1. Who is a Person of Indian Origin: FEMA 5 Regulation 2(XII)?
| For the purposes of availing of the facilities of opening and maintaining bank accounts and investments in shares/securities in India, a citizen (other than a citizen of Pakistan or Bangladesh) is a PIO if |
He at any time held an Indian passport
Or
He or either his/ her parents/any of his/ her grandparents was a citizen of India by virtue of the Constitution of India or Citizenship Act,1955 (57 of 1955)
Or
The person is a spouse of an Indian citizen or a person referred to in sub-clause (A) or (B).
Definition of an Overseas Corporate Bodies (OCB's)
Regulation 2(xi) of FEMA 5
OCB's are companies, partnership firms, societies and
other corporate bodies which are owned directly or indirectly to the extent of
at least 60 per cent by non-resident Indians and include overseas trusts in
which not less than 60 per cent of the beneficial interest is held by
non-resident Indians directly or indirectly but
irrevocably. |
2.Foreign Currency Non-resident (FCNR) Accounts?
| Fayde |
| Can be maintained by NRI's/OCB's with authorised dealers in India
FCNR accounts can be maintained in GBP,US dollar, Deutsche Mark and Euro
FCNR accounts can be kept only as Term Deposits (1-2 year, 2-3 year and 3 years. only)
Funds in such accounts are freely repatriable
Provision for nomination |
| Terms and Conditions |
| Discretion to banks to levy penalty on premature withdrawal
Interest is payable only if deposit is kept for the minimum period
Status of FCNR accounts on return of account holder would be resident but interest would be paid at contracted rate till maturity of deposit
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3.Who is not an NRI?
| Indians who go abroad for either of the following purposes
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Tourism
Undertaking business promotion.
To receive training
Obtaining medical treatment.
Participating in sports or cultural activities.
Indians or persons of Indian Origin residing in Nepal/Bhutan/Pakistan/Bangladesh.
Crew members working for Shipping/Airlines Companies posted in India and those companies whose registered offices are in Indi
Definition of NRI: Regulation 2(vi) of FEMA 5
Person resident outside India, who is a citizen of India or is a person of Indian origin
Indian citizens working abroad on assignment with Foreign Governments, Govt. agencies or in UNO and its affiliates IMF, IBRD etc. and Govt. officials (both central and state) and other officials of PSU's deputed abroad on assignments or posted abroad including Diplomatic Missions are non-resident Indians.
Non-resident foreign citizens of Indian origin are treated on par with NRI citizens for the purpose of certain facilities.
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4.Who is an NRI?
| 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 UN organisations 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 (NRI's).
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5.What is an Overseas Corporate Body (OCB)?
| Overseas Corporate Bodies (OCB's) are bodies predominantly owned individuals of Indian Origin or nationality 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. |
6.Are OCB's required to produce any certificate regarding ownership/beneficial interest in them by NRI's?
| Yes. In order to establish that the ownership/beneficial interest in any OCB held by NRI's is not less than 60%, the concerned body/trust is required to furnish a certificate from an overseas auditor/chartered accountant/certified public accountant in form OAC, where the ownership/beneficial interest is directly held by NRI's and further that such ownership interest is actually held by them and not in the capacity as nominees |
7.What are the various facilities available to NRI's?
| NRI's 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.
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8.What types of bank accounts can be opened by NRIs/OCBs in India?
| NRIs/OCBs can open the following types of accounts with banks in India, which hold authorised dealer licences, as also other banks, specifically authorised by the Reserve Bank to maintain accounts in the names of NRIs/OCBs. |
| Rupee Accounts:- |
| 1.Non-Resident (Ordinary) Account - NRO A/c.
2.Non-Resident (External) Rupee Account - NRE A/c.
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| Foreign Currency Accounts:- |
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Non-Resident (Foreign Currency) Account - FCNR A/c.
(in Pounds, Sterling, US Dollars, Japanese Yen and Euro).
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| A person, resident in India, who is earning foreign exchange, is also permitted to maintain a Foreign Currency account in India with an authorised dealer bank, to the extent of 50% of such foreign exchange earnings, under the Exchange Earners Foreign Currency Account (EEFC) Scheme. |
9.What are the special features of each account?
| The special features are as under: |
| NRO A/c.: The funds, standing to the credit of this account, cannot be repatriated outside India in foreign exchange, without prior permission of the Reserve Bank of India. Interest, earned on these accounts, is, however, eligible for repatriation outside India, net of Indian taxes. The remittance of interest (net of taxes) will be permitted by the authorised dealer, where the account is maintained, if the account holder makes an application to the authorised dealer, in the prescribed form. No RBI permission is required for remittance of interest. |
| NRE A/c.: The funds, standing to the credit of this account, as well as interest earned thereon, are remittable outside India in free foreign exchange, without permission of the RBI. The interest income is not subject to Indian Income-tax. Credits to the accounts should be in the form of remittance in foreign exchange from outside India, as well as other funds, which are eligible to be remitted outside India, in free foreign exchange. Funds, emanating from local sources, are not eligible to be credited to these accounts, unless these funds are otherwise remittable outside India, in terms of the existing Exchange Control Regulations. |
| FCNR A/c.:These accounts can be opened in four foreign currencies: |
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Pounds Sterling;
US Dollars;
Japanese Yen;
Euro.
