NRI Properties

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As the government continues to push through reforms (in the Land Acquisition Act, the Real Estate regulatory bill, relaxation of FDI rules, etc.), Property continues to remain the best option for NRIs looking to invest in India, But before making the final decision, there are some big questions to be addressed; who is the developer, what are his credentials, what about the property, location, amenities, payment terms, legalities and so on. The NEWEDGE offers rewarding investment options in the commercial hub of India – Mumbai.

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A. Who is a NRI?

Non Resident Indian (NRI) is a citizen of India, who stays abroad for employment/carrying on business or vocation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad is a non-resident. Non-resident foreign citizens of Indian Origin are treated at par with Non Resident Indian (NRIs).

NRIs can also be:

Indian citizens who stay in a foreign country for employment

Indian citizens carrying on their businesses or vocations

Indian citizens abroad for any other purpose in the circumstances indicating a definite intention to stay outside India for an indefinite period

Indian citizens working abroad on assignment with foreign governments or international agencies

Officials of central and state government and public sector undertakings deputed abroad on temporary assignments or posted to their offices abroad

Indians who have settled abroad permanently or gone abroad on immigration Non-resident Indians become residents of India once they come back to India to engage in employment, for carrying on any business or vocation, or for any other purpose indicating a definite intention to stay in India for an indefinite period.

Who is a PIO?

Person of Indian Origin (PIO) (not being a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan), who

AAt any time, held Indian passport, or

BWho or either of whose father or whose grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955)

Who is OCI?

A. Any person of full age and capacity:

Who is a citizen of another country, but was a citizen of India at the time of, or at any time after, the commencement of the constitution, or

Who is a citizen of another country, but was eligible to become a citizen of India at the time of the commencement of the constitution, or

Who is a citizen of another country, but belongs to a territory that became part of India after the 15th Day of August, 1947.

Who is a child of such a citizen, or

B. A person, who is minor child of a person mentioned in clause (a)

Provided that no person, who is or had been a citizen of Pakistan, Bangladesh shall be eligible for registration as an Overseas Citizen of India.

A. ACQUISITION AND TRANSFER OF IMMOVABLE PROPERTY IN INDIA BY A PERSON RESIDENT OUTSIDE INDIA

>A. Acquisition of Immovable Property in India by a person resident outside India, i.e., by a NRI / PIO / foreign national of non-Indian origin by way of purchase / gift / inheritance. B. Transfer of immovable property in India by a person resident outside India by way of

  • Sale
  • Gift
  • Mortgage
CMode of payment for purchase of immovable property in India. DRepatriation of sale proceeds of residential / commercial property, in India, outside India acquired by NRI / PIO by way of
  • Purchased
  • Gift
  • Inheritance
E Provisions for Foreign Embassies / Diplomats / Consulates General F Other Aspects. Acquisition Of Immovable Property In India Through Purchase / Gift/ Inheritance

Q.1. who can purchase immovable property in India?

Ans.Under the general permission available, the following categories can purchase immovable property in India:

i)Non-Resident Indian (NRI)

ii)Person of Indian Origin (PIO)

The general permission, however, covers only purchase of residential and commercial property and is not available for purchase of agricultural land / plantation property / farm house in India.

Q.2. Can NRI/PIO acquire agricultural land/ plantation property / farm house in India?

Ans.No.

Q.3. Are any documents required to be filed with the Reserve Bank after the purchase?

Ans.No. An NRI / PIO who has purchased residential / commercial property under general permission, is not required to file any documents/reports with the Reserve Bank.

Q.4. How many residential / commercial properties can NRI / PIO purchase under the general permission?

Ans.There are no restrictions on the number of residential / commercial properties that can be purchased.

Q.5. Can a foreign national of non-Indian origin be a second holder to immovable property purchased by NRI / PIO?

Ans.No

Q.6. Can a foreign national of non-Indian origin resident outside India purchase immovable property in India?

Ans.No A foreign national of non-Indian origin, resident outside India cannot purchase any immovable property in India unless such property is acquired by way of inheritance from a person who was resident in India. However, he / she can acquire or transfer immovable property in India, on lease, not exceeding five years. In such cases, there is no requirement of taking any permission of /or reporting to the Reserve Bank.

