NRI Corner

A person residing outside India who is a citizen of India or a person outside India who is of Indian origin is an NRI. The definition of the Person resident outside India is defined under section 2(w) of the Foreign Exchange Management Act, 1999 as “a person who is not resident in India”

A person shall be deemed to be a person, not resident in India in the following cases:-

• • When the person stays in India for less than or up to 182 days during the preceding financial year
  • When a person who has gone out of India or who stays outside India, in either case –
    1. For or on taking up employment outside India, or
    2. For carrying on outside India a business or vocation outside India, or
    3. For any other purpose, in such circumstances, as would indicate his intention to stay outside India for an uncertain period

The Definition Of ‘foreign citizen Of Indian Origin’ Is Defined Under Section 2 (B) Of Foreign Exchange Management (Borrowing And Lending In Rupees) Regulations, 2000 And Under Section 2 (Xii) Of Foreign Exchange Management (Deposit) Regulations, 2000 As Given Under:-

• Foreign citizen Of Indian Origin’ Means A Citizen Of Any Country Other Than Bangladesh Or Pakistan, If He at any time held an Indian passport; or
• He or either of his parents or any of his grandparents was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955)
• The person is a spouse of an Indian citizen or a person referred to in sub-clause (a) or (b)

Some of the factors to consider while purchasing a flat are:
Locality i.e. transport, schools, hospitals, market, business district, entertainment centers, hotels, restaurants, pollution levels

• Quoted area of the flat i.e. Carpet, Built Up Area and super Built Up Area
• Car parking space
• Quality of construction
• Reputation of the builder or seller
• Sufficient water and electric supply, other utilities
• Cost components: price, stamp duty, registration charges, transfer fees, monthly outgoings and society charges, costs of utilities
• Potential for resale or renting out of the property
• Any other distinguishing features or advantages of the property

• Market Trends about prevalent rates of property in the vicinity and last known transactions.
• Ask for photocopies of the all deeds of title related to the property to be purchased. Examine the deeds to establish the ownership of the property by the seller, preferably through an advocate. Ascertain the survey number, village and registration district of the property, as these details are required for registration of the sale. Previous encumbrances and loans, if any of the property must be cleared before completion of the purchase of the property. The title of the Vendor to the property must be clear and marketable.
• Check for approved layout plan and approved building plan with a number of floors.
• Clearance from Municipality, Electricity, Water, Pollution, Lift authorities.
• Check the building bye-laws in that area to verify any issue with a setback, side setback, height, etc
• Confirm transfer fees, stamp duty and registration charges to be paid on the purchase of the property as well as outgoings to be paid for the property i.e. property tax, water and electricity charges, society charges, maintenance charges.

No. NRI’s do not require any permission to buy any immovable property in India other than agricultural / plantation property or a farmhouse.

The purchase consideration should be met either out of inward remittances in foreign exchange through normal banking channels or out of funds from any nonresident accounts maintained with banks in India.

There are no limits on the number of residential properties that may be bought by an NRI. However, repatriation (the process of converting a foreign currency into the currency of one’s own country) is allowed only in respect of two such properties.

NRI/PIOs can without restraint rent out their immovable property, whether purchased through an application of forex or otherwise, without seeking any consent from the RBI. The rental income being a current account transaction is repatriable outside India, only if a proper tax is paid or provided for.

• The loan amount shall not exceed 85% of the cost of the housing unit.
• Own contribution, which is the cost of housing unit financed less the loan amount, can be met from direct remittances from abroad only through normal banking channels, your Non-Resident (External) [NR (E)] Account and /or Non-Resident (Ordinary) [NR (O)] account and /or Non-Resident Special Rupee account [NRSR] in India
• Reimbursement of the loan, comprising of the principal and interest including all the charges are to be remitted from abroad only through normal banking channels, your Non-Resident (External) [NR (E)] Account and /or Non-Resident (Ordinary) [NR (O)] account and /or Non-Resident Special Rupee account [NRSR] in India

Authorized dealers have been granted permission to grant loans to NRI’s for acquisition of house/flat for self-occupation on their return to India subject to certain conditions Repayment of the loan should be made within a period not exceeding 15 years out of inward remittance through banking channels or out of funds held in the investors’ NRE/FCNR/NRO accounts.

Yes. Such housing loans availed in rupees can also be repaid by the close relatives in India of the borrower.

The following documents are normally to be submitted along with the application:

• Photocopy of the labor contract and English translation duly countersigned by your employer
• Latest salary certificate (in English) specifying the following: Name (as it appears in the passport), Date of joining, Passport Number, Designation, Perquisites and salary.
• Photocopy of labor card/identity card
• Photocopy of valid resident visa stamped on the passport
• Photocopy of monthly statement of local bank account for the last 4 months
• Property related documents

An NRI can borrow against the security of immovable property from Authorized Dealer subject to the following conditions.

• The loan should be used for meeting the personal requirements or for borrower’s own business purposes and a loan should not be used for forbidden activities, namely;
  (a) a business of chit fund, or
  (b) agriculture or plantation activities or in the real estate business, or construction of farm houses, or
  (c) trading in Transferable Development Rights (TDRs).
• The loan amount cannot be remitted outside India
• Repayment of the loan shall be made from out of remittances from overseas or by debit to NRE/FCNR/NRO account or out of the sale profits of shares or securities or immovable property against which such loan was a grant.

The relaxation of FDI in the construction, development sector announced in March 2006 allows NRIs, PIOs and all foreigners equal opportunity with their Indian counterparts in the Indian real estate sector. The new guidelines state that before selling, the site has to be developed, constructed upon or fulfill the criteria of minimum one-year development.

• NRIs, PIOs and foreigners can now invest in land, buy it, construct upon it or develop it, sell constructed buildings/developed plots.
• FDI through automatic route can also flow is not just for the housing sector, but also for townships, housing, commercial area, and infrastructure development.
• Restrictions on a minimum area of land, the minimum number of units has been removed.
• Minimum constructed area required is 50, the designated area is 25 acres.

The automatic route has simplified much of the cumbersome investment process. Approval from the Reserve Bank is not required anymore. No need to go to the Foreign Investment Promotion Board either. The easing of paper work and relaxation of formalities has given a boost to overseas investor confidence for investing in India.

Healthy competition is important and necessary. However, in the case of FDI, joint venture definitely seems the wisest route to take as it has a tremendous scope. The Indian partner would always be in a better position to provide input in terms of information on land and clearances, where the foreign investors can put their money, use technology judiciously and opportunities where both can complement each other.