What are the regulations governing the income generated from real estate investment in India? Investment by NRIs
Income from investments in residential property is not repatriable outside. India but must be credited to the owner's Ordinary Non-Resident Rupee ("NRO") account. In case of properties purchased after 26 May 1993, RBI considers applications for repatriating the sale proceeds of such property up to the maximum of the original amount brought into India for purchasing the property. This is currently permitted for a maximum of two such properties and provided the property has been held for at least three years.
Repatriation of original investment in housing and real estate development through shares/debentures is permitted only after a lock-in period of three years from the date of issue of the equity shares/convertible debentures.
By its notification (No. FERA 155/93-RBI dated 16 September 1993) issued under section 29(I) of FERA, the RBI has granted permission to NRIs and foreign citizens of Indian origin to let out any immovable property in India. The rental proceeds or income of any investment of such income is not repatriable outside India at any time in future and such funds may be credited into the owner's Ordinary Non-Resident Rupee ("NRO") account maintained with a bank in India.
What is the definition of Non Resident Indian (NRI)?NRIs can be defined as:
- Indian citizens who stay in a foreign country for employment
- Indian citizens carrying on their businesses or vocations
- Indian citizens abroad for any other purpose in the circumstances indicating a definite intention to stay outside India for an indefinite period
- Indian citizens working abroad on assignment with foreign governments or international agencies
- Officials of central and state government and public sector undertakings deputed abroad on temporary assignments or posted to their offices abroad
- Indians who have settled abroad permanently or gone abroad on immigration
Non-resident Indians become residents of India once they come back to India to engage in employment, for carrying on any business or vocation, or for any other purpose indicating a definite intention to stay in India for an indefinite period.
Does a foreign citizen of non-Indian origin require permission from the Reserve Bank of India (RBI) for acquisition of immovable property?
Yes. The RBI may grant permission to a foreign citizen of non-Indian origin/foreign companies if the property is purchased for residential use and the consideration is paid by way of foreign exchange.
Which documents are to be verified before purchase of a Flat?
Before you purchase a flat, you have to have a title and document search conducted by a competent advocate. You cannot do it yourself. You have to use the services of a competent advocate. It is a professional job to be done with professional assistance.