Repatriation is the transfer of funds from India to accounts held overseas. Repatriation pertaining to Real Estate in India is in accordance with the provision of the Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2000 as defined in Sections 6 and 47 of FEMA, 1999 and Notification No. FEMA 21/2000-RB dated May 3, 2000.
Funds on which Repatriation is allowed in India:
If you are a Non-Resident Indian (NRI) or a Person of Indian
Origin (PIO), you can avail of repatriation facility on:
- Sale proceeds of immovable property acquired in India out of your repatriable funds, without any lock-in period. Sale proceeds of immovable property bought from foreign currency.
- Assets acquired by way of Inheritance/legacy/bequest, without any lock-in period.
- Deposit with a bank or a firm or a company from funds brought from abroad.
- Provident fund balance or superannuation benefits.
- Amount of claim or maturity proceeds of insurance policy.
- Sale proceeds of shares, securities.
- Refund of application/earnest money/purchase consideration made by house-building agencies/seller on account of non-allotment of flats/plots/cancellation of booking/deals for purchase of residential/commercial properties along with interest and net of taxes, if original payment is made out of NRE/FCNR (B) account/inward remittances.
However, all persons, whether resident in India or outside India, who are citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, or Bhutan, require prior permission of Reserve Bank for transferring any immovable property in India.
Conditions for Repatriation of Sale Proceeds from property:
- Property against which remittance is sought should be acquired as per the
applicable laws and in accordance with the provisions of foreign
exchange law in force.
- Documentary evidence in support of the acquisition of the funds/assets proposed
to be remitted should be produced. It is required by banks
for the same.
- Undertaking and Certification relating to tax compliance are mandatory.
- Proceeds should not exceed the amount paid for acquiring the property.
- Subject to fulfillment of few conditions, proceeds should be credited to
NRE account.
- Repatriation of sale proceeds of residential properties is restricted to
two such properties.
- Repatriation of sale proceeds of immovable property acquired out of Rupee
fund (inward remittance) is available only if the property
is held for a minimum period of 10 years. If such a property
acquired out of Rupee fund is sold within 10 years, remittance
can be made, only if the sale proceeds have been held by the
NRI/PIO for the balance period in an NRO Account (Savings/Term Deposits) or in any other eligible security provided
such investment is traced to the sale proceeds of the immovable
property.
- Repatriation should be done via 'authorised person'. Authorised person means
an authorized dealer/offshore banking unit or any other person
for the time being authorised to deal in foreign exchange
or foreign securities, by the RBI.
- Citizens of Pakistan, Bangladesh, Sri Lanka, China, Afghanistan, Iran, Nepal and Bhutan shall require prior approval from RBI to apply for repatriation.
NRI banking norms:
Repatriation of sales proceeds of an immovable property is allowed by banks, subject to fulfillment of the following points:
- Sale proceeds of property purchased with native currency by an NRI do not
qualify for repatriation.
- Sale proceeds of property purchased with foreign currency qualifies for repatriation
amount not exceeding $ I million, subject to two conditions:
- Remittance for the concerned property was done outside India, in accordance
with regulation of FEMA, 1999.
- Property in question is registered with RBI within 3 months of purchase.
- Real Estate acquired as gift by NRI qualifies for repatriation and can be
repatriated to only NRO account held by him.
- Inherited property can also be repatriated on producing proof of inheritance,
undertaking by the remitter and a certificate from a Chartered
Accountant. This is subject to RBI approval.
- Property purchased on loan also falls under repatriable investment if the
loan has either been repaid per norms or an undertaking by
a Chartered Accountant is enclosed.
Channels of Repatriation
NRI Accounts:
- NRE (Non Resident External Account) account (Savings/Current/
Fixed Deposits): Is freely repatriable (principal
and interest) and does not require prior permission from RBI.
Many banks like HDFC, PNB, SBI, ICICI et al offer NRE facilities.
- FCNR (Foreign Currency Non Resident Account) (Deposits): FCNR Deposits are fully repatriable (principal and interest).
And the entire deposit is exempt from tax. All major banks
HDFC, ICICI, SBI offer this facility.
- NRO account Non- Resident Ordinary Account(Savings):
NRO deposits are not repatriable (principal) except on current
NRI income like rent, dividend, pension, etc. and remittances
indicated under "Repatriation of NRO Funds" only after payment
of taxes due in India. Interest is freely repatriable. The
NRI may remit up to USD one million per calendar year.
- RFC account (Resident Foreign account):
This account is available for returning Indians only, that
is Indian who have permanently returned to India after holding
NRI status. Funds can be repatriated on a need basis.
Repatriation Procedure:
To apply for repatriation, an NRI should make an application in the prescribed format to an authorized dealer only, that is, a bank/dealer authorised to deal in foreign exchange by the RBI. The authorized dealer on satisfying itself with the particulars/documents submitted by the concerned NRI may allow the repatriation of the same.
The documents required while seeking Repatriation:
- Application for permission in prescribed format in Form
IPI 8 to repatriate the original investment made in immovable
property held in India.
- Certified copy of the purchase agreement.
- Certified copy of the sale agreement.
- Original bank documents proving that the purchase has been
made from abroad or from an NRE account held by the seller.
- Proof of the Capital gain tax, if any, deducted at source
and paid to the Government by the purchaser of the property.