A citizen of India resident out of India is called as Non Resident Indian (NRI). Reserve Bank of India (RBI) frames regulations to acquire or transfer immovable property in India by person residents outside India.
As per the latest circular issued by RBI (as on 2014) the following are the regulations –
Purchase of immovable property – NRI can acquire by way of purchase residential or commercial property in India. However, NRI is not allowed to purchase (or sell or transfer) agricultural land or plantation property or farm house in India.
Sale of immovable property – A NRI can sell residential or commercial property situated in India to a person resident in India. He can also sell/transfer the property to an Indian citizen resident outside India or a PIO (Person of Indian Origin)
Funds for purchase
- Inward remittance through normal banking channels (means travelers cheque or foreign currency notes bought along with while travelling or any other mode is not acceptable)
- Withdraw from NRO or NRE or FCNR(B) account
Reporting to RBI – A NRI who has purchased residential/commercial property as per the above guidelines is not required to file any documents with RBI.
Restriction on number of properties – There is no restriction on purchase of residential or commercial properties. A NRI can buy any number of properties.
Repatriation of funds in case of properties originally bought through inward remittance of funds –
- Can repatriate the sale proceeds after paying applicable taxes and
- Such funds should not exceed the amount paid for the property out of foreign exchange sources and
- The sale proceeds of a maximum of two residential properties
Repatriation of funds in case of properties purchased out of Rupee earnings –
- Remit up to One Million USD per financial year subject to payment of applicable taxes.
Refund of advance given to builders or developers
Refund of (a) application money / advance towards purchases on account of non-allotment of flats / plots and (b) cancellation of booking/deals for purchase of residential/commercial properties, together with interest, net of taxes, provided original payment is made out of NRE/FCNR (B) account/inward remittances