Q.1 Who can purchase immovable property in India?
Ans. Under the general permission available, the following
categories can purchase immovable property in India:
- Non-Resident Indian (NRI)
- Person of Indian Origin (PIO)
- The general permission, however, covers only purchase of residential and commercial property and is not available for purchase of agricultural land / plantation property / farm house in India.
Q.2. Can NRI/PIO acquire agricultural land/ plantation property / farm house in India?
Ans. No.
Q.3. Are any documents required to be filed with the Reserve Bank after the purchase?
Ans. No. An NRI / PIO who has purchased residential / commercial property under general permission, is not required to file any documents/reports with the Reserve Bank.
Q.4. How many residential / commercial properties can NRI / PIO purchase under the general permission?
Ans. There are no restrictions on the number of residential /
commercial properties that can be purchased.
Can a NRI/PIO acquire immovable property in India by way of gift? Can a foreign national acquire immovable property in India by way of gift?
Ans.
- Yes, NRIs and PIOs can freely acquire immovable property by way of gift either from
- i) a person resident in India; or
- ii) an NRI; or
- iii) a PIO.
- A foreign national of non-Indian origin resident outside India cannot acquire any immovable property in India by way of gift.
Q.5. Can a non-resident inherit immovable property in India?
Ans. Yes, a person resident outside India
- an NRI
- a PIO
- a foreign national of non-Indian origin can inherit and hold immovable property in India from a person who was resident in India.
Q.6. From whom can a non-resident person inherit immovable property?
Ans. A person resident outside India (i.e. NRI or PIO or foreign national of non-Indian origin) can inherit immovable property from
- a person resident in India
- a person resident outside India
Q.7. Can an NRI/ PIO/foreign national sell his residential / commercial property?
Ans.
- NRI can sell property in India to
- a person resident in India; or
- an NRI; or
- a PIO.
- (b) PIO can sell property in India to
- a person resident in India; or
- an NRI; or
- a PIO – with the prior approval of the Reserve Bank
- Foreign national of non-Indian origin including a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan can sell property in India with prior approval of the Reserve Bank to
- a person resident in India
- an NRI
- a PIO
Q.8. Can a non-resident owning / holding an agricultural land / a plantation property / a farm house in India sell the said property?
Ans.
(a) NRI / PIO may sell agricultural land /plantation property/farm house to a person resident in India who is a citizen of India.
(b) Foreign national of non-Indian origin resident outside India would need prior approval of the Reserve Bank to sell agricultural land/plantation property/ farm house in India.
Q.9. Can a non-resident gift his residential / commercial property?
Ans. Yes.
(a) NRI / PIO may gift residential / commercial property to
- a person resident in India or
- an NRI or
- PIO.
Q.10. Can an NRI / PIO / foreign national holding an agricultural land / a plantation property / a farm house in India, gift the same?
Ans. (a) NRI / PIO can gift an agricultural land / a plantation property / a farm house in India only to a person resident in India who is a citizen of India
Q.11. How can an NRI / PIO make payment for purchase of residential / commercial property in India?
Ans. Payment can be made by NRI / PIO out of:
(a) funds remitted to India through normal banking channels or
(b) funds held in NRE / FCNR (B) / NRO account maintained in India
No payment can be made either by traveller’s cheque or by foreign currency notes or by other mode except those specifically mentioned above.
Q.12 Is repatriation of application money for booking of flat / payment made to the builder by NRI/ PIO allowed when the flat or plot is not allotted or the booking / contract is cancelled?
Ans. The Authorised Dealers can allow NRIs / PIOs to credit refund of application/ earnest money/ purchase consideration made by the house building agencies/ seller on account of non-allotment of flat/ plot/ cancellation of bookings/ deals for purchase of residential, commercial property, together with interest, if any, net of income tax payable thereon, to NRE/FCNR account, provided, the original payment was made out of NRE/FCNR account of the account holder or remittance from outside India through normal banking channels and the Authorised Dealer is satisfied about the genuineness of the transaction.
Q.13. Can NRI / PIO repatriate outside India the sale proceeds of immovable property held in India?
Ans. (a) In the event of sale of immovable property other than
agricultural land / farm house / plantation property in India by a NRI / PIO,
the Authorised Dealer may allow repatriation of the sale proceeds outside
India, provided the following conditions are satisfied, namely:
(i) the immovable property was acquired by the seller in accordance with the
provisions of the foreign exchange law in force at the time of acquisition by
him or the provisions of these Regulations;
(ii) the amount to be repatriated does not exceed:
- the amount paid for acquisition of the immovable property in foreign exchange received through normal banking channels, or
- the amount paid out of funds held in Foreign Currency Non-Resident Account, or
- the foreign currency equivalent (as on the date of payment) of the amount paid where such payment was made from the funds held in Non-Resident External account for acquisition of the property; and
(iii) in the case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties.
For this purpose, repatriation outside India means the buying or drawing of foreign exchange from an authorised dealer in India and remitting it outside India through normal banking channels or crediting it to an account denominated in foreign currency or to an account in Indian currency maintained with an authorised dealer from which it can be converted in foreign currency.
(b) in case the property is
acquired out of Rupee resources and/or the loan is repaid by close relatives in
India (as defined in Section 6 of the Companies Act, 1956), the amount can be
credited to the NRO account of the NRI/PIO. The amount of capital gains, if
any, arising out of sale of the property can also be credited to the NRO
account.NRI/PIO are also allowed
by the Authorised Dealers to repatriate an amount up to USD 250000 per
financial year out of the balance in the NRO account / sale proceeds of assets
by way of purchase / the assets in India acquired by him by way of inheritance
/ legacy. This is subject to production of documentary evidence in support of
acquisition, inheritance or legacy of assets by the remitter, and a tax
clearance / no objection certificate from the Income Tax Authority for the
remittance. Remittances exceeding US $ 250000 in any financial year requires
prior permission of the Reserve Bank.
