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1. |
Who is an
NRI (Non-Resident Indian citizen)?
Under Foreign Exchange Management Act,
1999, Non-resident Indian are:
- Indian citizen who stays in
India less than 182 days during the
preceding financial year. OR
- Indian citizen who goes out of
India or who stays abroad for
employment or carrying on business
or on vocation or for any other
purposes, in circumstances
indicating an uncertain period of
stay abroad, OR
- Government servants deputed
abroad on assignment or posted to
their offices including Indian
Diplomatic Missions abroad, OR
- Indian citizen working abroad on
assignment with foreign government
regional/international Agencies like
the UNO, WHO, IMF, World Bank etc.
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2. |
Who is a PIO (foreign
citizen/Person of Indian Origin)?
As per FEM (Acquisition & Transfer of
Immovable Property in India)
Regulations, 2000 a Person of Indian
Origin means a citizen of any country
(other than Pakistan or Bangladesh or
Sri Lanka or Afganistan or China or Iran
or Nepal or Bhutan), if
- he at any time held an Indian
passport; or
- he or either of his parents or
any of his grand-parents was a
citizen of India by virtue of
Constitution or India or Citizenship
Act, 1955;
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3. |
What kind of Bank
Accounts can be Operated by NRI’s?
A. NON-RESIDENT (ORDINARY) ACCOUNT
Who can open and how?
An existing bank account of an Indian
national going abroad and becoming a
Non-Resident Indian is automatically
designated as Non-Resident (Ordinary)
account (NRO). An NRI can also open such
ordinary accounts even by making
remittances from abroad or by transfer
from an existing Non-Resident account in
India in his own name. Such accounts can
also be opened by Overseas Corporate
Bodies (OCBs). NRO account can be
opened, while a NRI is on a visit to
India or simply by making remittances
from abroad. NRO accounts can be in the
sole name of an NRI or in joining names
of more than one NRI or in joint names
with any of the close relatives in
India. In other types of joint accounts,
prior permission of Reserve Bank of
India (RBI) is required.
What type of accounts can be opened?
NRO account can be in the categories of
current, saving, and term deposit
accounts.
What types of transactions are
permitted?
All types of transactions of deposits
and withdrawals to and from NRO account
are normally permitted. However, the RBI
has prescribed certain transactions
required to be reported to RBI in
prescribed forms.
Can the funds be repatriated?
Repatriation is subject to RBI
approvals however, the funds can be
freely withdrawn from the local
disbursement without RBI approval.
Is interest earned exempt from tax?
The interest of deposits in NRI accounts
and balances standing to the credit of
such accounts are not exempted from
Income Tax.
B. NON-RESIDENT (EXTERNAL) ACCOUNT (NRE)
Who can open and how?
NRI as well as OCBs are permitted to
open NRE account. NRE accounts can be
opened by depositing foreign currency
alongwith the account application form
i.e. account opening form may be signed
by NRI abroad and the signature of NRI
may be verified by bank abroad or by
Indian embassy or by Notary Public
Officials abroad. NRE account can be
opened during the visit to India by
tendering foreign currency traveller’s
cheques or foreign currency notes.
What type of accounts can be opened?
All types or account i.e. current,
saving and term deposit can be opened
under NRE accounts scheme. NRE accounts
can be opened in single or joint name.
However, in case or account opened in
joint name, all the joint holders should
be resident of external group countries.
Can the funds be repatriated?
The entire credit balance can be
repatriated outside India at any time
without any reference to RBI. At the
time of repatriation, the amount to be
repatriated is converted into the
designated foreign currency at the
prevailing market rate of exchange. NRE
account offers all the facilities of the
NRO account plus complete repatriation
without informing the Reserve Bank.
C. FOREIGN CURRENCY NON-RESIDENT
ACCOUNT (BANK) (FCNR (B))
Who can open and how?
Both Non-Resident Indians, and OCBs are
eligible to open FCNR (B) accounts. NRI
and OCBs resident in bilateral group of
countries cannot open FCNR accounts
without RBI approval. FCNR (B) accounts
are permitted in the following
currencies.
- Pound Sterling (GBP)
- Deutsche Mark (DM)
- US Dollar (USD)
- Japanese Yen (JPY)
- Euro or other Currencies as per
RBI guidelines
The rates of interest on the above
account vary for each type of
designated currency.
What type of accounts can be
opened?
FCNR (B) account is permitted in the
form of fixed deposits for a maximum
period of 3 years. Current and
Saving accounts are not available
under this scheme.
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4. |
What is the position
under FEMA regarding acquisition of
immovable property by NRI/PIO?
NRI are permitted to acquire immovable
property in India other than
agricultural/plantation property or farm
houses.
