NRI

The Definition of ‘foreign citizen of Indian origin’ Is Defined Under Section 2 (B) of Foreign Exchange Management (Borrowing And Lending In Rupees) Regulations, 2000 and Under Section 2 (Xii) of Foreign Exchange Management (Deposit) Regulations, 2000 As Given Under:-

• Foreign citizen of Indian origin’ Means A Citizen of Any Country other than Bangladesh or Pakistan, if he at any time held an Indian passport; or
• He or either of his parents or any of his grandparents was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955); or The person is a spouse of an Indian citizen or a person referred to in sub-clause (a) or (b)”
• Foreign citizen Of Indian origin For The Purpose Of Acquiring Immovable Property In India As Given Under:- “Foreign citizen Of Indian Origin’ Means An Individual (Not Being A Citizen Of Pakistan Or Bangladesh Or Sri Lanka Or Afghanistan Or China Or Iran Or Nepal Or Bhutan), Who At any time, held an Indian passport; or
• Who or either of whose father or mother or whose grandfather or grandmother was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955)

Some of the factors to consider while purchasing a flat are locality i.e., transport, schools, hospitals, market, business district, entertainment centres, hotels, restaurants, pollution levels.

• Quoted area of the flat i.e., Carpet, Built-Up Area and super Built Up Area
• Car parking space
• Quality of construction
• The reputation of the builder or seller
• Sufficient water and electric supply, other utilities
• Cost components: price, stamp duty, registration charges, transfer fees, monthly outgoings and society charges, costs of utilities
• Potential for resale or renting out of the property
• Any other distinguishing features or advantages of the property

• Market Trends about prevalent rates of property in the vicinity and the last known transactions.
• Ask for photocopies of all the deeds of title related to the property to be purchased. Examine the deeds to establish the ownership of the property by the seller, preferably through an advocate. Ascertain the survey number, village and registration district of the property, as these details are required for registration of the sale. Previous encumbrances and loans, if any on the property must be cleared before completion of the purchase of the property. The title of the Vendor to the property must be clear and marketable.
• Check for approved layout plan and approved building plan with the number of floors.
• Clearances from Municipality, Electricity, Water, Pollution and Lift authorities.
• Check the building bye-laws in that area to verify any issue with the setback, side setback, height, etc.
• Confirm transfer fees, stamp duty and registration charges to be paid on the purchase of the property as well as outgoings to be paid for the property i.e. property tax, water and electricity charges, society charges, maintenance charges.

No. NRIs do not require any permission to buy any immovable property in India other than agricultural / plantation property or a farmhouse.

The purchase consideration should be met either out of inward remittances in foreign exchange through normal banking channels or out of funds from any non-resident accounts maintained with banks in India.

There are no limits on the number of residential properties that may be bought by an NRI. However, repatriation (the process of converting a foreign currency into the currency of one's own country) is allowed only in respect of two such properties.

NRI/PIOs can, without restraint, rent out their immovable property, whether purchase through the application of forex or otherwise, without seeking any consent from the RBI. The rental income being a current account transaction is repatriable outside India, only if proper tax is paid or provided for.

• The loan amount shall not exceed 85% of the cost of the housing unit.
• Own contribution, which is the cost of housing unit financed less the loan amount, can be met from direct remittances from abroad only through normal banking channels, your Non-Resident (External) [NR (E)] Account and /or Non-Resident (Ordinary) [NR (O)] account and /or Non-Resident Special Rupee account [NRSR] in India
• Reimbursement of the loan, comprising of the principal and interest including all the charges are to be remitted from abroad only through normal banking channels, your Non-Resident (External) [NR (E)] Account and /or Non-Resident (Ordinary) [NR (O)] account and /or Non-Resident Special Rupee account [NRSR] in India

Authorized dealers have been granted permission to grant loans to NRIs for the acquisition of house/flat for self-occupation on their return to India subject to certain conditions. 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 investor's NRE/FCNR/NRO accounts.

Yes. Such housing loans availed in rupees can also be repaid by the close relatives of the borrower in India.

