I sincerely feel that Saibaba's blessings of owning a residence in Shirdi came to me through these wonderful builders - Syamasundar Davuluri Houston, TX
The NRI investor has the option to raise their investments from financial institutions. The Housing Development and Finance Corporation (HDFC) are the leading institutions in India in the field. They have office network all over the country and respond speedily and efficiently. Silver Oak Builders & Developers & Silver Oak Construction properties are normally eligible for finance, and loan applicants can receive assistance and advice from our offices.
Purchase/Sale of Immovable Property by NRIs The provisions relating to purchase/sale of immovable property in India by Non-Resident Indians (NRIs) are provided in the Foreign Exchange Regulation Act, 1973 and the Income-Tax Act, 1961. As a consequence on the liberalization in Exchange Control policy and procedures, the government has brought about major legislative and policy changes to encourage NRI investments in real estate. The salient features of liberalized policy and updated position are discussed in detail below.
Acquisition of immovable property by NRIs holding Indian passport: Non-Resident Indians holding Indian passport do not require prior permission of Reserve Bank of India to buy a residential or commercial immovable property in India. The purchase consideration may be paid either by remittance of funds from abroad through normal banking channels or out of NRE/NRO/FCNR account. Non-Residents of Indian nationality do not require any permission for acquisition, transfer or disposal by way of gift of immovable property which is not a farmhouse or agricultural land or plantations property. Declaration of form IPI-7 for acquisition of commercial property for carrying on any industrial, commercial or trading activity by their proprietary partnership firm in India is required to be filed with RBI within 90 days from the date of purchase.
Acquisition of immovable property by foreign citizens of Indian origin Under the general permission to Non-Resident Indians holding foreign passport, the Reserve Bank of India has allowed them to acquire, hold, transfer or dispose of by way of sale or inheritance, immovable properties situated in India. The general permission is granted, provided:
The property is for the purchaser’s bonafide residential use.
The purchase consideration is met either from funds abroad through normal banking channels or out of NRE/FCNR account or out of FCNR Special Deposit account.
Income accruing by way of rent from the properties purchased or acquired by inheritance will not be allowed to be repatriated abroad even if the purchase consideration was met out of NRE/FCNR account.
Sale of Immovable Property - RBI permission The Reserve Bank of India has granted general permission to non-residents holding Indian passports and foreign citizens of Indian origin, whether resident in India or not, to dispose of by sale or inheritance immovable properties situated in India subject to certain conditions. However, such property can be sold to another foreign national of Indian origin provided funds towards purchase consideration are either remitted to India or paid out of balances in NRE/FCNR accounts. It is however, necessary for such persons purchasing the property to submit to the chief General Manager, Exchange Control Department, Foreign Investment Division, Central Office, Reserve Bank of India, Bombay, a declaration in the prescribed form IPI-7 within a period of 90 days from the date of purchase.
1. Am I an NRI? Under the Foreign Exchange Regulation Act of 1973, Non-Resident Indians are:
Indian citizens who stay abroad for employment or carrying on business or vocation outside India or for any other purpose in circumstances indicating an indefinite period of stay abroad; OR
Government servants who are posted abroad on duty with the Indian missions and similar other agencies set up abroad by the Government of India where the officials draw their salaries out of Government resources; OR
Government servants deputed abroad on assignments with foreign Governments or regional/international agencies like the World Bank, International Monetary Fund (IMF), World Health Organization (WHO), Economic and Social Commission for Asia and the Pacific (ESCAP) OR
Officials of the State Government and Public Sector Undertakings deputed abroad on temporary assignments or posted to their branches or offices abroad.
2. Who is a foreign citizen of Indian Origin? A foreign citizen is deemed to be of Indian Origin if : i) he held an Indian Passport at any time or ii) he or his father or paternal grand father was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955. However this does not apply to citizens of Pakistan, Bangladesh, Afghanistan, Bhutan, Sri Lanka or Nepal
3. Do NRI's require permission of Reserve Bank to acquire immovable property in India? No. NRI's do not require any permission to acquire any immovable property in India other than agricultural / plantation property or a farm house. Refer to the table below for a comprehensive list of transactions possible.
For NRI
NRI
PIO
Resident
Buy Property From
Yes
Yes
Yes
Sell Property To
Yes
Yes
Yes
Receive Gift From
Yes
Yes
Yes
Give Gift To
Yes
Yes
Yes
Agricultural Property
Purchase Property From
No
No
No
Sell Property To
No
No
Yes
Receive Gift From
No
No
No
Give Gift To
No
No
Yes
For PIO
NRI
PIO
Resident
Buy Property From
Yes
Yes
Yes
Sell Property To
No
No
Yes
Receive Gift From
Yes
Yes
Yes
Give Gift To
Yes
Yes
Yes
Agricultural Property
Purchase Property From
No
No
No
Sell Property To
No
No
Yes
Receive Gift From
No
No
No
Give Gift To
No
No
Yes
4. In what manner the purchase consideration for the immovable property should be paid under the general permission? The purchase consideration should be met either out of inward remittances in foreign exchange through normal banking channels or out of funds from any non resident accounts maintained with banks in India.
