In this article we discuss Immovable assets. Specifically property that an NRI, OCI may sell in India and subsequently require to repatriate proceeds of the sold property. We look at NRI OCI Property – Repatriation of Sale proceeds inline with the guidelines of RBI – Government of India.
Similarly, if you’re considering a course of action now or in the near future for your assets in India then these segments may provide valuable insight to the depth of process involved.
Whenever you engage a firm/advocate for your property matters in India, you may want to consider one that can provide an end to end solution. Which means process, guidance and subsequent process for repatriating your sale proceeds once ready to do so. However this depends on a number of factors. You can read more in some of our previous segments.
What is Repatriation of Sales Proceeds
As an NRI OCI, when you sell property in India, you may want to repatriate the funds/proceeds of the sale back to your country of residence. This may be due to a number of reasons which are different for everyone. Some of the reasons why you may want to repatriate proceeds of your sold property may involve;
- Family investment plan
- Buying property residential or commercial
- Maintaining fixed deposit
- Other personal factors
Indeed your requirements may differ from another’s but the process applied to achieve a recommended course of action as an NRI OCI with property in India may be similar. For instance, you wish to sell a part of your immovable asset in India and repatriate some of the sales proceeds to your main country of residence for further investment.
You may be contemplating on providing an Indian Power of Attorney to a trusted individual/firm to begin due process.
For the purpose of this article we define repatriation as; to bring funds back to one’s primary place of residence/country.
Equally, a comprehensive viewpoint helps. So, what are some of the official guidelines for NRI OCI Property – Repatriation of Sale proceeds. Let’s look at some of these;
NRI OCI Property – Repatriation Terms
Accordingly, the MEA have outlined the following repatriation terms to take into consideration.
(A22. NRI/ PIO may repatriate the sale proceeds of immovable property in India).
(a) Firstly, if the property was acquired out of foreign exchange sources i.e. remitted through normal banking channels I by debit to ‘NRE I FCNR (B) account, the amount to be repatriated should not exceed the amount paid for the property:
- In foreign exchange received through normal banking channel or,
- By debit to NRE account(foreign currency equivalent, as on the date of payment) or debit to FCNR (B) account. Repatriation of sale proceeds of residential property purchased by NRI/ PIO out of foreign exchange is restricted to not more than two such properties. Capital gains, if any, may be credited to the NRO account from where the NRI/PIO may repatriate an amount up to USD one million, per financial year, as discussed below.
(b) Secondly, if the property was acquired out of Rupee sources. NRI or PIO may remit an amount up to USD one million per financial year out of the balances held in the NRO account (inclusive of sale proceeds of assets acquired by way of inheritance or settlement). For all the bonafide purposes to the satisfaction of the Authorized Dealer bank and subject to tax compliance.
Immovable property acquired by way of inheritance/ legacy/ out of Rupee funds
A Non-Resident Indian (NRI) / Person of Indian Origin (PIO) may remit an amount, not exceeding US $ 1,000,000 (US Dollar One million only) per financial year out of the balances held in;
- NRO accounts / sale proceeds of assets by way of purchase / the assets in India acquired by him by way of inheritance / legacy/ out of Rupee funds.
This is subject to production of documentary evidence in support of acquisition, inheritance or legacy of assets by the remitter. And a tax clearance / no objection certificate from the Income Tax Authority for the remittance. Remittances exceeding US $ 1,000,000 (US Dollar One million only) in any financial year requires prior permission of the Reserve Bank.
In cases of deed of settlement made by either of his/her parents or a close relative (Section 6 of the Companies Act, 1956). And the settlement taking effect on the death of the settler;
- the original deed of settlement and a tax clearance / No objection certificate from the Income-Tax Authority should be produced for the remittance.
Where the remittance as above is made in more than one installment, the remittance of all such installments shall be made through the same Authorised Dealer.
Repatriation of Sale Proceed from an NRO Account
Accordingly, when proceeds from the sale of property in India are deposited in your NRO Account;
- You can repatriate up to USD one million per financial year (April-March) from your NRO account. Which would also include the sale proceeds of immovable property.
NRI OCI Property – Taxable or Nontaxable
NRI OCI property sale is not exempt from taxes in India, albeit there are certain exemptions and tax brackets. The Government of India defined guidelines that apply to nationals and non nationals.
The NRO account in terms of repatriation is also a taxable account. Any taxes to be paid/considerations on sold property would be dealt with by an experienced individual/firm. Again, this would be something to consider when engaging a firm for your course of action. It can prove to be beneficial in retrospect both in terms of expertise and process.
NRI OCI Property – Preparing In Advance
As an NRI OCI, you would need to ensure that you have obtained your PAN Card. Further it is important that your PAN is applied using FORM 49AA. Why? Your PAN is required on all financial transactions that exceed a certain amount in India.
As an illustration the PAN is your “permanent account number” that associates any transaction over the allowed threshold. It is a mandatory requirement by the Government of India. NRI OCI PAN Card Application Services.
In our next segment – How an NRI OCI can buy property in India? You may be looking for future investment or with the intention of returning as a resident.
I was looking for information and guidance on getting a Indian PoA made and came across their website. I decided to go ahead with them and was very satisfied with the service provided. The service was prompt and provided a completed PoA template based on a questionnaire they asked me to fill along with detailed instructions on how to get it notified and attested by the Indian consulate. It proved extremely helpful and the PoA was successfully registered and used subsequently in India. It was well worth the price I paid for their services and would definitely highly recommend. – Mr. Tiwari, London.
Importance of PAN In Repatriating Funds
When selling property in India, a Foreign Citizen must obtain a PAN Card to repatriate the sale proceeds. Failure to obtain a Permanent Account Number could result in delays ranging more than 30 days, as funds cannot be repatriated and regulatory formalities cannot be completed without it. We can help.
Frequently Asked Questions
A.32. The sale proceeds may be credited to NRO account.
Yes, you will need a PAN card as an NRI OCI in order to follow due process as outlined by Government of India.
Reserve Bank does not determine the residential status. Under FEMA, residential status is determined by operation of law. The onus is on an individual to prove his / her residential status, if questioned by any authority.
- Transfer of property in India
- Indian Property disputes
- Sell property in India
- Power of Attorney Service
- NRI OCI PAN Card
We can also assist with the following NRI Services in London:
- Illegal occupation of property in India
- Family Settlements and partition of NRI Indian property
- Ancestral real estate and inheritance advisory under Indian law
- NRI Property Transfer
- Possession of NRI Property
- Recovery of NRI money under Indian Law
- NRI Succession Certificate in India
- Injunction against alienation of NRI property in India
- Developer Claims under the Consumer Protection Act in India
- NRI property disputes
- Visas to India
- Indian Power of Attorney
- NRI PAN Card
- Overseas Citizenship of India (OCI)
- Inter-Country Adoption
- Divorce proceedings under Indian Law for parties settled abroad