Who is an NRI?
Under the Foreign Exchange Management Act, 1999 (FEMA), Non-Resident Indians are Indian citizens who stay abroad for employment or for carrying on business or vocation outside India or for any other purpose in circumstances indicating an indefinite stay abroad, or Government servants who are posted abroad on duty with the Indian mission and similar other agencies set up abroad by Government of India where the officials draw their salaries out of Government resources, or Government servants deputed abroad on assignments with foreign Governments or regional/international agencies like the World bank, International Monetary Fund (IMF), World Health Organization (WHO), Economic and Social Commission for Asia and the Pacific (ESCAP), or Officials of State Governments and public sector undertakings abroad on temporary assignments or posted to their branches or offices abroad. It enabled a new foreign exchange management regime consistent with the emerging framework of the World Trade Organization (WTO). It also paved the way for the introduction of the Prevention of Money Laundering Act, 2002, which came into effect from 1 July 2005.
FEMA is a regulatory mechanism that enables the Reserve Bank of India to pass regulations and the Central Government to pass rules relating to foreign exchange in tune with the Foreign Trade policy of India.
Can NRI avail of Home Loans back in India?
Yes, NRI can avail home loan in India as Home Loan is a housing loan scheme specially designed for Non-Resident Indians (NRIs) or Persons of Indian Origin (PIOs). The loan can be used for buying, constructing, extending and renovating a residential property in India. It comes with an array of features such as flexible repayment options, long tenure, balance transfer facility, easy application and faster processing.
The Reserve Bank of India has issued certain guidelines for granting loans to Non-Resident Indians by Housing Finance Company. The guidelines are:-
Can I buy immovable property in India?
Acquisition of immovable property by NRI’s holding Indian passport: Non-Resident Indians holding Indian passport do not require prior permission of Reserve Bank of India to buy residential or commercial immovable property in India. The purchase consideration may be paid either by remittance of funds from abroad through normal banking channels or out of NRE/NRO/FCNR account.
Non-Resident of Indian nationality does not require any permission for acquisition, transfer or disposal by way of gift of immovable property which is not a farmhouse or agricultural land or plantation property. Declaration on form IPI-7 for acquisition of commercial property for carrying on any industrial, commercial or trading activity by their property/partnership firm in India is required to be filed with RBI within 90 days from the date of purchase
General Permission to Foreign Companies
The Reserve Bank of India has given general permission to foreign companies to acquire or hold any immovable property which is necessary for or incidental to any activity carried on in India. The foreign companies engaged in manufacturing or trading activity will be permitted to open branches in India for the following purposes:
- To represent the parent company/ other companies in various matters in India. e.g. acting as buying/selling agents in India.
- To conduct research work in which the parent company is engaged provided the results of the research are made available to Indian Companies.
- To undertake export and import trading activity; and to promote technical and/or financial collaboration between Indian companies and overseas companies.
Permission to let out Immovable Property
The Reserve Bank of India has also granted general permission to Non-Resident Indian citizens of Indian origin, to let out their residential properties acquired for their bonafide residential purpose but which on account of their residence abroad, are not required for their immediate residential purpose.
Sale of immovable property
The Reserve Bank of India has granted general permission to Non-Residents holding Indian passports and foreign citizen of Indian origin, whether resident in India or not, to dispose of by sale or inheritance immovable properties situated in India subject to certain conditions. However, such property can be sold to another foreign national of Indian origin provided funds towards purchase consideration are either remitted to India or paid out of balances in NRE/FCNR accounts.
Can a non-resident repatriate the sale proceeds of immovable property in India?
(a) A person who has acquired the property U/s 6(5) of FEMA or his successor cannot repatriate the sale proceeds of such property without RBI approval.
(b) Repatriation up to USD 1 million per financial year is allowed, along with other assets under (Foreign Exchange Management (Remittance of Assets) Regulations, 2016) for NRIs/ PIOs and a foreign citizen (except Nepal/ Bhutan/ PIO) who has (i) inherited from a person referred to in section 6(5) of FEMA, or (ii) retired from employment in India or(c) is a non-resident widow/ widower and has inherited assets from her/ his deceased spouse who was an Indian national resident in India.
(c) NRIs/ PIOs can remit the sale proceeds of immovable property (other than agricultural land/ farm house/ plantation property) in India subject to the following conditions:
- The immovable property was acquired in accordance with the provisions of the foreign exchange law in force at the time of acquisition or the provisions of Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations 2018;
- The amount for acquisition of the property was paid in foreign exchange received through banking channels or out of the funds held in foreign currency non-resident account or out of the funds held in non-resident external account;
- In the case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties.
The remitter of funds is required to submit following documents to AD Bank for remittance of funds to NRE a/c or overseas bank account:
- Form 15CA :Undertaking by the remitter to be signed either physically or through a digital signature and submit online on the Tax Department website.
- Form 15CB :Certificate to be obtained from a Chartered Accountant confirming that applicable taxes have been paid on the remittances.
- Form A2/Outward Remittance Form in case of transfer of funds from NRO a/c to overseas bank account
- FEMA Declaration/Transfer Request in case of transfer of funds from NRO a/c to NRE a/c.
- Any other documents required by AD Bank
