NRI CORNER

Your home in India is one of the strongest emotional bonds that you share with your city. And we want to help this bond remain strong. To specifically cater to needs of the non-resident Indian market, we have put together this short list of pointers that may facilitate in you in this journey.

Your home in India is one of the strongest emotional bonds that you share with your city. And we want to help this bond remain strong. To specifically cater to needs of the non-resident Indian market, we have put together this short list of pointers that may facilitate in you in this journey.

REACH OUT TO US

Call Us : +91-98300-76072
Email : info@eruditerealty.com

REACH OUT TO US

Call Us : +91-98300-76072
Email : info@eruditerealty.com

FREQUENTLY ASKED QUESTIONS

For NRIs

A. General

Q1. Who is a Non Resident Indian?

A Non Resident Indian (NRI) as per India’s Foreign Exchange Management Act 1999 (FEMA), is an Indian citizen or foreign national of Indian Origin, residing outside India for purposes of employment, business or vocation in circumstances that indicate an intention to stay outside India for an indefinite period.

An individual will also be considered NRI if his stay in India is less than 182 days during the preceding financial year.

Q2. Who is a Person of Indian Origin?

A person who is not a citizen of India is deemed to be of Indian Origin (PIO)

a) If he / she at any time held an Indian passport; or,

b) If any of his / her parents or grandparents were a citizen of India by virtue of the Constitution of India or Citizenship Act, 1955

A spouse of an Indian citizen or of a Person of Indian Origin is also treated as a Person of Indian Origin for the purpose of NRI deposits if the accounts are held jointly with the NRI/PIO spouse. PIOs are extended the same facilities for bank account maintenance in India as NRIs and are also, for such purposes, called by the generic name, NRIs.

Q3. Can NRIs and PIOs purchase real estate in India?

Per the Reserve Bank of India, NRIs and PIOs are allowed to purchase residential and commercial real estate in India. However, the RBI’s guidelines restrict NRIs and PIOs from purchasing any agricultural land, plantation property and farm houses in India.

B. Financing and Repatriation of Capital

Q1. Can NRIs and PIOs avail home loans to acquire real estate in India?

Yes, NRIs and PIOs can avail home loans from authorised dealers or financial institutions approved by the National Housing Bank, subject to the following:

a) The quantum of loans, margin money and period of repayment should be at par for loans disbursed to residents of India

b) The loan should not be disbursed to non-resident external (NRE), foreign currency non-resident (FCNR) or non-resident non repatriable (NRNR) accounts of the borrower

c) The loan should be secured by a lien of the proposed acquisition of the property and if necessary, an additional lien on the borrower’s other assets in India

d) The instalment of the loan, interest and any other charges should be paid by the borrower by a) remittances from outside India or, b) out of funds in his / her NRE account, FCNR account, NRNR account or, c) by and rental income derived from renting out the acquired property or, d) by a relative of the borrower residing in India

e) The rate of interest shall be subject to the guidelines directed by the Reserve Bank of India or the National Housing Bank

Q2. Can NRIs and PIOs repatriate rental income from the acquired property?

Yes, rental income can be repatriated freely from India without taking any prior permissions, subject to necessary tax deductions

Q3. Can NRIs and PIOs repatriate proceeds from selling the acquired property?

Broadly, speaking, NRIs and PIOs are allowed to freely repatriate the initial amount paid for acquiring the property. The remaining capital gains come under the following purview (see below):

a) The amount to be repatriated in foreign exchange cannot exceed the total amount paid for the property
i) Such amount can be debited in foreign exchange either to the NRI / PIO’s NRE account or FCNR account

b) Capital gains, if any, can be debited to the NRI / PIO’s NRO account from where the NRI / PIO can:
i) Remit upto USD one million dollars, per financial year, from the balance in the NRO account

C. Taxation

Q1. Do capital gains taxes apply to NRIs / PIOs?

Yes, long-term and short-term capital gains taxes apply to both NRIs and PIOs.

The current short-term capital gains tax is: 30.9%
The current long-term capital gains tax is: 20.6%

There are exemptions available on long-term capital gains taxes, if the proceeds are reinvested in the acquisition or construction of real estate, within the prescribed time frame. For further details, please write to us at info@eruditerealty.com

Q2. How does the double tax avoidance treaty mitigate impact taxes on capital gains?

