NRI

Person of Indian Origin (PIO) (not being a citizen of Pakistan or Bangladesh or Srilanka or Afghanistan or China or Iran or Nepal or Bhutan), who

(a)        At anytime, held an Indian passport, or

(b)       Who or either of whose father or whose grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955).

(a) Any person of full age and capacity:

• Who is a citizen of another country
• but was a citizen of India at the time of, or at any time after, the commencement of the constitution, or
• but was eligible to become a citizen of India at the time of the commencement of the constitution, or
• Who is a citizen of another country, but belongs to a territory that became part of India after the 15^th Day of August, 1947.
• Who is a child of such a citizen, or

(b) A person, who is minor child of a person mentioned in clauses

• Provided that no person, who is or had been a citizen of Pakistan, Bangladesh shall be eligible for registration as an Overseas Citizen of India.

A foreign company is any company or body corporate incorporated outside India which, has a place of business in India whether by itself or through an agent, physically or through electronic mode; and conducts any business activity in India in any other manner.

A foreigner is someone from another country. A foreigner is someone from a different country. Foreigners are often tourists who check out the sights of other countries.

Under the general permission granted by RBI, the following categories can freely purchase immovable property in India.

• Non-Resident India (NRI)
• Person of India Origin (PIO)
• Overseas Citizen of India (OCI)
• Foreign Company

If you are an NRI / OCI / PIO / Foreign Company, you would have to file your income tax returns if you fulfill either of these conditions:

Mandatory to file:-as per the income tax Act, 1961.

1. If Taxable income in India was above the basic exemption limit.
2. If STCG or LTCG are less than the basic exemption limit.
3. Set-off or carry forward of capital loss against capital gains.
4. Foreign Company mandatorily required filing its tax return in India

Non-Mandatory to file:- (NRI / OCI / PIO)

1. Taxable income consisted only of investment income (interest) and / or capital gains

income and if tax has been deducted.

2. Long term capital gains from the sale of equity shares or equity mutual funds, & no

Tax has been payable and therefore you do not have to include that in your tax return.

3. If TDS is more than the actual tax liability, assessee may file a tax return if want to

claim a refund.

Traditionally, you could file your return either by giving a power of attorney to someone in India or by sending your form and documents to a tax expert in India who would then file returns on your behalf .But now a days, the easiest option for NRIs to file their Indian tax returns is by using the online platform. There are several options to file online.

A Power Of Attorney (POA) or letter of attorney is a written authorization to represent or act on another’s behalf in private affairs, business, or some other legal matter, sometimes against the wishes of the other. The person authorizing the other to act is the principal, grantor, or donor (of the power).

A Power Of Attorney is not an instrument of transfer in regard to any right, title or interest in an immovable property.

Yes, they can. Since NRIs live outside India, they have an option to give POA to their friends or relatives to complete their property deal in India. The POA can be general or specific about the rights their representative can exercise, in their absence.

If your tax liability exceeds Rs 10,000 in a financial year, you are required to pay advance tax. Interest under Section 234B and Section 234C is applicable when you don’t pay your advance tax.

Similar to residents, NRIs are also entitled to claim various deductions and exemptions from their total income.

Long-term capital gains (when the property is held for more than 3 years) are taxed at 20%. Do note that long-term capital gains earned by NRIs are subject to a TDS of 20%.

NRIs are allowed to claim exemptions under Section 54, Section 54 EC, and Section 54F on long-term capital gains. Therefore, an NRI can take benefit of the exemptions from capital gains at the time of filing a return and claim a refund of TDS deducted on Capital Gains.

Exemption under Section 54 is available on long-term capital gains on sale of a house property. Exemption under Section 54F is available on sale of any asset other than a house property.

India has Double Taxation Avoidance Agreement (DTAA) with several countries which give a favorable tax treatment in respect of certain heads of income. However, in case of sale of immovable property, the DTAA with most countries provide that the capital gains will be taxed in the country where the immovable property is situated. Hence, the non-resident will be subject to tax in India on the capital gains which arise on the sale of immovable property in India. Letting of immovable property in India would be taxed in India under most tax treaties in view of the fact that the property is situated in India.

NRIs can avoid double taxation (meaning: getting taxed on the same income twice in the country of residence and India) by seeking relief from Double Taxation Avoidance Agreement (DTAA) between the two countries.

Under Double Taxation Avoidance Agreement (DTAA), there are two methods to claim tax relief – (a) Exemption method and (b) Tax Credit method.

• Exemption method-NRIs are taxed in only one country and exempted in another.
• Tax Credit method-where the income is taxed in both countries, tax relief can be claimed in the country of residence.

An NRI’s income taxes in India will depend upon his residential status for the year. If your status is ‘resident,’ your global income is taxable in India. If your status is ‘NRI,’ your income which is earned or accrued in India is taxable in India.

Salary received in India or salary for service provided in India, income from a house property situated in India, capital gains on transfer of asset situated in India, income from fixed deposits or interest on savings bank account are all examples of income earned or accrued in India. These incomes are taxable for an NRI. Income which is earned outside India is not taxable in India. Interest earned on an NRE account and FCNR account is tax-free. Interest on NRO account is taxable for an NRI.

Yes. Long-term capital gains and short-term capital gains are taxable in the hands of non-residents.

Type of asset: Assets like house property, land and building, jewellery, development rights etc.

