To invest in an immovable property in
India, following criteria of people are applicable.
• Indian citizens; and
• A Person of Indian origin (PIO), who is an individual,
who:
• At any time held Indian passport; or
• was himself/ herself a citizen of India or whose
father or grandfather was a citizen of India
AND
• Is not a citizen of Pakistan or Bangladesh or Sri
Lanka or Afghanistan or China or Iran or Nepal or
Bhutan.
Purchase:
A specified form called the IPI 7 needs to be filed with
the central office of the RBI along with the title deed
or any other certified copy of the document proving that
the NRI has executed an agreement to purchase property
within the country. The form has to be filed within 90
days of the purchase of property and has to be
accompanied with a bank certificate stating the
consideration paid for the purchase. Permissions are
generally granted without undue delays if all the
relevant papers are submitted. There is no limit on the
number of investments or the quantity of investments
that can be made in real estate. The immovable property
can be purchased by inward remittances from any place
outside India or through funds maintained in NRI
accounts in the banks within the country.
Sale factor:
In the selling factor the difference of that of a PIO
and Indian Citizen is that a PIO can sell immovable
property only to a person resident in India, while an
Indian citizen can sell immovable property to any other
Indian citizen or person resident in India or a PIO. A
lock in period of three years is set for a NRI desiring
to sell property.
This is with accordance to the FEMA regulations. NRI
can sell property only after three years from the date
of acquisition of the property or from the date of
payment of the final installment of the consideration
for its acquisition, whichever is later.
"Income from house property "
this is the term used for the income that is derived
from renting out a property. The Annual value will be
subject to taxation after allowing deductions for (a)
30% of annual value (b) interest payable on borrowed
capital for acquisition of property. Annual value is
higher of (i) Actual rent received/ receivable or (ii)
fair rent of the property. If the property is let out
as a complete business centre wherein the purpose is to
provide a composite service of providing fully
furnished infrastructure for commercial use, the income
will be taxed as business income. TDS would have to be
deducted from Rental income.
An NRI/PIO resident outside India may invest by way
of contribution to the capital of partnership firm
or a proprietorship concern in India on
non-repatriation basis. The firm or proprietary
concern should not be engaged in any agricultural
/plantation or real estate business i.e. dealing in
land and immovable property or earning income
therefrom. However, they can invest with
repatriation benefits only with the prior approval
of Secretarial for Industrial Assistance (SIA).
Both NRIs and PIOs can invest in limited companies
engaged in real estate development. The paid up
value of shares/convertible debentures purchased by
an NRI both on repatriation and non-repatriation
basis should not exceed five per cent of the paid-up
capital/paid up value of each series of debentures.
The aggregate paid
up value of shares/convertible debentures purchased
by all NRIs should not exceed 10 per cent of the
paid up capital of the company /paid up value of
series of debentures. However it can be raised to 24
per cent if general body of the Indian company
concerned passes a special resolution to that
effect.
