Q: How does an NRI acquire immovable
Property i.e., Residential Property ?
Q: When is repatriation of sale
allowed ?
Q: How does an NRI acquire Commercial
Property ?
Q: How and from where can an NRI
set loans for buying immovable property?
Q: What is the Power of Attorney
?
Q: What are Capital Gains-Tax on
Sale of Property ?
Q: How does an NRI acquire immovable Property
i.e., Residential Property ?
A: The Reserve Bank of India has granted general permission
to foreign citizens of Indian origin, whether resident in India or
not, to acquire or sell any residential property situated in India
(not being agricultural land / farm house / plantation property) subject
to the following conditions :
(I) Property acquired by way of purchase is for the person’s
‘bonafide residential use’. No restrictions are placed
on the number of residential properties that can be acquired or
sold under the general permission. However, the restrictions/ conditions
for '‘repatriation’ of the sales proceeds are as given
below :
In the case of purchase, the entire consideration is paid out of
foreign exchange brought into India through normal banking channel
or out of the funds held in Non-resident External (NRE) Rupee account
or foreign Currency Non-Resident (FCNR) account maintained by the
purchaser in India.
A declaration is submitted in Form IPI-7 to the Reserve Bank of
India (Controller, Exchange Control Department, Foreign Investment
Division (III), Reserve Bank of India, Central office, Bombay) regarding
the acquisition, within a period of 90 days from the date of such
acquisition, together with a true copy of the conveyance deed and
a certificate from the concerned bank in India, indicating the particulars
about the payment of consideration amount.
Q: When is repatriation of sale allowed ?
A: Repatriation of sales proceeds is allowed, with prior approval
of the Reserve Bank of India, for residential properties purchased
on or after May 26, 1993, as per the following conditions :
The sale takes place after three years from the date of the final
purchase deed or from the date of payment of final instalment of
the consideration amount, whichever is later.
The amount allowed for repatriation shall not exceed the consideration
amount equivalent in foreign exchange paid for acquisition (i.e.,
original investment) of up to two such residential properties sold.
For seeking such repatriation, an application should be made in
Form IPI-8 to the Reserve Bank of India (Controller, Exchange control
Department , Foreign Investment Division (III), Reserve Bank of
India, Central office, Bombay), within 90 days of the sale of the
property.
Note :
1. For inheritance and gift transactions, please refer to the foresaid
notifications.
2. Non-Resident Indian nationals are also eligible for the facility
of repatriation of sale proceeds of property referred to above,
subject to the above conditions.
3. A foreign citizen is deemed to be of Indian origin if he held
an Indian passport at any time, or he or his father or paternal
grandfather was citizen of India. A citizen of Pakistan Bangladesh,
Afghanistan, Bhutan, Sri Lanka and Nepal shall be deemed to be not
of Indian Origin.
Q: How does an NRI acquire Commercial Property
?
A: The Reserve Bank of India has granted general permission
to foreign citizens of Indian origin, whether resident in India or
not, to acquire or sell commercial immovable properties situated in
India ( not being agricultural land / farm house / plantation property
) subject to the following conditions :
(I) Any number of commercial properties situated in India may be
acquired by way of purchase or inheritance or sold under the general
permission. However, the restrictions / conditions for ‘repatriation’
of the sales proceeds are as given below :
Consideration for the property purchased is met out
of foreign exchange remitted from abroad through normal banking
channels or funds withdrawn from the purchase’s NRE/FCNR account
with banks in India.
A declaration is submitted in Form IPI-7 to the Reserve Bank of
India (Central office, Bombay) about the acquisition of the commercial
property within 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.
Q: How and from where can an NRI set loans for
buying immovable property?
A: Loans are available to NRIs from various institutions
in India, under their schemes, for the purchase of residential house
property in India. Some of the institutions are :
HDFC (Housing Development Finance Corporation)
Ramona House
169 Backbit Reclamation
Bombay 4000020.
URL : www.hdfcindia.com
LIC Housing Finance Ltd.
Bombay Life Building
45-47 Veer Nariman Road,
Bombay 400 001.
Can Fin Homes Ltd (subsidiary of Canara Bank)
32 Shantini Kutir,
II floor Race Course Road
Bangalore 560 001
Details may be obtained from the above or their branches where available.
Some of these institutions have special schemes for NRIs.
Q: What is the Power of Attorney ?
A: For Non-Residents who are unable to be physically present
for completing the formalities of purchase (like negotiating with
the seller, signing the agreement, obtaining possession, e3tc.) they
may fulfill the formalities through some known person who can be given
a power of attorney for this purpose.
Q: What are Capital Gains-Tax on Sale of Property
?
A: Income-tax is payable on the "Capital Gain" arising
on the sale of immovable property. Capital gain is the excess of the
sale price over the cost of purchase. Expenditure in connection with
the sale and the cost of improvements are to be deducted. ‘Short-Term’
capital gain on the sale of immovable property is not entitled to
any tax concession. ‘Long-Term’ capital gain (i.e., where
the property is held for over 36 months prior to the sale) is given
a concessional treatment as follows :
(a) Computation / Rate of Tax Special provisions for indexation
of cost apply. See ‘Computation / Rate of Tax’ provisions
under ‘Capital Gains’ in the chapter ‘ How to save
Income-Tax’.
(b) Exemption by reinvestment in another house Complete
exemption of long-term capital gain arising from the sale of a residential
house is available to an individual, provided he has purchased a
residential house within one year before or two years after the
date of sale or has constructed a residential house within three
of such new house is equal to or more than the capital gain in question.
If the cost of the new house is less than the capital gain, the
difference will be chargeable to tax as long-term capital gain in
the year of sale. It is important to note that the new residential
house should not be sold for a period of three years from the date
of purchase of construction, since if it is sold during this period,
the capital gain on its sale, based on the formula given in the
Income-tax Act, will be treated as a short term capital gain in
the year of sales proceeds which is not utilised for the purchase
or construction of a new residential house before the date of furnishing
the return of income, shall be deposited in a specified bank and
utilised as per a notified scheme. The amount utilised for the purchase
or construction of the new residential house plus the amount so
deposited shall be deemed to be the cost of the new residential
house. Where the amount deposited is not utilised fully for acquiring
a utilised amount shall be charged as income of the year in which
the stipulated period expires (Section 54).
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