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| For the purpose of opening an account, remittance in foreign exchange, in the same currency, should be received in India. The accounts can be opened only as fixed deposits, with a minimum maturity of one year and, a maximum maturity of three years. The principal, as well as interest, earned on these accounts, is remittable outside India, in the same currency or, in other convertible currency, as desired by the account holder. The interest, earned on these deposits, is exempt from Indian Income-tax. |
10.Can Non Resident accounts be opened/ operated by the Power of Attorney holder in India, on behalf of the non-resident?
| The accounts cannot be opened by the Power of Attorney holder in India. However, the latter can operate the accounts for the purpose of local payments to be made on behalf of the non-resident account holder. The Power of Attorney holder is not permitted to make gifts from these accounts and, is not allowed to make remittances outside India. |
11.What happens to the status of these accounts when the non-resident holder becomes a person, resident in India?
| The accounts are to be re-designed as resident accounts, when the non-resident account holder becomes a person, resident in India. In the case of fixed deposits opened by the account holder, before becoming resident in India, the contracted rate of interest will be paid till maturity of the deposits. Similarly, FCNR deposits will be eligible to be held in respective currencies till maturity of the deposits, even after the non-resident holder become a resident in India. He will, however, cease to get tax exemption on interest on the erstwhile deposits (NRE/FCNR deposits), after he becomes resident in India. In certain situations, it might be advisable for the account holder to convert the account to a Resident Foreign Currency Account Deposit (RFC) |
12. What is the position regarding acquisition of immovable property by NRI?
| Consequent to the liberalization in exchange control policy and procedures, certain relaxations in the existing regulations and procedures governing the acquisition, holdings, etc. of immovable property in India have been announced. The current position in therefore as under : |
| Non-resident Indians holding Indian passport do not require any permission from RBI for acquiring immovable property for bonafide residential purposes.
Non-resident Indians holding Indian passport may pay the purchase consideration either by remittance of funds from abroad through normal banking channels or out of NRO account or NRE account or FCNR account.
RBI has given general permission to non resident Indians holding foreign passport (i.e. foreign citizens of Indian origin) to acquire, hold, transfer or dispose off by way of sale or inheritance immovable properties situated in India provided:
a. The property is for the purchaser's bonafide residential purpose.
b. The purchase consideration is met either by remittance of funds from abroad through normal banking channels or out of NRE account or FCNR
Foreign citizens of Indian origin are required to declare the properties to RBI within a period of 90 days from the date of purchase in form IPI 7. The following documents must be submitted along with the declaration.
a. A certified copy of the purchase deed or a certificate from the Cooperative Housing Society or an Association of the apartment owners as an evidence of transfer / registration of the property in the declarant's name.
b. Certificate from the declarant's bankers in India evidencing receipt of inward remittance(s) in foreign exchange through normal banking channel or withdrawal of funds from declarant's NRE account or FCNR account or FCNR Special Deposit Account and payment of consideration for the property out of those funds.
5. Where a foreign citizen of Indian origin wishes to acquire a property out of funds held in NRO account then the permission from RBI will be required which can be applied for in form IPI 1.
6. Where a foreign citizen of Indian origin wishes to acquire a property from the sale proceeds of another property, prior permission of RBI is essential and may be obtained by applying in form IPI 1.
7. Any number of properties can be acquired by non-resident Indians regardless of whether they are holding Indian passport provided they are required for bonafide residential purposes.
8. A person resident outside India who has established in India a branch or place of business (but not a mere liaison office) in accordance with RBI regulations, can acquire any immovable property in India, which is necessary for incidental to carrying on such activity.
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13.Do non-resident Indian citizens require permission of The Reserve Bank to acquire residential/commercial property in India?
| No. All Indian citizens are entitled to buy property in India, irrespective of their residential status. |
14.Do foreign citizens of Indian origin require permission of the Reserve Bank to purchase immovable property in India for their residential use?
| Yes. However, the RBI 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 separate permission of The Reserve Bank. |
15.Who is a foreign citizen of Indian Origin?
| A foreign citizen 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. However this does not apply to citizens of Pakistan, Bangladesh, Afghanistan, Bhutan, Sri Lanka or Nepal) |
16.What formalities have to be completed by foreign citizens of Indian origin to purchase residential immovable property in India under the general permission?
| 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 along with a certified copy of the documentary evidence for the transaction and bank certificate for the money paid. |
17.Can such property be sold without the permission of Reserve Bank?
| 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. |
18.Can sale proceeds of such property (if and when sold) be remitted out of India?
| For residential properties purchased on or after 26 May 1993, the Reserve Bank considers applications for repatriation of sale proceeds. Approval is usually granted for up to the consideration amount remitted in foreign exchange in acquiring the property for a maximum of two such properties. The balance amount of sale proceeds, if any, or sale proceeds for properties purchased prior to 26 May 1993, will have to be credited to the ordinary non-resident rupee account of the owner of the property. |
19.Are any conditions required to be fulfilled if repatriation of sale proceeds is desired?
| 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 the consideration amount, whichever is later.
