Over a period of time we have seen that a significant number of Non Resident Indians or Persons of Indian origin are buying properties in India. The investment is both for them to come back and also some form of speculation as India as market is giving good returns.
An NRI can sell residential/commercial property in India to a person resident in India, an NRI or a PIO. However, a PIO can sell residential/commercial property in India only to a resident of India & NRIHe would need prior approval of the RBI for sale of residential/commercial property in India to a PIO.
Yes. Reserve Bank has granted general permission for sale of such property. However, where another foreign citizen of Indian origin purchases the property, funds towards the purchase consideration should either be remitted to India or paid out of balances in non-resident accounts maintained with banks in India.
If an NRI is selling his/her property in India, depending on time or the amount of time he/she has held the property, the sale proceeds would be subjected to capital gains tax.
The sale proceeds of immovable property in India can be repatriated by NRI/PIO if the property was acquired of foreign exchange source that is through normal banking channels or by way of debit to NRE/FCNR(B)accounts. However, the amount to be repatriated shall not be more that the amount to paid for the property. The balance amount or capital gain if any, may by credited to NRO account from where it can be repatriated upto 1 Million USD per financial year subject to payment of applicable taxes, for bonafide purposes to the satisfaction of Authorised Dealer. Further sales proceeds of immovable property acquired in India to the extent of repatriable funds used for the acquiring the property is upto two residential properties only.
Yes. NRI/PIOs can freely rent out their immovable property, whether purchase through application of forex or otherwise, without seeking any permission from the RBI. The rental income being a current account transaction is repatriable outside India, only if proper tax is paid or provided for.
India is a signatory to the double taxation avoidance agreement with 60 countries. If an NRI is residing in any of these countries then he/she can take advantage and pay the taxes here in India since the property is situated here. He/she can pay the taxes and can take advantage or equivalent tax rebate in the country of residence.
Acting under the authority of law, the Central Government has so far entered into agreements with countries listed below which have become operative with effect from the assessment year mentioned against them.
First, the quantum of loan, margin money under the repayment period shall be at par with those applicable to those housing finance provided to Person Resident in India.
Second, the loan amount shall not be credited to NRE/FCNR(B)/NRNR of the borrower.
Third, the loan should be fully secured by equitable mortgage of the property purposed to be acquired and if necessary also by lien on borrowers other assets in India.
Fourth, the repayment of loan shall be through:
Normal banking channels
NRE account
NRO account
FCNR account
NRNR account
NRSR account
Rental Income of the property acquired
Through relatives as defined under Section 6 of Companies Act
Fifth, rate of interest shall be in conformity with Directives issued by RBI or National Housing Bank. However, banks cannot grant fresh loans/renew existing loans in excess of Rs 20 Lacs against NRE and FCNR (B) deposits either to depositors or to third party.
