The Good
News
With the
prices of
property in
Delhi and
Mumbai - be
it
commercial
or
residential
- spiraling
higher than
those in the
US and the
UK, this may
be the best
time for all
Non-Resident
Indians
(NRIs) to
consider
investing in
the country.
And the boom
times aren't
limited to
just the
metros. The
concept of
ultra-modern
private
integrated
townships
and world
class
infrastructure
has taken
wing in a
big way in
practically
all cities
and
satellite
townships in
the country,
thereby
making
investments
in property
in India
most
lucrative.
Amendments
to the
Foreign
Exchange
Regulation
Act (FERA)
now allow
NRIs to
acquire
residential
and
commercial
properties
without
prior
permission
from the
RBI. You can
even let out
the property
and credit
the Income
to your NRO
account. A
certain
percentage
of that
income may
be even
repatriated
abroad. The
best part:
there is no
limit on the
number of
properties
an NRI can
buy.
If the
property is
for
residential
use and
purchased
after May
26, 1993,
you are
allowed to
repatriate
the
"original
investment"
after a
lock-in
period of
three years
(that is,
three years
from the
date of
final sale
deed or date
of last
payment
whichever is
later). You
would, of
course pay
capital
gains tax on
the profit
you make on
the sale.
For NRIs who
are foreign
citizens of
Indian
origin,
repatriation
is limited
to two
residential
properties.
CAUTION 1:
Repatriation
is allowed
only if
payments for
the purchase
of the flat
have been
made through
banks in
India and
from
repatriable
accounts
(NRE/FCNR) -
even if the
purchaser
pays through
an NRE
account you
will not be
able to take
the funds
out of India
if you had
not
originally
purchased it
from an
NRE/FCNR
account.
CAUTION 2:
Prior
permission
of the
Income Tax
department
is necessary
if the value
of property
being sold
is more than
certain
limits
(usually Rs.
10 lakhs for
most cities.
The ascribed
value is
more for the
metros).
Permission
is to be
obtained by
Filling Form
37-I with
the IT
department.
CAUTION 3:
Application
for
repatriation
has to be
made to the
RBI within
90 days of
the sale of
the
property.
If you
wish to
avoid
capital
gains tax on
the sale of
property,
(20% for
long term)
you could
use the
funds from
the sale of
the property
to purchase
new property
within two
years from
the date of
sale of the
first
property.
Don't use
those funds!
All you need
to do is to
keep the
proceeds in
a separate
account with
a
nationalized
bank till
you purchase
the new
property.
However,
this
exemption is
applicable
only with
regard to
residential
houses and
will not be
applicable
for sale of
a plot of
land or
commercial
property. |
