Sale of Property - NRI

NRI's willing to sell property in India can remit the proceeds of sale back to the overseas bank accounts, provided the money received from the sale is not more than the money invested while buying it. RBI has set a limit of 2 properties for such transactions.

Following are guidelines by RBI.

In the event of sale of immovable property other than agricultural land / farm house / plantation property in India by a NRI / PIO, the Authorized Dealer may allow repatriation of the sale proceeds outside India, provided the following conditions are satisfied;

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 these 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;

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

For this purpose, repatriation outside India means the buying or drawing of foreign exchange from an authorized dealer in India and remitting it outside India through normal banking channels or crediting it to an account denominated in foreign currency or to an account in Indian currency maintained with an authorized dealer from which it can be converted in foreign currency.

In case the property is acquired out of Rupee resources and/or the loan is repaid by close relatives in India (as defined in Section 6 of the Companies Act, 1956), the amount can be credited to the NRO account of the NRI/PIO. The amount of capital gains, if any, arising out of sale of the property can also be credited to the NRO account.
NRI/PIO are also allowed by the Authorized Dealers to repatriate an amount up to USD 1 million per financial year out of the balance in the NRO account / sale proceeds of assets by way of purchase / the assets in India acquired by him by way of inheritance / legacy. This is subject to production of documentary evidence in support of acquisition, inheritance or legacy of assets by the remitter, and a tax clearance / no objection certificate from the Income Tax Authority for the remittance. Remittances exceeding US $ 1,000,000 (US Dollar One million only) in any financial year requires prior permission of the Reserve Bank.

A person referred to in sub-section (5) of Section 6 of the Foreign Exchange Management Act 3, or his successor shall not, except with the prior permission of the Reserve Bank, repatriate outside India the sale proceeds of any immovable property referred to in that sub-section.