(c) A person referred to in
sub-section (5) of Section 6 of the Foreign Exchange Management Act 3[3] or his
successor shall not, except with the prior permission of the Reserve Bank,
repatriate outside India the sale proceeds of any immovable property referred
to in that sub-section.
Q.14. Can an NRI/PIO repatriate the proceeds in case the sale proceeds were deposited in the NRO account?
Ans. NRI/PIO may repatriate up to USD 250000per financial year (April-March) from their NRO account which would also include the sale proceeds of immovable property. There is no lock in period for sale of immovable property and repatriation of sale proceeds outside India.
Q.15. If the immovable property was acquired by way of gift by the NRI/PIO, can he repatriate abroad the funds from sale of such property?
Ans. The sale proceeds of immovable property acquired by way of gift should be credited to NRO account only. From the balance in the NRO account, NRI/PIO may remit up to USD 1.25 million, per financial year, subject to the satisfaction of Authorised Dealer and payment of applicable taxes
Q.16. Can NRI / PIO rent out the residential / commercial property purchased out of foreign exchange / rupee funds?
Ans. Yes, NRI/PIO can rent out the property without the approval of the Reserve Bank. The rent received can be credited to NRO / NRE account or remitted abroad. Powers have been delegated to the Authorised Dealers to allow repatriation of current income like rent, dividend, pension, interest, etc. of NRIs/PIO who do not maintain an NRO account in India based on an 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.
Q.17. Can a person who had bought immovable property, when he was a resident, continue to hold such property even after becoming an NRI/PIO? In which account can the sale proceeds of such immovable property be credited?
Ans. Yes, A person who had bought the residential / commercial property / agricultural land/ plantation property / farm house in India when he was a resident, continue to hold the immovable property without the approval of the Reserve Bank even after becoming an NRI/PIO. The sale proceeds may be credited to NRO account of the NRI /PIO.
Q.18. Can the sale proceeds of the immovable property referred to in Q. No. 17 be remitted abroad?
Ans. Yes, from the balance in the NRO account, NRI/PIO may remit up to USD 1.25million, per financial year, subject to the satisfaction of Authorised Dealer and payment of applicable taxes.
Q.19 Is an NRI/PIO is liable to pay taxes and file its Income Tax Return on Sale of Immovable property in India?
Ans. Yes, There exist a liability to file Income Tax Return and pay due taxes, if any, arising out of Sale of Immovable property in India. Further, other Income like Interest, rent, dividend, if any, arising in India will also be included in filing Income Tax Return and will be taxed according to Income Tax Act, 1961.
Q.20 Can a NRI transfer money from NRO to NRE Account?
Yes, the Reserve Bank of India (RBI) has permitted transfer of funds from NRO to NRE account subject to payment of applicable taxes within the overall ceiling of $ 250000 in a financial year and production of Certificates like 15CA & 15CB from Chartered Accountant.
Q. 21. If an individual of Indian origin staying abroad has to remit some money to his parents in India, will such repatriation of money to India affect the taxability of the parents?
Ans.: Repatriation of money to parents of an individual will not be liable to be taxed in India in the hands of the parents. This is because gifts made to relatives are not taxable as per the Income‐tax Act.
Q. 22 If a non resident is willing to invest in the Equity Shares or debentures of an Indian Company by utilizing its foreign currency as a medium of purchase, then are there any specific provisions relating to the taxability of such shares?
Ans.: In case of non‐resident capital gains arising from the sale of shares, or debentures of, an Indian company shall be computed by converting the cost of purchase, and the sale consideration received as a result of sale of such shares and debentures, into the same foreign currency as was initially utilized in the purchase of the shares or debentures, and the capital gains so computed in such foreign currency shall be reconverted into Indian currency. Moreover the aforesaid manner of computation of capital gains shall be applicable in respect of all capital gains arising from every reinvestment thereafter in sale of shares or debentures of an Indian company.
Q. 23 Whether dividend income earned by a non – resident individual or foreign company from an Indian Company is taxable?
Ans.: The dividend income earned by a non – resident individual or foreign company from an Indian Company is exempt from tax in India.
Q. 24 Can a Non‐Resident become a shareholder or a director in an Indian Company?
Ans.: Yes, a Non‐Resident can become a shareholder or a director in an Indian Company.
Q. 25 How can a NR file his return of income even if he is not physically present in India?
Ans.: As per the provisions of the Income Tax Act, 1961, a non – resident can file his/ her return of income by authorizing another person through a signed power of attorney to sign his/ her return of income on his/ her behalf.
A non‐resident, even though he/she is not physically present in India, can himself file his return of income by furnishing the same electronically on the website of Directorate of Income Tax by following the procedure mentioned therein.
Q. 26 If a Non Resident individual of Indian origin is returning back to India with all his assets including money, then what are the tax implications on his income and assets?
Ans.: If a non‐resident individual is returning back to India then for the purpose of Income Tax his residential status shall be computed as discussed above and accordingly his/her income shall be taxed. While for the purpose of wealth Tax a non‐ resident individual returning back to India will not have to pay Wealth Tax for seven successive years after his return to India on money and assets which have been acquired outside India one year before his return to India.