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Q 1
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Who is a non-resident Indian (NRI)? |
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An Indian Citizen who stays abroad for employment/carrying on
business or vocation outside India or stays abroad under circumstances
indicating an intention for an uncertain duration of stay abroad is a
non-resident. (Persons posted in U.N. organizations and officials deputed
abroad by Central/State Governments and Public Sector undertakings on temporary
assignments are also treated as non-residents). Non-resident foreign citizens
of Indian Origin are treated on par with non-resident Indian citizens (NRIs)
for the purpose of certain facilities.
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Q 2
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Who is a person of Indian Origin? |
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A. For the purposes of availing of the facilities of opening
and maintenance of bank accounts and investments in shares/securities in India
A foreign citizen (other than a citizen of Pakistan or Bangladesh) is deemed to
be of Indian origin, if,
(i) He, at any time, held an Indian passport, or
(ii) He or either of his parents or any of his grand parents was
citizen of India by virtue of the Constitution of India or Citizenship Act,
1955 (57 of 1955).
Note: A spouse (not being a citizen of Pakistan or Bangladesh)
of an Indian citizen or of a person of Indian origin is also treated as a
person of Indian origin for the above purposes provided the bank accounts are
opened or investments in shares/securities in India are made by such persons
only jointly with their NRI spouses.
B. For investments in immovable properties
A foreign citizen (other than a citizen of Pakistan, Bangladesh,
Afghanistan, Bhutan, Sri Lanka, or Nepal), is deemed to be of Indian origin if,
(i) he held an Indian passport at any time, or
(ii) he or his father or paternal grand-father was a citizen of
India by virtue of the (Constitution of India or the Citizenship Act, 1955 (57
of 1955).
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Q 3
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Overseas Corporate Bodies (OCBs) are bodies predominantly
owned by individuals of Indian nationality or origin resident outside India and
include overseas companies, partnership firms, societies and other corporate
bodies which are owned, directly or indirectly, to the extent of at least 60%
by individuals of Indian nationality or origin resident outside India as also
overseas trusts in which at least 60% of the beneficial interest is irrevocably
held by such persons. Such ownership interest should be actually held by them
and not in the capacity as nominees. The various facilities granted to NRIs are
also available with certain exceptions to OCBs so long as the
ownership/beneficial interest held in them by NRIs continues to be atleast 60%.
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Q 4
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Are OCBs required to produce any certificate
regarding ownership/beneficial interest in them by NRIs? |
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Yes. In order to establish that the ownership/beneficial
interest in any OCB held by NRIs is not less than 60%, the concerned body/trust
is required to initially furnish a certificate from an overseas
auditor/chartered accountant/certified public accountant in form OAC where the
ownership/beneficial interest is directly held by NRIs, and in form OAC 1 where
it is held indirectly by NRIs and further that such ownership interest is
actually held by them and not in the capacity as nominees. Thereafter a simple
certificate signed by the Managing Director or Chief Executive Officers of the
OCB on the lines indicated above may be submitted.
Note: In the case of closely held OCBs (i.e. where shareholders
belong to the same family or are closely related to each other, certificate in
form OAC/OAC1 may be submitted in the first instance along with documentary
evidence to the effect that the shareholders belong to the same family or are
closely related to each other. Annual submission of OAC/OAC1 thereafter is not
necessary and it will suffice if a certificate signed by the Managing
Director/Chief Executive Officer of the OCB is submitted stating that there is
no change in the shareholding pattern since submission of the last certificate.
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Q 5
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What are the various facilities available to
NRIs/OCBs? |
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NRIs/OCBs are granted the following facilities:
1. Maintenance of bank accounts in India.
2. Investments in securities/shares of, and deposits with,
Indian firms/companies.
3. Investments in immovable properties in India.
Details of these facilities are given in the respective
chapters.
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Q 6
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What is the procedure for obtaining Reserve
Bank permission in this regard? |
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Application for the purpose should be made by the concerned
Indian company to the Central Office of Reserve Bank in Mumbai [in Form
ISD(R)].
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Q 7
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Will repatriation of the original investment
and/or dividend income be freely permitted? |
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Yes. Repatriation of original investment will be permitted after
a lock-in period of three years from the date of issue of the equity
shares/convertible debentures. In addition, OCBs will be permitted to
repatriate net profit (upto 16 per cent) arising from the sale of such
investment after the lock-in-period of three years. (This facility is, however,
not available to individual NRIs.) Annual dividend/interest on equity
shares/debentures can, however, be freely remitted subject to payment of tax.
Investment in Immovable Property
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Q 8
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Do non-resident Indian citizens require
permission of Reserve Bank to acquire residential/commercial property in India? |
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No.
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Q 9
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Do foreign citizens of Indian origin require
permission of Reserve Bank to purchase immovable property in India for their
residential use? |
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Reserve Bank has granted general permission to foreign
citizens of Indian origin, whether resident in India or abroad, to purchase
immovable property in India for their bona fide residential purpose. They are,
therefore, not required to obtain permission of Reserve Bank.
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Q 10
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In what manner the purchase consideration for
the residential immovable property should be paid by foreign citizens of Indian
origin under the general permission? |
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The purchase consideration should be met either out of inward
remittances in foreign exchange through normal banking channels or out of funds
from NRE/FCNR accounts maintained with banks in India.
