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NRI Corner

A Non-Resident Indian (NRI) is a citizen of India who holds an Indian passport and has temporarily emigrated to another country for six months or more for employment, residence, education or any other purpose. A Person of Indian Origin (PIO) is a person of Indian origin or ancestry but who is not a citizen of India and is the citizen of another country. A PIO might have been a citizen of India and subsequently taken the citizenship of another country, or have ancestors born in India or other states.

Other terms with vaguely the same meaning are overseas Indian and expatriate Indian. In common usage, this often includes Indian-born individuals (and also people of other nations with Indian ancestry) who have taken the citizenship of other countries. According to the Ministry of Overseas Indian Affairs, India has the second-largest diaspora in the world after overseas Chinese. The overseas Indian community, estimated to number over 25 million, is spread across every major region in the world.

Investment destination: India

In recent times, India has emerged as one of the popular real estate destinations for the global investors. Real estate is one of the booming industries in the country and your investment will surely flourish in the next five years. It is all set to scale new heights with the emergence of fresh localities in tier one and two cities.

Who is a Non Resident Indian (NRI)?

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 is a non-resident. (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). Non-resident foreign citizens of Indian origin are treated on par with non- resident Indian citizens (NRIs).

Who is a Person of Indian Origin (PIO)?

PIO is a person of Indian origin 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.

Who can purchase immovable property in India?

The Reserve Bank of India ("RBI") has granted general permission to the following persons to purchase immovable property in India:

Non-Resident Indian (NRI)- that is a citizen of India resident outside India;

Person of Indian Origin (PIO)- that is an individual (not being a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan), who: at any time, held Indian passport, or who or either of whose father or grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955).

The general permission, has however, been granted only purchase of residential & commercial property and not for purchase of agricultural land/plantation property/farm house in India.

Can NRI's acquire commercial properties in India?

NRIs can purchase commercial, as well as residential property in India (except for agricultural land, farm house & plantation property) provided the purchase consideration is met either out of inward remittances in foreign exchange through normal banking channels or out of funds from the purchaser's NRE/FCNR accounts maintained with banks in India.

In this case, a declaration has to be submitted to the Central Office of Reserve Bank in form IPI 7 within a period of 90 days from the date of purchase of the property/final payment.

Can NRI's acquire / dispose residential property as a gift?

Yes, the Reserve Bank has granted general permission to NRIs to acquire or dispose of NRI India Properties by way of gift from or to a relative who may be an Indian citizen or a person of Indian origin (PIO) whether resident in India or not.

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

As per the general permission granted by RBI, NRIs are allowed to receive financial assistance in the form of housing finance from certain financial institutions namely, HDFC, LIC Housing Finance, IDBI etc.

Housing loans can be availed in rupees.

Even though the criteria regarding the purpose of the loan are at par with those applicable to the resident citizens, the repayment period of the loan should not exceed 15 years.

Can I rent out my property in India?

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.

Can I sell my property in India?

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.

What is repatriation outside India and am i eligible to do so?

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.