As the Prime Minister travels the world and goads Indian expats everywhere to invest back in their country, NRIs have once again become a potent source of capital and prosperity for the country. To make the whole process easier for you, here are some NRI FAQs.
1. Who is an NRI?
A NRI, or non-resident Indian, is any Indian citizen employed or operating a business or a vocation abroad. It may also include Indians who are stationed abroad under an arrangement involving an uncertain length of stay. Indian diplomats at the UN and embassies worldwide are treated on par with NRIs. People of Indian origin (PIO) living abroad may also be treated at par with NRIs in certain cases.
2. Who is a Person Of Indian Origin?
For the purpose of opening and maintain back accounts and making investments in India, a Person of Origin (PIO) is defined as persons who
- Has held an Indian passport at some point in time.
- Their parents or grandparents had been a citizen of India under the Citizenship Act of 1955.
Foreign origin spouses of Indians are also treated at par with Persons of Indian origin in case of opening of bank accounts or making investments, as long as these are made jointly with their NRI spouse. None of these facilities apply to current citizens of Pakistan & Bangladesh.
3. Do non-resident Indians require the Reserve Bank of India's permission to acquire residential/commercial property in India?
No, non-resident Indians don't require the prior permission of Reserve Bank of India to acquire residential/commercial property in India.
4. Do foreign citizens of Indian origin require permission from Reserve Bank of India for purchase of immovable property for their residential use?
The Reserve Bank of India has issued blanket permission to all persons of Indian origin living abroad to purchase immovable property for their bona fide residential use. No prior permission is required from the Reserve Bank of India for such transactions.
5. How can foreign citizens of Indian origins pay for residential immovable purchased in India?
The payment for purchase of residential immovable property by a foreign citizen of Indian origin can be made from funds remitted to India via normal banking channels. Alternatively, the payment can be made from an external rupee account (NRE) or a Non-resident Ordinary Account (NRO) or a Non-resident foreign currency account (FCNRB).
6. What formalities must Indians living abroad complete for the purchase of immovable residential property under this general cases?
They must fill in a declaration in form of a IPI 7 at the Central Office of the Reserve Bank of India in Mumbai within 90 days of the completion of the purchase of the property or the payment of the final installment along with documentary evidence of the transaction and a bank certificate for the amount paid.
7. Can such property be sold without the permission of Reserve Bank of India?
Yes, the Reserve Bank of India has granted a blanket permission for such sales of immovable property. However, if the property is resold to a foreign citizen of Indian origin, the payment must be routed through their respective NRE or FCNR accounts as directed above.
8. Can the sale proceeds of such property be remitted out of India?
For properties purchased after 26th May 1993, Reserve Bank of India entertains applications for repatriation of funds equal to the original remittance in foreign currency for the investment, for two such properties. The balance amount if any, or the sale proceeds from properties purchases on or before 26th May 1993, will have to be credited to the ordinary Non-resident rupee account of the property owner.
9. Are any conditions required to be fulfilled for the repatriation of sale proceeds?
Reserve Bank of India considers application of repatriation of sale proceeds, as long as it is more than 3 years since the completion of the original purchase deal or the payment of the final installment of the purchase amount, whichever happens later.
10. What is the procedure for seeking such repatriation?
The applicant must seek permission in form of IPI 8, submitted at the Central Office of Reserve Bank of India within 90 days of the sale of the property.
11. Can foreign citizens of Indian origin acquire or dispose of property by way of gift?
Yes, the Reserve Bank of India has issued a blanket permission to allow any foreign citizen to either acquire or dispose of a residential as gift given to or received from a relative, another person of Indian origin, who may or may not be a resident of India, subject to compliance with the tax laws.
12. Can immovable property held in India be transferred as a way of gift to relatives or registered charitable institutions/organizations in India?
Yes, Reserve Bank of India has granted general permission to those persons of Indian origin seeking to gift immovable property to relatives or registered charitable institutions/organizations, as long as the provisions of other relevant laws like the Foreign Contribution Act of 1976 are followed.
13. Can foreign citizens of Indian origin acquire commercial property?
Yes, Reserve Bank of India allows Indians living abroad to purchase commercial property other than farmland/plantation property, as long as the purchase amount is paid from funds remitted to India under normal banking channels, or the purchasers NRE, NRO or FCRA accounts held in an Indian Bank. The buyer must then submit a declaration in form IPI 7 to the Central Office of Reserve Bank of India within 90 days of the payment of the last installment of the purchase amount.
14. Can they dispose of such property?
15. Can sale proceeds of such property be remitted out of India?
For owners of properties purchased after 26th May 1993, applicants may be allowed to remit sale proceeds equal to the original remittance for investment in foreign currency, provided the request comes after 3 years since the purchase of the property. Applications can be made in form a submission of the IPI 8 at the Central Office of Reserve Bank of India within 90 days from the sale of the property.
16. Can commercial and rented properties owned by Indians abroad be rented out, if not required for immediate use?
Yes, Reserve Bank of India has issued general permission for foreign citizens of Indian origins to rent out their commercial or residential premises in India, the rent for which shall be deposited in their NRE or NRO accounts in India and are eligible for repatriation.
17. Can NRIs obtain loans for the purchase of residential property from registered institutions and banks providing housing finance?
Yes, NRI buyers are allowed to avail of home loan facilities from registered housing finance institutions and dealers for the purchase of residential property for personal use. The margin and quantum of the loan will be at par with those applicable to housing loans to residents. The loan should be repaid within 15 years out of inward remittances, or out of the NRE, NRO or FCNR accounts held in India.
18. Can Indian companies grant loans to their NRI staff?
Reserve Bank of India permits Indian companies to provide housing loans to their employees holding an Indian passport but deputed abroad subject to certain conditions.
19. Can authorized dealer grant home loans to an NRI applicant where a resident relative is the co-guarantor/co-obligant or where the land is jointly owned by such NRI borrower & resident close relative.
Yes. However, it is stipulated that the payment of the margin money and loan installments should be made by the NRI borrower.