• Repatriation of Profits from Sale of Property OCI

Please could you advise on the repatriation of proceeds from the sale of property in India by a UK resident OCI. I would like to buy an apartment off-plan but need to understand whether I'll be able to repatriate profits from the sale of the property should it increase in value over the next five or ten years. I would be paying for the property out of GBP raised from UK income, transferred to an OCI account and converted into Rupees.
Thanks
Deepa
Asked 7 years ago in Property Law
Religion: Hindu

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8 Answers

Repatriation of sale proceeds of immovable property may be allowed by authorised dealer outside India provided:

The immovable property was acquired by the seller in accordance

with the provisions of the foreign exchange law in force at the

Time of acquisition by him or the provisions of FEMA Regulations;

The amount to be repatriated does not exceed:

? the amount paid for acquisition of the immovable property in

foreign exchange received through normal banking channels, or

? the amount paid out of funds held in Foreign Currency Non-

Resident Account, or

? 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 account for acquisition of the property

Ajay Sethi
Advocate, Mumbai
95208 Answers
7610 Consultations

5.0 on 5.0

Yes you can repatriate the profits generated from the property after repatriation even though the property purchasing from income raised at UK transferred OCI account and converted into rupees.

Lakshmi Kanth
Advocate, Hyderabad
446 Answers
15 Consultations

4.7 on 5.0

Hi

I) First and foremost, you can buy residential or commercial properties in India from your UK income and you can repatriate the proceeds outside India provided that you fulfill certain conditions:

Conditions for Purchase:

a) Purchases should be through Remittances in foreign exchange through normal banking channels and using these funds either in ,

i) Foreign Currency Non Resident (FCNR) Account or

ii) Non Resident External (NRE) Account OR

iii) NRO account

b) By taking a home loan from an Indian bank.

II) Repatriation of funds in the event of sale:

a) As a general rule repatriation cannot exceed the amount you remitted and the current cap is you can repatriate to the extent of USD 1 million (including all other capital account transactions) per calendar year without obtaining permission from Reserve bank of india

b) If you purchased using funds in the Foreign Currency Non Resident (FCNR) Account, then the repatriation cannot exceed he foreign exchange equivalent, as on date of purchase of the amount paid through this account.

c) If you purchased using funds lying in your Non Resident External (NRE) Account, then the repatriation cannot exceed the foreign exchange equivalent, as on date of purchase, of the amount paid through NRE Account.

d) If you purchased a property by taking a home loan, then repatriation cannot exceed the amount of loan repayment that has been done using foreign inward remittances or debit to NRE/FCNR Accounts.

e) If you purchased the property using balance in your NRO account, then the sale proceeds must be credited to your NRO account and you can repatriate to the extent of USD 1 million (including all other capital account transactions) per calendar year.

III) In the event of sale price exceeding USD 1 million you have the following options

a) you can repatriate up to USD 1 million per calendar year (including all other capital account transactions) without necessity of obtaining RBI Permission or

b) You can repatriate over and above USD 1 million per calendar year after obtaining RBI Permission.

iv) In all cases, repatriation is restricted to sale of two residential properties.

v) All sales of immovable properties will be liable for capital gains tax and prior to repatriation all capital gains (short term or long term) should have been compulsorily paid by OCI

Hope this information is useful.

Rajgopalan Sripathi
Advocate, Hyderabad
2173 Answers
394 Consultations

5.0 on 5.0

You should make payment in Indian rupees for purchase of immovable property

2) in agreement for sale total consideration should be mentioned

3) period within which full payment to be made should be specified

4) it should be mentioned that on full consideration being made sale deed would be executed in your favour

Ajay Sethi
Advocate, Mumbai
95208 Answers
7610 Consultations

5.0 on 5.0

Mode of payment will be depends on receiver and you. It can be in rupees or otherwise if said receiver agrees. Yes there are stranded contacts terms for securing property which will be reduced in writing in the form of sale agreement.

Lakshmi Kanth
Advocate, Hyderabad
446 Answers
15 Consultations

4.7 on 5.0

1.In the event of sale of immovable property other than agricultural land/farm

house/plantation property in India by NRI/PIO, the authorized dealer will

allow repatriation of sale proceeds outside India provided;

(i) The immovable property was acquired by the seller in accordance with

the provisions of the foreign exchange law in force at the time of

acquisition by him or the provisions of FEMA Regulations;

(ii) 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 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 account for acquisition of the property.

iii. In the case of residential property, the repatriation of sale proceeds is

restricted to not more than two such properties.

2. RBI approval is required if:

(i) Remittance is in excess of USD 1,000,000 (US Dollar One million only) per financial year:

(II) on account of legacy, bequest or inheritance to a citizen of foreign state, resident outside India; and

by NRIs/ PIOs out of the balances held in NRO accounts/ sale proceeds of assets/ the assets acquired by way of inheritance/ legacy.

(ii) Hardship will be caused to a person if remittance from India is not made to such a person.

Ashish Davessar
Advocate, Jaipur
30763 Answers
972 Consultations

5.0 on 5.0

Under the general permission granted by RBI, an OCI can can freely purchase

immovable property in India.

OCI can purchase immovable property in India except agricultural land/plantation property/farmhouse.

The mere acquisition of property does not attract income tax.

However, any income accruing from the ownership of it, in the form of rent (if it is let out)/annual value of the house (if is not let out and it is not the only residential property owned by that person in India) and/or capital gains (short term or long term) arising on the sale of this house or part thereof is taxable in the hands of the owner.

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.

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 then 3 years then the resultant gain would be long term capital gains subject to 20% tax plus applicable cess.

(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:

(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.

T Kalaiselvan
Advocate, Vellore
85409 Answers
2237 Consultations

5.0 on 5.0

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.

T Kalaiselvan
Advocate, Vellore
85409 Answers
2237 Consultations

5.0 on 5.0

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