NRI - Frequently Asked Question
Q9. What are the rules governing the repatriation of the proceeds of sale of immovable properties by NRI/PIO as prescribed by the Reserve Bank of India?
(a) If the property was acquired out of foreign exchange sources i.e. remitted through normal banking channels/by debit to NRE/FCNR(B) account, the amount to be repatriated should not exceed the amount paid for the property:
Q10. Is the rental income from property repatriable and what are the RBI rules?
(i) In foreign exchange received through normal banking channel or
(ii) By debit to NRE account (foreign currency equivalent, as on the date of payment) or debit to FCNR(B) account.
Repatriation of sale proceeds of residential property purchased by NRI’s/PIO’s out of foreign exchange is restricted to not more than two such properties. Capital gains, if any, may be credited to the NRO account from where the NRI’s/PIO’s may repatriate an account up to USD one million, per financial year, as discussed below.
(b) If the property was acquired out of Rupee sources, NRI/PIO may remit an amount up to USD one million, per financial year, out of the balances held in the NRO account (inclusive of sale proceeds of assets acquired by way of inheritance or settlement), for all the bonafide purposes to the satisfaction of the Authorized Dealer bank and subject to tax compliance. The NRI/PIO may use this facility to remit capital gains, where the acquisition of the subject property was made by funds sourced by remittance through normal banking channels/by debit to NRE/FCNR(B) account.
The rental income, being a current account transaction, is repatriable, subject to the appropriate deduction of tax and the certification thereof by a Chartered Accountant in practice. Repatriation of sale proceeds is subject to certain conditions. The amount of repatriation cannot exceed the amount paid for acquisition of the immovable property in foreign exchange.
Q11. Are NRI/PIO/OCI eligible for Housing loans to buy property from any Indian Bank?
An authorised dealer or a housing finance institution in India approved by the National Housing Bank may provide housing loan to a non-resident Indian or a person of Indian origin residing outside India. for acquisition of a residential accommodation in India, subject to the following conditions, namely:
Q12. Are NRIs eligible to invest their funds in units of United Trust of India (UTI) or Government Securities?
(a) He quantum of loans, margin money and the period of repayment shall be at par with those applicable to housing finance provided to a person residing in India.
(b) The loan amount shall not be credited to Non-resident External (NRE)/Foreign Currency Non-resident (FCNR)/Non-resident non-repatriable (NRNR) account of the borrower.
(c) The loan shall be fully secured by equitable mortgage by deposit of title deal of the property proposed to be acquired, and if necessary, also be lien on the borrower’s other assets in India.
(d) The installment of loan, interest and other charges, if any, shall be paid by the borrower by remittances from outside India through normal banking channels or out of funds in his Non-resident External (NRE)/Foreign Currency Non-resident (FCNR)/Non-resident Non-repatriable (NRNR)/Non-resident Ordinary (NRO)/non-resident Special Rupee (NRSR) account in India, or out of rental income derived from renting out the property acquired by utilization of the loan or by any relative of the borrower in India by crediting the borrower’s loan account through the bank account of such relative (The word 'relative' means 'relative' as defined in section 6 of the Companies Act, 1956).
(e) The rate of interest on the loan shall conform to the directives issued by the Reserve Bank of India or, as the case may be, the National Housing Bank.
NRI are entitled to freely invest their funds in United Trust of India (UTI) or Government Securities through authorised dealers. They can also purchase units directly from the UTI.
Q13. Is investments in National Savings Certificates issued by Post Offices in India applicable for NRIs?
Yes, NRIs can invest in National Savings Certificates issued by Post Offices in India subject to the terms and conditions. However, NRIs are not eligible to invest in bearer securities like Indira Vikas Patra/Kisan Vikas Patra.
Q14. Are Government securities/units be freely transferrable or sold?
Yes, only when the transfers/sales are organized through an authorised dealer. However, Units can also be purchased directly by UTI.
Q15. Are Government securities/Units/National Savings Certificates' sales/maturity proceeds repatriated abroad?
Yes, sale/maturity of securities purchased out of funds remitted from abroad or out of NRE/FCNR accounts. If the sale/maturity proceeds of securities purchased out of funds in NRO accounts, then it can only be credited to NRO accounts and cannot be remitted abroad. However, interest earned during the financial year 1994- 95 and onwards can be remitted to the extent permitted by Reserve Bank.
Q16. How and where from can I purchase a car? Is it better to purchase a used car or a new car? What do I need to keep in mind while purchasing a vehicle?
When buying a car first check on how much you can afford to spend. Your decision to purchase a new car or used car will depend on your affordability. Typically an used car will have a higher maintenance cost, however a new car depreciates significantly in the first couple of years. Identify your needs and look for only those vehicles that meet your needs. Shop around for financing-terms-tenure, down payment, and interest-rates, finance charges before you choose a car. If possible take a friend or colleague who has been through this experience so that you don't end up paying extra. Remember that car dealers in the US are very slick salesmen and you must be wary and prepared to bargain.