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IV. Investment in immovable
Property
- May acquire immovable property
in India other than agricultural land/ plantation
property or a farm house out of repatriable
and non-repatriable funds.
In respect of such investments
NRIs are eligible to repatriate -
- Sale proceeds of immovable
property acquired in India to the extent of
repatriable funds used for acquiring the property,
up to two residential properties. The balance
will be repatriable through NRO Account subject
to conditions mentioned at item (I) (d).
- Refund of (a) application
/ earnest money / purchase consideration made
by house-building agencies/seller 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.
- Housing Loan in rupees availed
of by NRIs from ADs / Housing Financial Institutions
can be repaid by the close relatives in India
of the borrower.
V. Facilities to returning
NRIs/PIO
Returning NRIs/ PIO
- May continue to hold, own,
transfer or invest in foreign currency, foreign
security or any immovable property situated
outside India, if such currency, security or
property was acquired, held or owned when resident
outside India.
- May open, hold and maintain
with an authorised dealer in India a Resident
Foreign Currency (RFC) Account to transfer balances
held in NRE/FCNR(B) accounts. Proceeds of assets
held outside India at the time of return, can
be credited to RFC account. The funds in RFC
accounts are free from all restrictions regarding
utilisation of foreign currency balances including
any restriction on investment in any form outside
India.
Investment
Policy for Non-resident Indians (NRIs)
Recognising the investment
potential of the Non-resident Indians, a number
of steps are being taken by the Government on
an ongoing basis to attract investments from them
in Indian companies. Some of the investment schemes
presently available to Non-resident Indians (NRIs)
include the facility to invest upto 100 percent
equity with full benefits of repatriation of capital
invested and income accruing thereon in high priority
industries mentioned in the Annexure-III to the
Industrial Policy 1991, 100 percent export oriented
units, sick units under revival, housing and real
estate development companies, etc;.
NRIs/PIOs/OCBs are also permitted
to make portfolio investments through secondary
markets. In terms of the relaxations announced
in 1998-99, investment limits for an individual
NRI has been revised upwards from 1% to 5%, aggregate
portfolio investment limits by all NRIs increased
from 5% to 10% of the issued and paid-up capital
of the company. The aggregate investment limit
would be separate and exclusive of FII portfolio
investment limits.
Ready Reckoner for NRI Investment
In order to help the tax-payers to plan their
Income-tax affairs well in advance and to avoid
long drawn and expensive litigation, a scheme
of Advance Rulings has been introduced under the
Income-Tax Act, 1961. Authority for Advance Rulings
has been constituted. The tax-payer can obtain
a binding ruling from the Authority on issues
which could arise in the determination of his
tax liability. A non-resident or certain categories
of resident can obtain binding rulings from the
Authority on any question of law or fact arising
out of any transaction/proposed transactions which
are relevant for the determination of this tax
liability.
Remittance facilities for
Non Resident Indians (NRIs) / Persons of Indian/Foreign
Nationals Origin (PIO) and Foreign Nationals
The Regulations for transfer
of assets outside India by a person, whether residents
in India or not, are given in the Notification
Nos. FEMA 13/2000-RB and FEMA 21/2000- RB
dated May 3, 2000 and the related amendments to
these Notifications. Accordingly, remittance of
capital assets in India held by a person, whether
resident in or outside India, would require approval
of the Reserve Bank except to the extent provided
in FEMA or Rules or Regulations made there under.
Definition of NRI/PIO
NRI for this purpose is defined as a person resident
outside India who is citizen of India. In terms
of Regulation 2 FEMA Notification No.13 dated
May 3, 2000, Non-Resident Indian (NRI) means a
person resident outside India who is a citizen
of India. Person of Indian Origin (PIO) means
a citizen of any country other than Bangladesh
or Pakistan who had (a) at any time held Indian
passport or (b) he or either of his parents or
any of his grandparents was a citizen of India
by virtue of the Constitution of India or the
Citizenship Act, 1955 or (c) the person is a spouse
of an Indian citizen or a person referred to in
(a) or (b).
Remittance
of current income
Remittance of current income like rent , dividend,
pension, interest etc. of NRIs/PIO even those
who do not maintain NRO account is freely allowed,
on the basis of appropriate certification by a
Chartered Accountant certifying that the amount
proposed to be remitted is eligible for remittance
and that applicable taxes have been paid / provided
for.
NRIs/PIO have the option to credit the current
income to their Non-Resident (External) Rupee
account, provided the authorized dealer bank is
satisfied that the credit represents current income
of the non-resident account holder and income
tax thereon has been deducted / provided for.
