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Who can invest ? |
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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. |
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Purchase/Sale of Property |
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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. |
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Rental Income |
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" 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. |
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Investment in proprietorship/partnership firm and limited companies |
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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. |
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