The following documents are normally to be submitted along with the application:

• Photocopy of the labour contract and English translation duly countersigned by your employer.
• Latest salary certificate (in English) specifying the following: Name (as it appears in the passport), date of joining, Passport Number, Designation, Perquisites and salary.
• Photocopy of labour card/identity card.
• Photocopy of valid resident visa stamped on the passport.
• Photocopy of monthly statement of a local bank account for the last 4 months.
• Property related documents.

An NRI can borrow against the security of immovable property from an authorized dealer subject to the following conditions.

• The loan should be used for meeting the personal requirements or for borrower's own business purposes; and
• The loan should not be used for forbidden activities, namely;
(a) The business of chit fund, or
(b) agriculture or plantation activities or in the real estate business, or construction of farmhouses, or
(c) trading in Transferable Development Rights (TDRs).
• The loan amount cannot be remitted outside India
• Repayment of the loan shall be made from out of remittances from overseas or by debit to NRE/FCNR/NRO account or out of the sale profits of shares or securities or immovable property against which such loan was granted.

The relaxation of FDI in the construction, development sector announced in March 2006 allows NRIs, PIOs and all foreigners equal opportunity with their Indian counterparts in the Indian real estate sector. The new guidelines state that, before selling, the site has to be developed, constructed upon or fulfil the criteria of minimum one-year development.

• NRIs, PIOs and foreigners can now invest in land, buy it, construct upon it or develop it, sell constructed buildings/developed plots.
• FDI through automatic route can also flow in, not just for the housing sector, but also for townships, housing, commercial area, and infrastructure development.
• Restrictions on a minimum area of land, a minimum number of units has been removed.

The norms are quite liberal. It allows you five years to finish at least 50% of your project from the date of getting all the clearances. In normal circumstances, the project can be completed within three years. It helps protect the customer and keeps fly-by-night operators at bay.

The automatic route has simplified much of the cumbersome investment process. An approval from the Reserve Bank is not required anymore and there is no need to go to the Foreign Investment Promotion Board either. The easing of paperwork and relaxation of formalities has given a boost to overseas investor confidence for investing in India.

Any NRI, before investing in Indian real estate, should also focus on the particular segment that he plans to invest in - like residential, retail or office space. Consulting legal firms and real estate firms providing professional NRI services can be very useful.

A lot depends on the segment you want to invest in. It helps to gauge the future state and to know what utilities are available. i) An office market investment, for instance, requires you to:

• Get in touch with consultants for advice on the city of choice.
• Outline your objectives, the size of your investments.
• Have an approximation of the returns you are expecting.
• The yield that has evolved from distinct parameters ranges between 8 - 8.5% to 12% for office space and 4% - 6% in residential.
• Whether the land is for investment or development is also a deciding factor, as is the local demand-supply situation. While investing in India, the availability and quality of infrastructure or utilities like power, connectivity, security, and long-term plans need to be scrutinized.

Single-window clearance in a real estate project in India sometimes may be difficult, because of the involvement of several authorities. If it is a multi-storied building, you need to get clearance from town planning authorities, clearance on design, elevators, firefighting agencies, etc. Efforts are on to make the process simpler and transparent, though.

Healthy competition is important and necessary. However, in the case of FDI, joint venture definitely seems the wisest route to take as it has tremendous scope. The Indian partner would always be in a better position to provide inputs in terms of information on land and clearances, where the foreign investors can put their money, use technology judiciously and opportunities where both can complement each other.

Currently, as big foreign investors are foraying into India, their main interests have been in joint ventures. The first couple of transactions or strategies have gone this way, and large joint ventures have been struck. Trends show that in the initial years, FDI inflow into real estate in India will come through joint ventures. Efforts to improve infrastructure and speed up reform processes, better tax rules, computerization of land records and more transparency have ensured enhanced investments and developments in the Indian real estate industry.

The response received post relaxation of FDI in the construction and development sector has been very optimistic. This can be seen as a catalyst for investment as it would have a multiplier effect on the economy. Other sectors that will receive a boost include:

• Technology, associated infrastructure that will be built.
• Growth of associated industries such as steel, cement, building material, designers, etc.
• Job opportunities for unskilled, semi-skilled workers, artisans, engineers, architects and the like.