1. Who is a non-resident Indian (NRI)?

An Indian Citizen who stays abroad for employment/carrying on business or vacation 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 Government and Public Sector undertakings on temporary assignments are also treated as non-residents). Non-resident foreign citizen of Indian Origin are treated on par with non-residential Indian Citizen (NRI’s) for the purpose of certain facilities.

 2. Who is a person of Indian Origin?

For the purpose 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, he, at any time, held and Indian Passport, or 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 citizen of Pakistan or Bangladesh) of and Indian citizen or of a person if 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.

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 the Indian Origin if he held and Indian Passport at any time, or he or his father or parental grand-father was a citizen of India by virtue of the (Constitution of India or the Citizenship Act, 1955(57 of 1955).

 3. Do non-resident Indian citizen require permission of Reserve Bank to acquire   residential/commercial property in India?

No.

 4. Do foreign citizens of Indian Origin require permission of Reserve Bank to purchase immovable property in India for their residential purpose?

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 bonafide residential purpose. They ate, therefore, not required to obtain permission of Reserve Bank.

 5. In what manner the purchase consideration for the residential immovable property should be paid by foreign citizen 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.

 6. What are the formalities required to be completed by foreign citizen of Indian Origin for purchasing 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 document evidencing the transactions and bank certificate regarding the consideration paid.

 7. Does such property can be sold without the permission of Reserve Bank?

Yes, Reserve Bank has granted general permission for sale of such property. However whether 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 balance in NRE/FCNR accounts.

 8. Can sale proceeds of such property if and when sold be remitted out of India?

In respect of residential properties purchased on or after 26^th 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 26^th May 1993, will have to be credited to the ordinary non-resident rupee account of the owner of the property.

 9. 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 from the date of payment of final installment of consideration amount, whichever is later.

 10. What is the procedure for seeking such repatriation?

Applications for necessary permission for remittabnce of sale proceeds should be made inform IPI 8 to the Central Office of Reserve Bank at Mumbai within 90 days of the sale of the property.

 11. Can foreign citizen of Indian Origin acquire or dispose of residential property by way of gift?

Yes. Reserve Bank has granted general permission to foreign citizen 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.

 12. Can immovable property held in India, be transferred by way of gift to relatives/registered charitable trusts/organizations in India?

Yes. General permission has been granted by Reserve Bank to non-resident persons(foreign citizen) of Indian Origin to transfer by way of gift immovable property held by them in India to relatives and charitable trust/organizations subject to the conditions that the provisions of any other law, including Foreign Contribution (Regulation) Act, 1976, as applicable, are duly complied with.

 13. Can foreign citizen of Indian Origin acquire commercial properties in India?

Yes. Under the general permission granted by Reserve Bank properties other than agricultural land/farm house/plantation property can be acquired by foreign citizen of Indian Origin provided the purchase consideration is met either out of inward remittance in foreign exchange through normal banking channels or out of funds from the purchaser’s NRE/FCNR accounts maitained 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.

 14. Can they dispose of such property?

Yes.

 15. Can sale proceeds of such property be remitted out of India?

Yes. Repatriation of original investment in respect of properties purchased by foreign citizen of Indian Origin on or after 26^th 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 instalment of consideration amount, whichever is later. Application for the purpose are acquired to be made to the Central Office of Reserve Bank within 90 days of the sales of property in Form IPI 8.

 16. Can the properties(residential/commercial) be given on rent if not required for immediate use?

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.

 17. Can NRI’s obtain loans for acquisition of house/flat for residential purpose from authorized dealers/financial institutions providing housing finance?

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 remittance or out of funds held in the investor’s NRE/FCNR/NRO accounts.

 18. Can Indian companies grant loans to their NRI staff?

Reserve Bank permits Indian Firms/Companies to grant housing loans to their employees deputed abroad and holding Indian passports subject to certain conditions.

 19. 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-obligator/ guarantor or where the land is owned jointly by such NRI borrower with his resident close relatives?

Yes. However, in such cases the payment of margin money and repayment of the loan installment should be made by the NRI

Have money and want to buy a house? Good sense, if you are in Delhi.