5. Is there any restriction on the number of residential properties that may be purchased by an NRI? There are no restrictions on the number of residential properties that may be bought by an NRI. However, repatriation is allowed only in respect of two such properties.
6. What are the guidelines for acquisition of agricultural land / plantation property / farmhouse by NRIs and foreign citizens of Indian origin? All requests for acquisition of agricultural land / plantation property / farm house by any person resident outside India may be made to The Chief General Manager, Reserve Bank of India, Central Office, Exchange Control Department, Foreign Investment Division (III), Mumbai 400 001.
1. Can such property be sold without the permission of Reserve Bank? Yes. Reserve Bank has granted general permission for sale of such property. However, where another foreign citizen of Indian origin purchases the property, funds towards the purchase consideration should either be remitted to India or paid out of balances in non-resident accounts maintained with banks in India.
2. Can sale proceeds of such property if and when sold be remitted out of India? In the event of sale of immovable property other than agricultural land/farm house/plantation property in India by a NRI or PIO, the authorized dealer may allow repatriation of the sale proceeds outside India, provided all the following conditions are satisfied: -
The immovable property was acquired by the seller in accordance with the provisions of the Exchange Control Rules/Regulations/Law in force at the time of acquisition, or the provisions of the Regulations framed under the Foreign Exchange Management Act, 1999;
NRIs/PIOs can effect remittance of sale proceeds of immovable property in India irrespective of the period for which the property was held. The sale proceeds allowed to be repatriated should, however, not exceed the foreign exchange brought in to acquire the said property.
In case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties, if the property was purchased from funds held in NRE Account.
The amount sought to be repatriated abroad should not exceed the amount paid for acquisition of the immovable property in the foreign exchange received through normal banking channels or out of funds held in FCNR or NRE Account. In case of investment out of NRE Account the amount to be calculated as foreign currency is equivalent value as on the date of payment for acquisition of the said property.
1. Can NRI's/PIO's rent out the properties (residential/commercial) if not required for immediate use? Yes. NRI/PIOs can freely rent out their immovable property, whether purchase through application of forex or otherwise, without seeking any permission from the RBI. The rental income being a current account transaction is repatriable outside India, only if proper tax is paid or provided for.
1. Does RBI have any guidelines for loans to NRI's/PIO's? Yes. There are guidelines issued by the by the Reserve Bank of India for grant of Housing Loans to NRIs. The guidelines are:
The loan amount shall not exceed 85% of the cost of the dwelling unit.
Own contribution, which is the cost of dwelling unit financed less the loan amount, can be met from direct remittances from abroad only through normal banking channels, your Non-Resident (External) [NR (E)] Account and /or Non-Resident (Ordinary) [NR (O)] account and /or Non-Resident Special Rupee account [NRSR] in India.
Repayment of the loan, comprising of the principal and interest including all the charges are to be remitted from abroad only through normal banking channels, your Non-Resident (External) [NR (E)] Account and /or Non-Resident (Ordinary) [NR (O)] account and /or Non-Resident Special Rupee account [NRSR] in India.
2. Can authorized dealer grant loans to NRIs for acquisition of a flat/house for residential purposes? Authorized dealers have been granted permission to grant loans to NRI's for acquisition of house/flat for self-occupation on their return to India subject to certain conditions Repayment of the loan should be made within a period not exceeding 15 years out of inward remittance through banking channels or out of funds held in the investors' NRE/FCNR/NRO accounts.
3. Can authorized dealer grant housing loan to NRI's where he is a principal borrower with his resident close relative as a co-applicant / guarantor or where the land is owned jointly by such NRI borrower with his resident close relative? Yes. Such housing loans availed in rupees can also be repaid by the close relatives in India of the borrower.
4. What are the documents I have to submit along with the application? The following documents are normally to be submitted along with the application:
Photocopy of the labor contract and English translation duly countersigned by your employer.
Latest salary certificate (in English) specifying the following: Name (as it appears in the passport) Date of joining Passport Number Designation Perquisites and salary
Photocopy of labor card/identity card
Photocopy of valid resident visa stamped on the passport
Photocopy of monthly statement of local bank account for the last 4 months
Property related documents
5. Can an NRI take loan against the security of immovable property in India? Are there any restrictions on the use of loan amount ? An NRI can borrow against the security of immovable property from Authorized Dealer subject to following conditions:
the loan should be used for meeting the personal requirements or for borrower's own business purposes; and
loan should not be used for prohibited activities, namely; (a) business of chit fund, or (b) Nidhi Company, or (c) agriculture or plantation activities or in real estate business, or construction of farm houses, or (d) trading in Transferable Development Rights (TDRs),
the loan amount cannot be remitted outside India,
repayment of loan shall be made from out of remittances from abroad or by debit to NRE/FCNR/NRO account or out of the sale proceeds of shares or securities or immovable property against which such loan was granted.
