any guidelines for grant of housing loans to NRIs?

AcquestExpert:The Reserve Bank of India has issued the following guidelines for granting housing loans to Non-Resident Indians:

  • Own contribution, which is the cost of dwelling unit financed less the loan amount, can be met from direct remittances from abroad only through normal banking channels, your Non-Resident (External) [NR (E)] Account and /or Non-Resident (Ordinary) [NR (O)] account and /or Non-Resident Special Rupee account [NRSR] in India.
  • Repayment of the loan, comprising of the principal and interest including all the charges are to be remitted from abroad only through normal banking channels, your Non-Resident (External) [NR (E)] Account and /or Non-Resident (Ordinary) [NR (O)] account and /or Non-Resident Special Rupee account [NRSR] in India.

Can NRIs obtain loans for acquisition of a house/flat for a residential purpose from authorized dealers/financial institutions providing housing finance?

AcquestExpert:Yes. Repayment of loan should be made within a period not exceeding 15 years out of inward remittances or out of funds held in the borrower's NRE/FCNR/NRO accounts.

Can Indian companies grant loans to their NRI staff?

AcquestExpert:Reserve Bank permits Indian firms/companies to grant housing loans to their employees deputed abroad and holding Indian passports subject to certain conditions.

Can NRIs and PIOs give a Power of Attorney in favour of a person of their choice in India to complete loan formalities on their behalf?

AcquestExpert:Yes. Normally it is desirable to appoint a Power of Attorney in India to represent you in dealings in India. The Power of Attorney should be executed as per drafts provided by the housing finance company. The Power of Attorney holder should be a trustworthy person.

Non-resident Indians are staying abroad can the property be purchased through the agent or through the Power of Attorney?

AcquestExpert: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 India.

Can such residential property be given on rent if not required for immediate residential use?

AcquestExpert:YES

What should be the method of payment for purchasing residential immovable property in India by foreign nationals of Indian origin under the general permission?

AcquestExpert: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

What way the Non-resident Indian can finance the flat?

AcquestExpert:The purchase of the flats can be financed from the fresh remittance through the normal banking channels or from payment from original non-resident account or from Non-resident (External) Accounts. When the flat is under construction, it may be possible to get instalment facilities from the builder. Loan may also be available in India for purchase of flats, for example from Housing Development Finance Corporation, ANZ Grindlays Bank, Citi Bank etc. Non-resident Indians who are citizens of India (India Passport holders) are eligible for housing finance for the acquisition of an immovable property or construction of a new house, or a flat for their occupation or for that of their family in India. But the HDFC also considers granting of loans to non-resident Indians even if they are abroad, provided a family member of his or her in India is made a co-borrower and a power of attorney is given to his representative in India

How should NRIs and PIOs make payment of the consideration for residential / commercial property?

AcquestExpert: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/NRO accounts maintained with banks in India.

Can refund of application/earnest money/purchase consideration made by the house building agencies/seller on account of non-allotment of flat/plot/cancellation of booking deals for purchase of residential/commercial property together with interest, if any ( net of income tax payable thereon) can be credited to NRE account?

AcquestExpert:Yes, provided orginal payment was made by way of inward remittance or by debit to NRE/FCNR (B) account. For this purpose no permission of Reserve Bank is required and they may approach the authorized dealer directly in the matter.

Can NRIs and PIOs gift residential / commercial premises to relatives / registered charitable trusts / organizations in India?

AcquestExpert:Yes. General permission has been granted by Reserve Bank to non-resident persons (foreign citizens) of Indian origin to transfer by way of gift immovable property held by them in India to relatives and charitable trusts/organisations subject to the condition that the provisions of any other laws, including Foreign Contribution (Regulation) Act, 1976 and stamp duty laws, as applicable, are duly complied with.

Can NRIs and PIOs give residential / commercial premises on rent if not required for immediate use?

AcquestExpert: Yes. Reserve Bank has granted general permission for letting out any immovable property in India. The rental income or proceeds of any investment of such income are eligible for repatriation subject to payment of taxes and production of a certificate issued by a chartered accountant with the guidance of an authorized dealer such a bank for completion of formalities.

Can the rental income from such property be remitted outside India?

AcquestExpert:No. Such income cannot be remitted abroad and will have to be credited to the ordinary non-resident rupee account of the owner of the property.

Yes. However, such property can be sold to another foreign national of Indian origin provided funds towards the purchase consideration are either remitted to.

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