Capital gains paid in India can be applied for tax credit in the NRI / PIO’s country of residence. The exact amount and timeframe for applying for such credits varies by country.

Q3. Do NRIs and PIOs have to file for taxes from rental income in India?

Yes, NRIs and PIOs have to file for taxes for income arising out of renting their property in India.

FREQUENTLY ASKED QUESTIONS

For NRIs

A. General

Q1. Who is a Non Resident Indian?

A Non Resident Indian (NRI) as per India’s Foreign Exchange Management Act 1999 (FEMA), is an Indian citizen or foreign national of Indian Origin, residing outside India for purposes of employment, business or vocation in circumstances that indicate an intention to stay outside India for an indefinite period.

An individual will also be considered NRI if his stay in India is less than 182 days during the preceding financial year.

Q2. Who is a Person of Indian Origin?

A person who is not a citizen of India is deemed to be of Indian Origin (PIO)

a) If he / she at any time held an Indian passport; or,

b) If any of his / her parents or grandparents were a citizen of India by virtue of the Constitution of India or Citizenship Act, 1955

A spouse of an Indian citizen or of a Person of Indian Origin is also treated as a Person of Indian Origin for the purpose of NRI deposits if the accounts are held jointly with the NRI/PIO spouse. PIOs are extended the same facilities for bank account maintenance in India as NRIs and are also, for such purposes, called by the generic name, NRIs.

Q3. Can NRIs and PIOs purchase real estate in India?

Per the Reserve Bank of India, NRIs and PIOs are allowed to purchase residential and commercial real estate in India. However, the RBI’s guidelines restrict NRIs and PIOs from purchasing any agricultural land, plantation property and farm houses in India.

B. Financing and Repatriation of Capital

Q1. Can NRIs and PIOs avail home loans to acquire real estate in India?

Yes, NRIs and PIOs can avail home loans from authorised dealers or financial institutions approved by the National Housing Bank, subject to the following:

a) The quantum of loans, margin money and period of repayment should be at par for loans disbursed to residents of India

b) The loan should not be disbursed to non-resident external (NRE), foreign currency non-resident (FCNR) or non-resident non repatriable (NRNR) accounts of the borrower

c) The loan should be secured by a lien of the proposed acquisition of the property and if necessary, an additional lien on the borrower’s other assets in India

d) The instalment of the loan, interest and any other charges should be paid by the borrower by a) remittances from outside India or, b) out of funds in his / her NRE account, FCNR account, NRNR account or, c) by and rental income derived from renting out the acquired property or, d) by a relative of the borrower residing in India

e) The rate of interest shall be subject to the guidelines directed by the Reserve Bank of India or the National Housing Bank

Q2. Can NRIs and PIOs repatriate rental income from the acquired property?

Yes, rental income can be repatriated freely from India without taking any prior permissions, subject to necessary tax deductions

Q3. Can NRIs and PIOs repatriate proceeds from selling the acquired property?

Broadly, speaking, NRIs and PIOs are allowed to freely repatriate the initial amount paid for acquiring the property. The remaining capital gains come under the following purview (see below):

a) The amount to be repatriated in foreign exchange cannot exceed the total amount paid for the property
i) Such amount can be debited in foreign exchange either to the NRI / PIO’s NRE account or FCNR account

b) Capital gains, if any, can be debited to the NRI / PIO’s NRO account from where the NRI / PIO can:
i) Remit upto USD one million dollars, per financial year, from the balance in the NRO account

C. Taxation

Q1. Do capital gains taxes apply to NRIs / PIOs?

Yes, long-term and short-term capital gains taxes apply to both NRIs and PIOs.

The current short-term capital gains tax is: 30.9%
The current long-term capital gains tax is: 20.6%

There are exemptions available on long-term capital gains taxes, if the proceeds are reinvested in the acquisition or construction of real estate, within the prescribed time frame. For further details, please write to us at info@eruditerealty.com

Q2. How does the double tax avoidance treaty mitigate impact taxes on capital gains?

Capital gains paid in India can be applied for tax credit in the NRI / PIO’s country of residence. The exact amount and timeframe for applying for such credits varies by country.

Q3. Do NRIs and PIOs have to file for taxes from rental income in India?

Yes, NRIs and PIOs have to file for taxes for income arising out of renting their property in India.