here is a growing concern among NRIs (Non-Resident Indians) when it comes to their immovable assets in India, especially when considering disposal of the property and repatriation of funds. Here are a few pointers that will clear those doubts:
- NRIs are free to sell property, either residential or commercial to a person living in India, a Person of Indian Origin (PIO) or to another NRI.
- NRIs can sell agricultural land, farm house or plantations only to an Indian citizen, who is residing in India. A foreign national of non-Indian origin residing outside India, will need to get a prior approval from the Reserve Bank of India (RBI), to sell agricultural land/farm house or a plantation property in India.
An NRI can repatriate sale proceeds under these following conditions:
- When the property was acquired by the seller in accordance with the provisions of the foreign exchange law at the time of acquisition.
- When the amount to be repatriated is not more than the amount paid for acquiring the property in foreign exchange, received through proper banking channels or the amount was paid out of funds held in the Foreign Currency Non-Resident (FCNR) account or the foreign currency equivalent on the date of payment of the amount drawn from the Non-Resident External (NRE).
- The sale proceeds of not more than two properties can be repatriated.
To repatriate the sales proceeds outside India:
- The NRI needs to buy or draw foreign exchange from an authorised dealer and remit it outside India through normal banking channels. They can also credit it into an account denominated in foreign currency or to an account in Indian currency held by an authorised dealer from which it can be converted into foreign currency.
- If the property was acquired out of rupee resources or if the loan was repaid by close relatives in India, the amount can be credited only to the Non-Resident Ordinary (NRO) account.
Till what limit can NRIs repatriate?
- NRIs can repatriate up to $ 1 million per financial year out of the balance in the NRO account of the sale proceeds of assets purchased or assets in India which were acquired by inheritance or legacy.
- The NRI would have to produce documentary evidence to support the acquisition, inheritance or legacy, a tax clearance certificate, a no objection certificate from the Income Tax authority for the remittance.
- Remittance which exceeds $1 million needs the permission of the RBI.
- The sale proceeds of property which was gifted to the NRI must be credited to the NRO account. The NRI can repatriate funds from the NRO account up to $1 million in one financial year after payment of the applicable taxes.
In the case of an inheritance, the NRI can repatriate funds under the following conditions:
- The amount should not be more than $1 million in one financial year.
- The NRI must produce documentary evidence, a certificate from a Chartered Accountant in the format prescribed by the Central Board of Direct Taxes
What if the dead of settlement is made by the NRI’s parents or family?
- The settlement will take place on the death of the settler
- The original deed of settlement, a tax clearance, and a no objection certification from the Income Tax authority should be produced for the remittance.
Repatriation of the sale proceeds for the foreign national:
- In the case of a foreign national the sale proceeds can be repatriated if the property is inherited from a person residing outside India with the prior approval of the RBI.
- The foreign national has to approach the RBI documentary evidence and the certification from the Chartered Accountant.
- General permission for the repatriation of sale proceeds of property is not available for citizens of Bangladesh, Pakistan, China, Sri Lanka, Afghanistan and Iran. Such individuals will have to get a specific approval from the RBI.
