Saturday, August 09, 2008

Repatriation procedures simplified

With the repatriation procedures further simplified, NRIs and PIOs have every reason to smile while investing in immovable property

For Non Resident Indians (NRIs) and Persons of Indian Origin (PIOs) who are investing in immovable property, repatriation of sale proceeds and rental income has been further simplified and made hassle-free. The Reserve Bank of India (RBI) has delegated the powers to authorised dealers of foreign exchange to process the application and effect repatriation.

At present, authorised dealers are allowed to repatriate funds held by NRIs and PIOs in their NRO accounts for sale proceeds of immovable property held for a period of 10 years up to USD1,00,000 per calendar year. Further, authorised dealers were also permitted to allow remittance of assets of foreign nationals, including retired employees/widows of Indian citizen resident outside India and assets in India acquired by NRIs and PIOs by way of inheritance or legacy up to USD 1,00,000. The RBI has now decided to remove the present dispensation of varying amount for different purposes and enhance the overall limit to USD one million per calendar year. Therefore, NRIs and PIOs can now repatriate up to USD one million out of the balance held in NRO accounts.

Repatriation of sale proceeds of any immovable property other than agricultural and/or plantation property or farm house by an NRI or PIO is permitted without the prior approval of Reserve Bank if the property was acquired by the seller in accordance with the provisions of foreign exchange law in force at the time of acquisition or the provisions of FEM (Acquisition and Transfer of Immovable Property in India) Regulations, 2000.

Further, repatriation is permitted to the extent of consideration amount in foreign exchange received through normal banking channels or out of funds held in the FCNR account or foreign currency equivalent, as on the date of payment, where payment is made out of NRE account for acquisition of the immovable property sold. In case of sale of residential properties, repatriation will be allowed up to a maximum of two such properties. The limitation that the sale should take place after three years from the date of acquisition or from the date of payment of final installment of consideration amount, whichever is later, has been dispensed with.

In the case of NRIs who had acquired residential or commercial property in India when they were resident in India or inherited from a person resident in India, sale proceeds of such immovable property can be repatriated with the prior permission of the RBI. Similarly, permission is needed for transferring any immovable property if it is not expressly permitted in FEMA, 1999 or in FEM (Acquisition and Transfer of Immovable Property in India) Regulations, 2000.
Repatriation of current income

So far authorised dealers have been permitted to allow remittances of NRIs' current incomes like rent, dividend, pension, interest etc. net of applicable taxes by NRIs to the debit of their NRO accounts. The RBI has recently allowed the authorised dealers to effect repatriation of such income even if NRIs do not maintain an NRO account in India. What is required is a certificate from a chartered accountant specifically mentioning that the amount specified for repatriation is eligible for remittance and that applicable taxes, if any, have been paid for or suitably provided.

The RBI has also clarified that authorised dealers may credit the current income like rent, dividend, pension, interest etc of NRIs to their Non-Resident (External) Rupee accounts, provided they are satisfied that the credit represents current income of the non-resident account holder, and that income-tax thereon has been deducted / paid / provided for as the case may be.

The apex bank has further clarified that NRIs and PIOs who do not maintain NRO accounts in India and have no taxable income in India need not submit the chartered accountant's certificate for remitting their current income like dividend, rent, pension, interest etc. In case NRIs do not have taxable income in India, all that is needed on the part of authorised dealers is to obtain a simple declaration, in duplicate, to the effect that he is not a taxpayer in India. This provision is applicable in case of remittance of current income by debiting NRO accounts as well as for crediting current income to NRE account of the account holder.

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