NRI Investment Procedure
Who is a Non Resident Indian, NRI?
An Indian citizen who stays abroad for employment/running a business, vacation outside India, 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, NRIs.
Who is a person of Indian Origin?
A. For the purposes of availling 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,
(ii) he or either of his parents or any of his grand parents was a 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.
A foreign citizen (other than a citizen of Pakistan , Bangladesh , Afghanistan , Bhutan , Srilanka or Nepal ), is deemed to be of Indian origin if,
(i) he held an Indian passport at any time,
(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).
B. For investments in immovable properties.
Do non-resident Indian citizens require permission of the Reserve Bank to acquire residential/ commercial property in India ?
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 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 separate permission of the Reserve Bank.
How should purchase considerations for the residential immovable property be paid by foreign citizens 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.
What are the formalities 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 document evidencing the transaction and bank certificate regarding the consideration paid.
Can such property be sold without the permission of the Reserve Bank?
Yes. The 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.
Can sale proceeds of such property if and when sold be remitted out of India ?
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.
What conditions have to be met 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 consideration amount, whichever is later.
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 Reserve Bank at Mumbai within 90 days of the sale of the property.