1. Am I an NRI?
Under the Foreign Exchange Regulation Act of 1973, Non-Resident Indians are:
- Indian citizens who stay abroad for employment or carrying on business or vocation outside India or for any other purpose in circumstances indicating an indefinite period of stay abroad; OR
- Government servants who are posted abroad on duty with the Indian missions and similar other agencies set up abroad by the Government of India where the officials draw their salaries out of Government resources; OR
- Government servants deputed abroad on assignments with foreign Governments or regional/international agencies like the World Bank, International Monetary Fund (IMF), World Health Organisation (WHO), Economic and Social Commission for Asia and the Pacific (ESCAP) OR
- Officials of the State Government and Public Sector Undertakings deputed abroad on temporary assignments or posted to their branches or offices abroad.
2. 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
3. What is the difference between carpet area, built-up and super built-up area?
The area of an apartment or building, not inclusive of the area of the walls is known as carpet area. This is the area that is actually used and in which a carpet can be laid. When the area of the walls including the balcony is calculated along with the carpet area, it is known as built-up area. The built-up area along with the area under common spaces like lobby, lifts, stairs, garden and swimming pool is called super built-up area.
4. What should a buyer keep in mind while purchasing a residential flat?
Some of the factors to consider while purchasing a flat are:
- Locality i.e. transport, schools, hospitals, market, business district, entertainment centres, 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
5. Checklist for buying a residential 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 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 on the property must be cleared before completion of 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 number of floors
- Clearance from Municipality, Electricity, Water, Pollution, Lift authorities
- Check the building bye-laws in that area to verify any issue with setback, side setback, height, etc
- Confirm transfer fees, stamp duty and registration charges to be paid on 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
6. Can such propery be sold without the permission of Reserve Bank?
Yes. Reserve Bank has granted general permission for sale of such property. However, where another foreign citizen of Indian origin purchases the property, funds towards the purchase consideration should either be remitted to India or paid out of balances in non-resident accounts maintained with banks in India.
7. Can sale proceeds of such property if and when sold be remitted out of India?
In the event of sale of immovable property other than agricultural land/farm house/plantation property in India by an NRI or PIO, the authorized dealer may allow repatriation of the sale proceeds outside India, provided all the following conditions are satisfied:
- NRIs/PIOs can effect remittance of sale proceeds of immovable property in India irrespective of the period for which the property was held. The sale proceeds allowed to be repatriated should, however, not exceed the foreign exchange brought in to acquire the said property.
- In case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties, if the property was purchased from funds held in NRE Account.
- The amount sought to be repatriated abroad should not exceed the amount paid for acquisition of the immovable property in the foreign exchange received through normal banking channels or out of funds held in FCNR or NRE Account. In case of investment out of NRE Account the amount to be calculated as foreign currency is equivalent value as on the date of payment for acquisition of the said property.
8. Can NRI’s/PIO’s rent out the properties (residential/commercial) if not required for immediate use?
Yes. NRI/PIOs can freely rent out their immovable property, whether purchase through application of forex or otherwise, without seeking any permission from the RBI. The rental income being a current account transaction is repatriable outside India, only if proper tax is paid or provided for.
9. Does RBI have any guidelines for loans to NRI’s/PIO’s?
Yes. There are guidelines issued by the by the Reserve Bank of India for grant of Housing Loans to NRIs. The guidelines are:
- The loan amount shall not exceed 85% of the cost of the dwelling unit.
- Own contribution, which is the cost of dwelling 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.
- Repayment 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.
10. Can authorised dealer grant loans to NRIs for acquisition of a flat/house for residential purposes?
Authorised 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.
11. Can authorized dealer grant housing loan to NRI’s where he is a principal borrower with his resident close relative as a co-applicant / guarantor or where the land is owned jointly by such NRI borrower with his resident close relative?
Yes. Such housing loans availed in rupees can also be repaid by the close relatives in India of the borrower.
12. What are the documents I have to submit along with the application?
The following documents are normally to be submitted along with the application:
- Photocopy of the labour 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
- Perquisites and salary
- Photocopy of labour 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
13. Can an NRI take loan against the security of immovable property in India? Are there any restrictions on the use of loan amount?
An NRI can borrow against the security of immovable property from Authorised Dealer subject to following conditions:
- The loan should be used for meeting the personal requirements or for borrower’s own business purposes; and
Loan should not be used for prohibited activities, namely;
- Business of chit fund, or
- Nidhi Company, or
- Agriculture or plantation activities or in real estate business, or construction of farm houses, or
- Trading in Transferable Development Rights (TDRs),
- The loan amount cannot be remitted outside India,
- Repayment of loan shall be made from out of remittances from abroad or by debit to NRE/FCNR/NRO account or out of the sale proceeds of shares or securities or immovable property against which such loan was granted.