“Land has become scarce in Delhi city, with very few new developments coming up. Most of the new supply in Delhi is coming up in townships such as Dwarka. So, if you are getting a premium property which is priced anywhere between Rs 4,000 and Rs 6,000 a sq ft in Delhi, it is considered reasonable, compared to other cities in Asia Pacific,” says Nitin Gupta, associate director, PricewaterhouseCoopers.

“These properties can still give a return of 20 per cent over the next three years,” adds Gupta. “Although Delhi prices are at an all-time high, they are not going to come down in the near future. In fact, whatever correction has to happen, has already happened.

Compared with the last couple of years when prices increased 40-50 per cent, this year, the rise has been a more modest 15-20 per cent. We expect this trend to continue, especially in the Rs 60 lakh (Rs 6 million) to Rs 1 crore (Rs 10 million) segment,” says Jayant Verma, executive director - north, Knight Frank, a real estate consulting firm.

He also predicts a 10-15 per cent correction in the prices of properties priced upwards of Rs 1 crore, in the medium term. “There is too much supply coming in at this end with developers such as DLF, Parsvanath and Unitech announcing new developments. But we are doubtful about whether the market can absorb so many of these properties. By the time these properties are actually ready, we expect a slump in demand,” says Verma.

And who should buy? Buy only if you are a long-term investor and are not looking at short-term gains, says Gupta.

“Only then does it make sense to put in Rs 4,000-6,000 for a sq ft. If you are looking at short-term gains, then investing in a property in Delhi may not be the best use for your money,” says he.

Mumbai: Wait and watch, if you can

“Prices are at an all-time high. Although there are still some areas where you can get a price advantage, such as Thane and Kharghar, housing properties in Mumbai are not likely to see significant appreciation. So, if you are buying from an investment point of view, this may not be the best time,” says Pranay Vakil, CEO of Knight Frank.

Most buyers in the city today are end-users who are looking at an incremental investment, moving from their first houses to larger second houses. Therefore, the rising price points still work  out for them as they are ploughing back money from the  sales of the earlier properties, he says.

“But if you are a first-time buyer and afford to hold out for another three to five years, then you should,” says Vakil.  The reasons: a host of government initiatives that are expected to remove restrictions on developments in the city.

The state government has committed itself to repealing the Urban Land Ceiling (ULC) Act and is expected do away with the Rent Act. The repeal of the Rent Act will release a substantial chunk of the locked-up housing stock in the city, while the ULC repeal will release virgin  and for development within the city.

The Bombay High Court ruling on the Transfer of Development Rights, too, will release additional FSI in the city. The ruling has opened up older buildings for redevelopment along the LBS Marg in the central suburbs and SV Road in the western suburbs, with a doubling in existing FSI.

Vakil says these developments will also keep the price hike in check over the short term, as the supply situation begins to ease in the next two-three years.

Kolkata: Buy! Buy! Buy!

“If you have the money, buy. And buy now, before the prices shoot through the roof,” says Kolkata builder Jitendra Khaitan. “Property prices in the metro are just beginning to go up. Last year, we saw some areas appreciate fast — New Town, for example, surged 100 per cent, while Diamond Harbour and Joka shot up 60 per cent,” he says.

“In the next five years, Salt Lake will be the centre of the city and values here will appreciate tremendously,” adds Khaitan.

“Kolkata is on an upswing, and as long as the present government of Buddhadeb Bhattacharya is in the saddle, the pace of developments is expected to continue,” says Pranay Vakil.

Areas to buy? Rajarhat, EM Bypass and areas in the vicinity of Salt Lake and New Town. “With companies like TCS and Godrej showing a major interest and the upcoming developments on the Bata land and the Salim group developments, the city is coming into focus. Prices are slated to go up for the right projects,” says Vakil.  Who should buy?

“If I had the money I would buy,” quips Vakil. “Kolkata is a very practical market. You can buy a two-bedroom apartment in the Rs 10 lakh (Rs 1 million) bracket or in the Rs 4 crore (Rs 40 million) bracket,” says Khaitan.