Can NRIs (Non-Resident
Indians) and OCBs (Overseas Corporate Bodies) invest
in India?
The Government of India has adopted a liberal
policy, with respect to investments by NRIs and OCBs
in India. Such investments are allowed, both, through
the RBI route and through the Government route. Foreign
Investment Promotion Board (FIPB) permits to invest
up to 100% equity in real estate development activity
and civil aviation sectors.
NRIs (being Indian citizens) are
allowed to invest in immovable property, without RBI's
permission in India. For foreign nationals of Indian
origin (whether resident in India or not), RBI has
granted general permission (notification, May 26,
93) to acquire or dispose off any immovable property,
other then agriculture land/ farm house/ plantation
property, subject to certain conditions.
Can NRIs/OCBs invest
in real estate development companies?
NRIs are permitted to invest up to 100% in the new
issue of equity shares/ debentures of Indian companies
engaged in the following area.
 |
Development of serviced plots and construction
of residential premises. |
|
Real estates covering construction of residential
and commercial premises including business centers
and offices. |
|
Development of township. |
|
Manufacture of building material. |
|
Financing of housing development |
Can NRIs staying abroad
purchase the property through an agent or Power of
Attorney?
The NRIs living abroad may enter into an agreement
through their relatives and/or by executing Power
of Attorney in their favor as it is not feasible for
them to be present for completing all the formalities
of purchase. Power of Attorney may only be executed
on the stamp paper before the appropriate authorities
in foreign countries.
Are there any formalities
to be completed by foreign nationals of Indian origin
for purchasing residential immovable property
in India?
A declaration in form IPI-7 with certified copy of
conveyance deed and a certificate from bank regarding
payment particulars has to be filed by the purchaser
within 90 days of acquisition to the Controller, Exchange
Control Department, Foreign Investment Division (III),
RBI, Central office, Mumbai.
Is the investment made
by NRIs and OCBs repatriable?
Investments made by the NRIs and OCBs are
fully repatriable, except in the case of Real Estate,
which has a three year lock-in period on original
investment, and 16% cap on dividend repatriation.
In the event of sale of immovable property, other
than agricultural land/farm house/plantation property
in India by a person resident outside India, who is
a citizen of India, or a person of Indian origin,
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.
The sale takes place after three years from the date
of acquisition of such immovable property or from
the date of payment of final installment of consideration
for its acquisition, whichever is later 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 out of funds held in foreign currency non-resident
account.
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.
In the case of residential property, the repatriation
of sale proceeds is restricted to not more than two
such properties.
Repatriation of sale proceeds is permitted with prior
approval of RBI for properties purchased on or after
May 26, 1993. Applications for necessary permission
for remittance of sale proceeds should be made in
form IPI 8 to the Central Office of Reserve Bank of
India at Mumbai within 90 days of the sale of the
property. An OCB, even if it remits fund from abroad,
would still require RBI permission to acquire property
in India.
How can foreign nationals
make payment for purchasing residential immovable
property in India?
The purchase consideration should be met either out
of inward remittances in foreign exchange through
standard banking channels or out of funds from NRE/FCNR
accounts maintained with banks domestically.
What types of bank accounts
can be opened by NRIs/OCBs in India?
NRIs/OCBs can open the following types of accounts
with banks in India, which hold authorized dealer
licenses, as also other banks, specifically authorized
by the Reserve Bank to maintain accounts in the names
of NRIs/OCBs.
Rupee Accounts:-
1.Non-Resident (Ordinary) Account - NRO A/c
2.Non-Resident (External) Rupee Account - NRE A/c
Foreign Currency Accounts:-
1.Non-Resident (Foreign Currency) Account
- FCNR A/c
(In US Dollars, Pound Sterling,
Japanese Yen and Euro)
A person, resident in India, who is earning foreign
exchange, is also permitted to maintain a Foreign
Currency account in India with an authorized dealer
bank, to the extent of 50% of such foreign exchange
earnings, under the Exchange Earners Foreign Currency
Account (EEFC) Scheme.
What are the special
features of each account?
The special features are as under:
NRO A/c.: The funds, standing to
the credit of this account, cannot be repatriated
outside India in foreign exchange, without prior permission
of the Reserve Bank of India. Interest, earned on
these accounts, is, however, eligible for repatriation
outside India, net of Indian taxes. The remittance
of interest (net of taxes) will be permitted by the
authorized dealer, where the account is maintained
in the prescribed form. No RBI permission is required
for remittance of interest. Rental income cannot be
remitted abroad and will have to be credited to the
NRO account of the owner of the property.
NRE A/c.: The funds, standing to
the credit of this account, as well as interest earned
thereon, are remittable outside India in free foreign
exchange, without permission of the Reserve Bank of
India. The interest income is not subject to Indian
Income-tax. Credits to the accounts should be in the
form of remittance in foreign exchange from outside
India, as well as other funds, which are eligible
to be remitted outside India, in free foreign exchange.
Funds, emanating from local sources, are not eligible
to be credited to these accounts, unless these funds
are otherwise remittable outside India, in terms of
the existing Exchange Control Regulations.FCNR A/c.:
These accounts can be
opened in four foreign currencies:
US Dollars
Pound Sterling
Japanese Yen
Euro
For the purpose of opening an account, remittance
in foreign exchange, in the same currency, should
be received in India. The accounts can be opened only
as fixed deposits, with a minimum maturity of one
year and, a maximum maturity of three years. The principal,
as well as interest, earned on these accounts, is
remittable outside India, in the same currency or,
in other convertible currency, as desired by the account
holder. The interest, earned on these deposits, is
exempt from Indian Income-tax.