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20.What is the procedure for seeking such repatriation?
| Applications for necessary permission for remittance of sale proceeds should be made in form IPI 8 to the Central Office of The Reserve Bank at Mumbai within 90 days of the sale of the property. |
21.Can foreign citizens of Indian origin acquire or dispose residential property by way of gift?
| The 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, provided gift tax has been paid. |
22.Can immoveable property held in India be transferred by way of gift to in India?
| General permission has been granted by Reserve Bank to non-resident persons (foreign citizen) of Indian Origin to transfer, by way of gift, immoveable property held by them in India to relatives and charitable trusts / organisations subject to the condition that the provisions of all other laws, as applicable are complied with |
23. Can foreign citizens of Indian origin acquire commercial properties in India?
| 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 purchaser's NRE/FCNR accounts maintained with banks in India. A declaration has to be 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. |
24.Can they dispose of such properties?
25.Can sale proceeds of such property be remitted out of India?
| Yes. Repatriation of original investment in respect of properties purchased by foreign citizens of Indian origin on or after 26 May 1993 can 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 instalment of consideration amount, which ever 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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26.Can the properties (residential/commercial) be given on rent if not required for immediate use?
| The 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. |
27.Can NRIs obtain loans for acquisition of a house/flat for residential purpose from financial institutions providing housing finance?
| The Reserve Bank has granted general permission to certain financial institutions providing housing finance e.g. HDFC and authorised dealers to grant housing loans to non-resident Indian nationals for acquisition of a house/flat for self-occupation, subject to certain conditions. Criteria regarding the purpose of the loan, margin money and the quantum of loan will be at par with those applicable to resident Indians. 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. |
28.Can Indian companies grant loans to their NRI staff?
| The Reserve Bank permits Indian firms to grant housing loans to their employees deputed abroad and holding Indian passport subject to certain conditions.
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29.Can an authorised dealer grant a housing loan to non-residents of Indian nationality where the NRI is the 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?
| Yes. However in such cases the payment of margin money and repayment of loan instalments should be made by the NRI borrower |
30.What should be the method of payment for purchasing residential immovable property in India by foreign nationals of Indian origin under the general permission?
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
Do non-resident Indian nationals require permission of Reserve Bank to acquire residential / commercial property in India?
No permission is required by non-resident Indian nationals to acquire immovable Property in India
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31.Are foreign nationals of Indian origin allowed to purchase immovable property in India?
| Yes, foreign nationals of Indian origin, whether resident in India or abroad, have been granted general permission to purchase immovable property in India
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32.In what way the Non-resident Indian can finance the flat?
| The purchase of the flats can be financed from the fresh remittance through the normal banking channels or from payment from original non-resident account or from Non-resident (External) Accounts. Non-resident Indians who are citizens of India (India Passport holders) are eligible for housing finance for the acquisition of an immovable property or construction of a new house, or a flat for their occupation or for that of their family in India. But the HDFC also considers granting of loans to non-resident Indians even if they are abroad, provided a family member of his or her in India is made a co-borrower and a power of attorney is given to his representative in India
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33.Non-resident Indians are staying abroad can the property be purchased through the agent or through the Power of Attorney?
| The non-resident Indians who are staying abroad may enter into an agreement through their relatives and/or by executing the Power of Attorney in their favour as it is not possible for them to be present for completing the formalities of purchase (negotiating with the builder or Developer, drafting and signing of agreements, taking possession, etc.) These formalities can be completed through some known person who can be given the Power of Attorney for this purpose. Power of Attorney should be executed on the stamp paper before the proper authorities in foreign countries. Power of Attorney cannot be drafted on the stamp paper bought in India. |
34.Can such residential property be given on rent if not required for immediate residential use?
35.Can the rental income from such property be remitted outside India?
No. Such income cannot be remitted abroad and will have to be credited to the ordinary non-resident rupee account of the owner of the property.
Non-resident Indians are staying abroad can the property be purchased through the agent or through the Power of Attorney?
The non-resident Indians who are staying abroad may enter into an agreement through their relatives and/or by executing the Power of Attorney in their favour as it is not possible for them to be present for completing the formalities of purchase (negotiating with the builder or Developer, drafting and signing of agreements, taking possession, etc.) These formalities can be completed through some known person who can be given the Power of Attorney for this purpose. Power of Attorney should be executed on the stamp paper before the proper authorities in foreign countries. Power of Attorney cannot be drafted on the stamp paper bought in India.
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36.Are there any formalities to be completed by foreign nationals of Indian origin for purchasing residential immovable property in India?
| They are required to file a declaration in form IPI 7 with the Central Office of Reserve Bank at Bombay within a period of 90 days from the date of purchase of immovable property.
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