NRIs can dis­pose of prop­er­ties in In­dia

A non-res­i­dent In­dian can trans­fer by way of sale the prop­er­ties ac­quired by him in In­dia to a person res­i­dent in the coun­try or an In­dian re­sid­ing abroad

HT Estates - - HTESTATES - Su­nil Tyagi

Last week’s col­umn ad­dressed the in­her­i­tance rights of non- res­i­dent In­di­ans (NRI) and per­sons of In­dian ori­gin (PIO) with re­spect to im­mov­able prop­erty in In­dia, un­der the pro­vi­sions of For­eign Ex­change Man­age­ment Act, 1999 (FEMA). In sum­mary, an NRI and PIO may ac­quire any im­mov­able prop­erty in In­dia (in­clud­ing res­i­den­tial, com­mer­cial, agri­cul­tural, plan­ta­tion and farm­house prop­er­ties) by way of in­her­i­tance/ legacy from a person res­i­dent in In­dia or out­side In­dia, pro­vided the de­ceased person had ac­quired the prop­erty in com­pli­ance with the for­eign ex­change law in force, at the time of ac­qui­si­tion of the prop­erty.

Apart from rules gov­ern­ing in­her­i­tance of im­mov­able prop­erty in In­dia by NRIs and PIOs, the pro­vi­sions of FEMA also stip­u­late strict rules for the pur­chase and dis­posal of im­mov­able them.

Some key points to bear in mind are given below:

Buy­ing prop­erty

RIs and PIOs are per­mit­ted to pur­chase any type of im­mov­able prop­erty in In­dia, in­clud­ing com­mer­cial and res­i­den­tial prop­er­ties, other than agri­cul­tural prop­erty, plan­ta­tion, or a farm­house.

A prop­erty may be pur­chased with­out any lim­i­ta­tions on the num­ber or size of the prop­er­ties. NRIs and PIOs are not re­quired to seek any prior per­mis­sion from Re­serve Bank of In­dia (RBI) for pur­chas­ing a res­i­den­tial/ com­mer­cial prop­erty in In­dia. They are also not re­quired to file any doc­u­ments with RBI af­ter hav­ing pur­chased a res­i­den­tial/com­mer­cial prop­erty un­der the gen­eral per­mis­sion.

Pay­ment of the sale con­sid­er­a­tion can be made only from funds that have been re­mit­ted to In­dia through nor­mal bank­ing chan­nels or from funds held in an NRE/NRO/FCNR(B) * ac­count main­tained in In­dia. Such pay­ments can­not be made in for­eign cur­rency or by trav­eller’s cheques or any other mode, ex­cept those that have been spec­i­fied by RBI.

Sell­ing prop­erty

An NRI can trans­fer by way of sale the res­i­den­tial/com­mer­cial prop­er­ties ac­quired by him in In­dia to (a) a person res­i­dent in In­dia, or (b) a person res­i­dent out­side In­dia who is a cit­i­zen of In­dia, or (c) a person of In­dian ori­gin res­i­dent out­side In­dia. How­ever, a PIO can trans­fer by way of sale the res­i­den­tial /com­mer­cial prop­er­ties ac­quired by him in In­dia to a person res­i­dent in In­dia. As re­gards sale to any other en­tity, NRIs and PIOs have to ob­tain prior per­mis­sion from RBI.

Repa­tri­a­tion of s al e pro­ceeds

For an NRI/PIO who wants to sell an im­mov­able prop­erty, rules for out­ward re­mit­tance come into play. Im­por­tantly, the im­mov­able prop­erty be­ing sold should have been ac­quired as per pro­vi­sions of ap­pli­ca­ble for­eign ex­change law in force when it was ac­quired. In the event of sale of im­mov­able prop­erty by NRI/PIO other than agri­cul­tural land/farm­house/ plan­ta­tion prop­erty in In­dia, repa­tri­a­tion of the sale pro­ceeds out­side In­dia may be al­lowed sub­ject to cer­tain con­di­tions.

The amount to be repa­tri­ated does not ex­ceed the amount that was paid (from for­eign ex­change re­ceived through nor­mal bank­ing chan­nels or out of funds in FCNR/ NRE ac­count) for ac­quir­ing such prop­erty. How­ever, this fa­cil­ity is re­stricted to repa­tri­a­tion of sale pro­ceeds for a max­i­mum of two res­i­den­tial prop­er­ties.

Where the pur­chase price was paid from an NRO ac­count, a max­i­mum of US$ 1 mil­lion per fi­nan­cial year can be re­mit­ted from sale pro­ceeds of im­mov­able prop­erty.

The au­tho­rised dealer bank be­ing sat­is­fied about the trans­ac­tion, sup­port­ing doc­u­men­tary ev­i­dence sub­mit­ted to it, and pay­ment of ap­pli­ca­ble taxes as pre­scribed by the cen­tral board of di­rect taxes from time to time be­ing made. As re­gards re­mit­tances that ex­ceed US$ 1 mil­lion in any fi­nan­cial year, NRIs and PIOs have to ob­tain prior per­mis­sion from RBI.

There are cases where, de­spite an NRI/PIO hav­ing in­vested some funds to­wards pur­chas­ing an im­mov­able prop­erty, the trans­ac­tion does not ma­te­ri­alise into an ul­ti­mate sale-pur­chase for var­i­ous rea­sons (for in­stance, on ac­count of non-al­lot­ment of prop­erty or can­cel­la­tion of book­ings). In such cases, the pro­vi­sions of FEMA al­low re­fund of ap­pli­ca­tion/ earnest money /pur­chase con­sid­er­a­tion to be made, to­gether with in­ter­est, if any (net of ap­pli­ca­ble in­come tax). In bona fide trans­ac­tions, such re­fund of amounts would be al­lowed by way of credit to an NRE/FCNR (B) ac­count, pro­vided the orig­i­nal pay­ment had also been made ei­ther out of NRE/FCNR (B) ac­count or from funds that had been re­ceived via in­ward re­mit­tance through nor­mal bank­ing chan­nels.

When contemplating salepur­chase trans­ac­tions, NRIs and PIOs must re­fer to the lat­est rules stip­u­lated by RBI from time to time.

IMAGESBAZAAR

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