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Repatriation of Sale Proceeds in India by NRIs and FEMA

[ Acquisition and Transfer of Immovable Property in India by NRIs and FEMA ]

Authorised dealers have been permitted to allow remittance of sales proceeds of property other than agricultural/plantation property or a farm house to an Indian citizen resident outside India or a PlO as defined in clause (c) of Regulation No.2, who has sold the property in India subject to terms and conditions stipulated in Regulation No.6. The important condition in this regard is that the sale should take place after three years from the date of acquisition of such immovable property or from the date of the payment of final instalment of consideration for its acquisition, whichever is later. In the case of residential property, repatriation of sale proceeds is restricted to not more than two such properties. Another condition about the repatriation of the amount is that such amount should not exceed

 

(a) the amount paid for the acquisition of the immovable property in foreign exchange received through normal banking channels, or out of fund held in Foreign Currency Non-resident Account, or

 

(b) the foreign currency equivalent, as on the date of payment, of the amount paid where such payment was made from the funds held in Non-resident External Account for acquisition of the property.

 

All NRIs would be happy to note that repatriation is possible in respect of refund of application / earnest money / purchase consideration made by the house building agencies / seller on account of non-allotment of flat / plot / cancellation of bookings / deals for purchase of residential / commercial property, together with interest, if any (net of income tax payable thereon), provided the original payment was made out of NRE / FCNR account of the account-holder or remittance from outside India through normal banking channels and the authorised dealer is satisfied about the genuineness of the transaction.

 

While dealing with the aspects of acquisition of immovable property in India other than an agricultural property, plantation or a farm-house the payment of purchase price, if any, shall be made out of

 

(i) funds received in India through normal banking channels by way of inward remittance from any place outside India or

 

(ii) funds held in any nonresident account maintained in accordance with the provisions of the Act and the regulations made by the Reserve Bank. It is also provided that no payment of purchase price for acquisition of immovable property shall be made either by traveler’s cheque or by foreign currency notes or by other mode other than those specifically permitted by the RBI.

 

The Non-Resident Indians would be happy to note that they are allowed to repatriate an amount up to US$ one million, per financial year (April-March), out of the balances held in the NRO account subject to tax compliance. This amount includes sale proceeds of assets acquired by way of inheritance or settlement.

 

Sometimes a question also arises as to whether any documents need to be filed with the Reserve Bank of India after purchase of immovable property in India. Well, to this common question the Government has clarified through FAQ’s that an NRI / IPO who has purchased residential / commercial property under general permission is not required to file any documents with the Reserve Bank of India.

 

A common question which is asked again and again by Non-Resident Indians relates to the number of residential / commercial properties which they can purchase under the general permission. Well, to this question the Government through its FAQs has clearly stated that there is no restriction on the number of residential / commercial properties that can be purchased by an NRI. This is a happy news which would inspire the RNIs to invest more and more in the real estate sector in India.

 

NRI can also save on Capital gains specially if the property is sold after three years.

Prohibition On Acquisition Or Transfer Of Immovable Property In India By Citizens Of Certain Countries

 

A person who is a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan requires approval of Reserve Bank for acquisition of transfer of property in India other than lease not exceeding 5 years, in terms of Regulation No.7.
Acquisition and Transfer of Immovable Property in India by NRIs and FEMA
1. Basic Introductions
2. NRIs Can Hold, Own Or Transfer Immovable Property In India Without Any Condition
3. Acquisition And Transfer Of Immovable Property By An NRI
4. Acquisition And Transfer Of An Immovable Property By A Person Of Indian Origin
5. Acquisition Of Immovable Property For Permitted Activity
6. Repatriation of Sale Proceeds
7. Latest Amendments Regarding Acquisition Of Immovable Properties

More... Topics !..

 

Tax Guide for NRI - Tax Planning, Tax Saving, Investment Guidance for Non-Resident Indians !

1. Basic Aspects Of Tax Planning For NRIs
2. How an NRI can Avoid Clubbing of his Incomes and Wealth with that of his Spouse and Children
3. The Incomes of an NRI completely Exempt from Income Tax
4. Capital Gain of an NRI could be Completely Exempt from Income Tax
5. Items completely Exempt from Wealth Tax for an NRI
6. Special Procedure of Assessment regarding Income of an NRI from Foreign Exchange Assets
7. Deductions Allowed to NRIs in the Computation of Total Income and Tax Payable
8. Procedure for the Filing of Income Tax and Wealth Tax Returns, Assessment, and Refunds
9. Gifts by NRIs to Relatives and Friends can be made fully Exempt from Gift Tax
10. FEMA and NRIs Preliminary Aspects Analysed
11. Acquisition and Transfer of Immovable Property in India by NRIs and FEMA
12. Permissible and Prohibited Current Account Transactions in Case of NRI
13. Investment In Shares, Securities, Units And Other Activities, etc. by an NRI in India
14. Deposits in India by an NRI
15. RFC account of a Returning NRI and Investment Abroad
   
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