Rate of tax deduction at source (TDS)

Long term – 20.08%

Short term – 30.12%

Exemption available (only for long term capital gains)

The long term capital gains arising on sale of a residential house can be invested in buying/ constructing another residential house, within the prescribed time. The exemption is restricted to the amount of capital gains or amount invested in new residential house, whichever is lower. If the amount of capital gains is invested in bonds of National Highways Authority of India (NHAI) or Rural Electrification Corporation (REC), then the entire capital gains is exempted, else the proportionate gain is exempted. As per the financial budget 2007-08, a cap of Rs. 50 lakhs has been imposed on investment that can be made in capital tax saving bonds.

The Government of India has granted general permission for NRI/PIO/OCI to buy property in India and they do not have to pay any taxes even while acquiring property in India. However, taxes have to be paid if they are selling this property. Rental income earned is taxable in India, and they will have to obtain a PAN and file return of income if they have rented this property. On sale of the property, the profit on sale shall be subject to capital gains tax. If they have held the property for less than or equal to 3 years after taking actual possession then the gains would be short term capital gains, which are to be included in their total income as tax as per the normal slab rates shall be payable and if the property has been held for more than 3 years then the resultant gain would be long term capital gains subject to tax plus applicable cess.

Repatriation of amounts is subject to certain conditions:-

1. The rental income is repatriable, subject to the appropriate TDS and the certification thereof by a Chartered Accountant in practice.
2. The amount of repatriation cannot exceed the amount paid for acquisition of the immovable property in foreign exchange
3. You can repatriate –sale proceeds of immovable property acquired in India out of your repatriable funds, without any lock-in period.
4. The amount to be repatriated does not exceed :-

(a) the amount paid for acquisition of the immovable property in foreign exchange received through normal banking channels or out of fund held in Foreign currency Non-Resident (FCNR) Account or

(b) the foreign currency equivalent as on the date of payment, of the amount paid where such payment was made from the funds held in Non-Resident External (NRE) account for acquisition of the property.

(c) In the case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties.

(d) In the case of sale of immovable property purchased out of Rupee funds, Ads (American Depository Share) may allow the facility of repatriation of funds out of balances held by NRIs/PIO in their Non-resident Rupee (NRO) accounts up to US$ 1 million per financial year subject to production of undertaking by remitter and a certificate from the Chartered Accountant in the formats prescribed by the CBDT.

1. RBI has now permitted transfer Non-resident Rupee (NRO) account to Non-Resident External (NRE) account within the overall ceiling of USD 1 million or equivalent per financial year, subject to submission of necessary documents as applicable.
2. Transfer funds from Non-Resident External (NRE) to Non-resident Rupee (NRO) account entirely possible.
3. NRI have to open his Non-Resident External (NRE) Account in India for fund transfer to invest in property.

NRIs are allowed to repatriate or bring their sale proceeds of property sold in India to the US. However, the limit to the amount brought from India is $1 million per calendar year, including all other capital account transactions

Yes, under the general permission granted by the Reserve Bank, property other than agricultural land/farm house/plantation property can be acquired by NRIs provided the purchase consideration is met either out of inward remittances in foreign exchange through normal banking channels or out of funds from the purchaser’s NRE/FCNR accounts maintained 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.

If NRIs want to acquire an agricultural land, plantation property or a farmhouse in India, they need to get approval from the RBI and the Government. There is no restriction on the number of properties an NRI can buy. The monetary transaction should be in Indian rupees (INR) and through normal banking channels, using an NRI Account.

The Reserve Bank has granted some general permission to certain financial institutions providing housing finance and authorized dealers to grant housing loans to NRI nationals for acquisition of a NRI house/flat for self-occupation subject to certain conditions. Criteria regarding the purpose of the loan, margin money and the quantum of loan will be at par with those applicable to resident Indians. Repayment of the loan should be made within a period not exceeding 15 years, out of inward remittance through banking channels or out of funds held in the investors’ NRE/FCNR/NRO accounts.

Lenders can fund the purchase of NRIs provided they are proven eligible and their property papers are found to be clear. For that, they need to get their papers verified by a professional lawyer before finalizing the property deal. Also, they need to check the title papers of the property. Especially for new constructions, it is vital that the land title should be clear and the builder should ideally have taken all necessary approvals and permits from the civic authorities in terms of construction. Only graduate NRIs can avail home loans in India since educational qualification and the profession they are in, also plays a major role in deciding their loan eligibility.

NRIs have been given general permission by the RBI to buy residential property in India from banks and housing finance companies registered with the National Housing Bank. According to rules and regulations, the loan amount cannot be credited directly to the bank account of an NRI. It has to be disbursed to either the seller’s or the developer’s account. The loan can be repaid using funds in an NRI’s NRO/NRE account or FCNR deposits.

A maximum amount of 80% of the property value can be funded by a financial institution and the rest of the 20% would be from the NRI’s personal resources, in keeping with the RBI norms. Since Indian financial institutions offer loans in rupees, it becomes mandatory that the loan is repaid in rupees only. One more option that NRIs can try is getting the funds from overseas where interest rates are lower, especially if they stay overseas and have a regular income earning there.

Tax deducted at source (TDS) is calculated at the rate of 20.08 percent on long-term capital gains and 30.12 percent on short-term capital gains. The final taxation rate is similar for NRIs and resident Indians. Suppose, an NRI has a lower tax slab applicable to him, he can apply for a refund of the TDS by filing his income tax return.

– Pan Card (Permanent account number)
– Memorandum of Association (MOA) & Article of Association (AOA)
– Incorporation Certificate
– Address Proof
– Details of Key Managerial Personnel (KMP)

– Pan Card (Permanent account number)
– OCI/PIO card (In case of OCI/PIO)
– Passport
–Passport size photographs
–Address proof