Remittance of assets
by a foreign national of non- Indian origin
A foreign national of non-Indian origin who has
retired from employment in India or who has inherited
assets from a person resident in India or who
is a widow of an Indian citizen who was resident
in India, may remit an amount not exceeding USD
one million, per financial year(April-March),
on production of documentary evidence in support
of acquisition /inheritance of assets, an undertaking
by the remitter and certificate by a Chartered
Accountant in the formats prescribed by the Central
Board of Direct Taxes vide their Circular NO.10/2002
dated October 9, 2002.
These remittance facilities are not available
to citizen of Nepal and Bhutan.
Remittance of assets
by NRO/PIO
A Non-Resident Indian (NRI) or a Person of Indian
Origin (PIO) may remit an amount up to USD one
million, per financial year, out of the balances
held in his Non-Resident(Ordinary) Rupee(NRO)
account / sale proceeds of assets (inclusive of
assets acquired by way of inheritance of settlement),
for all bonafide purposes, to the satisfaction
of the authorized dealer bank, on production of
an undertaking by the remitter and certificate
by a Chartered Accountant in the formats prescribed
by the Central Board of Direct Taxes vide their
Circular NO.10/2002 dated October 9, 2002.
NRI/PIO may remit sale proceed of immovable property
purchased by him out of Rupee funds or as a person
resident in India as indicated above without any
lock-in-period.
In respect of remittance of sale proceed of assets
acquired by way of inheritance of legacy or settlement
for which there is no lock-in-period, NRI/PIO
may submit documentary evidence in support of
inheritance or legacy of assets, an undertaking
by the remitter and certificate by Chartered Accountant
in the prescribed formats. Settlement is also
a mode of inheritance from the parent, the only
difference being that the property under the settlement
passes to the beneficiary on the death of owner/parent
without any legal procedures/hassles and helps
in avoiding delay and inconvenience in applying
probate, etc.
The remittance facility in respect of sale proceeds
of immovable property is not available to citizen
of Pakistan, Bangladesh, Sri Lanka, China, Afghanistan,
Iran, Nepal and Bhutan.
The facility of remittance of sale proceeds of
other financial assets is not available to citizen
of Pakistan, Bangladesh, Nepal and Bhutan.
Repatriation of sale
proceeds of residential property purchased by
NRIs/PIO out of foreign exchange
Repatriation of sale proceeds of residential property
purchased by NRI/PIO is permitted to the extent
of the amount paid for acquisition of immovable
property in foreign exchange received through
banking channels. The facility is restricted to
not more than two such properties.
Authorized dealer banks may permit repatriation
of amounts representing the refund of application
/ earnest money/ purchase consideration made by
the house building / seller on account of non-allotment
of flat/ plot/ cancellation of booking/ 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 (B) account of the holder
, or remittance from outside India through normal
banking channels and the authorized dealer bank
is satisfied about the genuineness of the transaction.
Such funds may also be credited to the NRE/FCNR
(B) account of the NRI/PIO, if they so desire.
Authorized dealer banks may allow repatriation
of sale proceeds of residential accommodation
purchased by NRIs/PIO out of funds raised by way
of loans from the authorized dealer banks/housing
finance institutions to the extent of such loans
repaid by them out of foreign inward remittances
received through normal banking channel or by
debit to their NRE/FCNR (B) accounts.
Facilities for students
Students going abroad for studies are treated
as Non-Resident Indians (NRIs) and are eligible
for all the facilities available to NRIs under
FEMA. As Non-Residents, they will be eligible
to receive remittances from India (i) up to USD
100,000 from close relatives in India on self
declaration towards maintenance, which could include
remittances towards their studies also and (ii)
up to USD 1 million per financial year, out of
sale proceeds of assets/balances in their account
maintained with an AD bank in India.All other
facilities available to NRIs under FEMA are equally
applicable to the students.Educational and other
loans availed of by them as residents in India
will continue to be available as per FEMA regulations.
Income-tax clearance
The remittances will be allowed to be made by
the authorized dealer banks on production of an
undertaking by the remitter and a Certificate
from a Chartered Accountant in the formats prescribed
by the Central Board of Direct Taxes, Ministry
of Finance, Government of India in their Circular
No.10/2002 dated October 9, 2002.
[cf. A. P. (DIR Series) Circular] No.56 dated
November 26, 2002]..
International Credit
Cards
Authorized dealer banks have been permitted to
issue International Credit Cards to NRIs/PIO,
without prior approval of Reserve Bank. Such transactions
may be settled by inward remittance or out of
balances held in the cardholder’s FCNR (B)
/NRE /NRO accounts.
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