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Q 11
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What are the formalities required to be
completed by foreign citizens of Indian origin for purchasing residential
immovable property in India under the general permission? |
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They are required to file a declaration in form IPI 7 with the
Central Office of Reserve Bank at Mumbai within a period of 90 days from the
date of purchase of immovable property or final payment of purchase
consideration alongwith a certified copy of the document evidencing the
transaction and bank certificate regarding the consideration paid.
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Q 12
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Can such property be sold without the
permission of Reserve Bank? |
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Yes. Reserve Bank has granted general permission for sale of
such property. However, where the property is purchased by another foreign
citizen of Indian origin, funds towards the purchase consideration should
either be remitted to India or paid out of balances in NRE/FCNR accounts.
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Q 13
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Can sale proceeds of such property if and
when sold are remitted out of India? |
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In respect of residential properties purchased on or after
26th May 1993, Reserve Bank considers applications for repatriation of sale
proceeds up to the consideration amount remitted in foreign exchange for the
acquisition of the property for two such properties. The balance amount of sale
proceeds if any or sale proceeds in respect of properties purchased prior to
26th May 1993, will have to be credited to the ordinary non-resident rupee
account of the owner of the property.
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Q 14
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Are any conditions required to be fulfilled
if repatriation of sale proceeds is desired? |
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Applications for repatriation of sale proceeds are considered
provided the sale takes place after three years from the date of final purchase
deed or from the date of payment of final instalment of consideration amount,
whichever is later.
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Q 15
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What is the procedure for seeking such
repatriation? |
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Applications for necessary permission for remittance of sale
proceeds should be made in form IPI 8 to the Central Office of Reserve Bank at
Mumbai within 90 days of the sale of the property.
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Q 16
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Can foreign citizens of Indian origin acquire
or dispose of residential property by way of gift? |
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Yes. Reserve Bank has granted general permission to foreign
citizens of Indian origin to acquire or dispose of properties up to two houses
by way of gift from or to a relative who may be an Indian citizen or a person
of Indian origin whether resident in India or not, subject to compliance with
applicable tax laws.
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Q 17
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Can immovable property held in India, be
transferred by way of gift to relatives/registered charitable
trusts/organizations in India? |
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Yes. General permission has been granted by Reserve Bank to
non-resident persons (foreign citizens) of Indian origin to transfer by way of
gift immovable property held by them in India to relatives and charitable
trusts/organisations subject to the condition that the provisions of any other
law, including Foreign Contribution (Regulation) Act, 1976, as applicable, are
duly complied with.
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Q 18
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Can foreign citizens of Indian origin acquire
commercial properties in India? |
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Yes. Under the general permission granted by Reserve Bank
properties other than agricultural land/farm house/plantation property can be
acquired by foreign citizens of Indian origin provided the purchase
consideration is met either out of inward remittances in foreign exchange
through normal banking channels or out of funds from the purchasers' NRE/FCNR
accounts maintained with banks in India and a declaration is submitted to the
Central Office of Reserve Bank in form IPI 7 within a period of 90 days from
the date of purchase of the property/final payment of purchase consideration.
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Q 19
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Can they dispose of such properties? |
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Yes.
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Q 20
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Can sale proceeds of such property are
remitted out of India? |
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Yes. Repatriation of original investment in respect of
properties purchased by foreign citizens of Indian origin on or after 26th May
1993 will be allowed to be remitted up to the consideration amount originally
remitted from abroad provided the property is sold after a period of three
years from the date of the final purchase deed or from the date of payment of
final installment of consideration amount, whichever is later. Applications for
the purpose are required to be made to the Central Office of Reserve Bank
within 90 days of the sale of property in form IPI 8.
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Q 21
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Can the properties (residential/commercial)
be given on rent if not required for immediate use? |
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Yes. Reserve Bank has granted general permission for letting
out any immovable property in India. The rental income or proceeds of any
investment of such income are eligible for repatriation.
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Q 22
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Can NRIs obtain loans for acquisition of a
house/flat for residential purpose from authorized dealers/financial
institutions providing housing finance? |
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Reserve Bank has granted general permission to certain
financial institutions providing housing finance e.g. HDFC, LIC Housing Finance
Ltd., etc., and authorized dealers to grant housing loans to non-resident
Indian nationals for acquisition of a house/flat for self-occupation subject to
certain conditions. The purpose of the loan, margin money and the quantum of
loan will be at par with those applicable to housing loans to residents.
Repayment of loan should be made within a period not exceeding 15 years out of
inward remittances or out of funds held in the investors' NRE/FCNR/NRO
accounts.
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Q 23
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Can Indian companies grant loans to their NRI
staff? |
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Reserve Bank permits Indian firms/companies to grant housing
loans to their employees deputed abroad and holding Indian passports subject to
certain conditions.
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Q 24
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Can authorized dealer grant housing loan to
non-residents of Indian nationality where he is a principal borrower with his
resident close relative as a co-obligant/guarantor or where the land is owned
jointly by such NRI borrower with his resident close relative? |
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Yes. However, in such cases the payment of margin money and
repayment of the loan installments should be made by the NRI borrower.
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