PIO resident outside India, are
permitted:
- to acquire any immovable
property other than agricultural
land/farm house/plantation property
in India by purchase, from out of
(i) funds received in India by way of inward remittance
from abroad, or
(ii) funds held in any non-resident account of the investor,
or
- to acquire any immovable
property in India other than
agricultural
land/farmhouse/plantation property
by way of gift from a resident
person or NRI or PIO; or
- to acquire any immovable
property in India by way of
inheritance from a resident person
or a non-resident person who had
acquired such property in accordance
with the law of foreign exchange in
force at the time of acquisition.
Any non-resident person, who has
established in India a branch, office or
other place of business (excluding a
liaison office) for carrying on in India
any activity, in accordance with FEM
(Establishment in India of Branch or
office or other Place of Business)
Regulations, 2000, may acquire any
immovable property shall furnish a
declaration in Form IPI to the Reserve
Bank of India within 90 days from the
date of acquisition.
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5. |
What are the Benefits
Offered to NRIs/PIOs/OCBs under the
liberalized Exchange Policy in respect
of immovable property?
- Non-resident
Indians are permitted to transfer
any immovable property in India to a
resident person, and any immovable
property other than agricultural or
plantation property or farmhouse, to
a non-resident Indian or person of
Indian origin.
- Persons of Indian origin are
permitted to transfer any immovable
property in India other than
agricultural land / farm house /
plantation property, by way of sale
to a resident person; any
agricultural land / farm house /
plantation property in India, by way
of gift or sale to resident person
who is a citizen of India; and any
residential or
commercial property
in India; by way of gift to a
resident person or NRI / PIO.
- Any Non-Resident person who has
acquired any immovable property in
India, for establishing or for the
purpose of a branch, office or other
place of business (excluding a
liaison office) , is permitted to
transfer such property by way of
mortgage to a authorised dealer as a
security for any borrowing.
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6. |
Can the sale proceeds
of immovable property in India be
repatriated?
The sale proceeds of an immovable
property in India can be repatriated if
following conditions are fulfilled:
- The immovable
property was acquired by the seller
in accordance with the law of
foreign exchange in force at the
time of acquisition;
- 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 FCNR A/c, or the foreign exchange
equivalent, as on the date of
payment, where the amount paid of
out of NRE A/c.
- In case of residential property,
the repatriation of sale proceeds
restricted to not more than two such
properties.
- In case a non-resident person
acquired an immovable property in
India when he was resident or
inherited it from a resident person,
repatriation of sale proceeds of
such property shall be allowed only
with the permission of Reserve Bank.
Similar restriction shall apply in
case of successor of the aforesaid
persons.
- No permission is required for
renting / transfer or gift of
property so long as there is no
repatriation of proceeds.
(The condition for non-repatriation
of sale proceeds for a period of three
years has now deleted by RBI circular dt.
1.11.2002)
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7. |
Can the
NRI avail Housing Loans against Security
of Immovable Property?
Yes Authorised dealers and hosing
financial institutions in India approved
by the National Hosing Banks may grant
housing loans to NRIs/PIOs for
acquisition of immovable property in
India subject to the following
condition:
- The quantum of
loan, margin money and the repayment
period will be at par with those
applicable to housing loans being
granted to residents.
- The loans shall be fully secured
by creating equitable mortgage of
the property proposed to be
acquired, and if necessary, be lien
on borrower’s other assets in India.
- The loan amount shall not be
credited to NRE/FCNR/NRNR account of
the non-resident borrower.
- Repayment of loan may be made by
the borrower in installments
comprising principal, interest and
other charges by remittances form
abroad through normal banking
channels or out of funds held in his
NRE/FCNR/NRO/ NRNR accounts in India .
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8. |
What
security will NRI’s have to provide?
Typically the security for the loan is
first mortgage of the property to be
financed, normally by way of deposit of
title deeds and / or such other
collateral security as may be necessary.
In additional interim security may be
required, if the property is under
construction. Collateral or interim
security could be in the form of
assignment of life insurance policies,
surrender value of which is at least
equal to the loan amount, pledge of
shares other investments.
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9. |
Can
NRI’s give a Power of Attorney in favour
of a person of his choice in India to
complete loan formalities on my behalf?
Yes, normally it is desirable to appoint
a Power of Attorney in India to
represent you in dealings in India. The
power of Attorney should be executed as
per drafts provided by the housing
finance company. The power of Attorney
can be given to any person of your
choice in India.
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10. |
Can the
house acquired by NRI be let out?
The RBI has granted general permission
to NRI’s and foreign citizens of India
origin, to let out their residential
properties. However, there are
restrictions on the repatriation of the
rental income earned from such letting
out the property. The rental income is
on a non-repatriation basis. Thus funds
(rental income) can be credited to the
NRO Account/ Residential Account in
India.
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