Q.7. Can a foreign national who is a person resident in India purchase immovable property in India?

Ans.Yes, a foreign national who is a ‘person resident in India’ within the meaning of Section 2(v) of FEMA, 1999 can purchase immovable property in India, but the person concerned would have to obtain the approvals and fulfill the requirements, if any, prescribed by other authorities, such as, the State Government concerned, etc. The onus to prove his/her residential status is on the individual as per the extant FEMA provisions, if required by any authority. However, a foreign national resident in India who is a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan would require prior approval of the Reserve Bank.

A. Forex facilities

Introduction:

The legal framework for administration of foreign exchange transactions in India is provided by the Foreign Exchange Management Act, 1999. Under the Foreign Exchange Management Act, 1999 (FEMA), which came into force with effect from June 1, 2000, all transactions involving foreign exchange have been classified either as capital or current account transactions. All transactions undertaken by a resident that do not alter his / her assets or liabilities, including contingent liabilities, outside India are current account transactions.

In terms of Section 5 of the FEMA, persons resident in India are free to buy or sell foreign exchange for any current account transaction except for those transactions for which drawl of foreign exchange has been prohibited by Central Government, such as remittance out of lottery winnings; remittance of income from racing/riding, etc., or any other hobby; remittance for purchase of lottery tickets, banned / proscribed magazines, football pools, sweepstakes, etc.; remittance of dividend by any company to which the requirement of dividend balancing is applicable; payment of commission on exports under Rupee State Credit Route, except commission up to 10% of invoice value of exports of tea and tobacco and payment related to “call back services�? of telephones.

Foreign Exchange Management (Current Account Transactions) Rules, 2000 - Notification [GSR No.381 (E)] dated May 3, 2000 and the revised Schedule III to the Rules as given in the Notification G.S.R. 426(E) dated May 26, 2015 is available in the Official Gazette as well as, as an Annex to our Master Circular on ‘Miscellaneous Remittances from India–Facilities for Residents’ available on website www.mastercirculars.rbi.org.in.

These FAQs may be referred to for general guidance. The Authorised Persons and their constituents may refer to respective circulars/ notifications for detailed information, if so needed.

Q.1. who is an Authorized Dealer?

An Authorised Dealer is any person specifically authorized by the Reserve Bank under Section 10(1) of FEMA, 1999, to deal in foreign exchange or foreign securities (the list of ADs is available on www.rbi.org.in) and normally includes banks.

Q.2. Who are authorized by the Reserve Bank to sell foreign exchange for travel purposes?

Foreign exchange can be purchased from any authorised person, such as Authorised Dealer (AD) Category-I bank and AD Category II. Full-Fledged Money Changers (FFMCs) are also permitted to release exchange for business and private visits.

Q.3. What is the Liberalised Remittance Scheme (LRS) of USD 2, 50,000.

Under the Liberalised Remittance Scheme, all resident individuals, including minors, are allowed to freely remit up to USD 2, 50,000 per financial year (April – March) for any permissible current or capital account transaction or a combination of both. Further, resident individuals can avail of foreign exchange facility for the purposes mentioned in Para 1 of Schedule III of FEM (CAT) Amendment Rules 2015, within the limit of USD 2, 50,000 only. If an individual remits any amount under LRS in a financial year, then the applicable limit for such individual would be reduced from USD 250,000 by the amount so remitted. In case of remitter being a minor, the LRS declaration form must be countersigned by the minor’s natural guardian.

Q. 4. Can a resident individual make a rupee loan to a NRI/PIO who is a close relative of resident individual, by of crossed cheque/ electronic transfer?

A resident individual is permitted to make a rupee loan to a NRI/PIO who is a close relative of the resident individual (‘relative’ as defined in section 6 of the Companies Act 1956) by way of crossed cheque/ electronic transfer subject to the following conditions:

  1. The loan is free of interest and the minimum maturity of the loan is one year.

  2. The loan amount should be within the overall limit under the Liberalised Remittance Scheme of USD 2,50,000, per financial year, available to the resident individual. It would be the responsibility of the lender to ensure that the amount of loan is within the Liberalised Remittance Scheme limit of USD 2,50,000 during the financial year.

  3. The loan shall be utilized for meeting the borrower's personal requirements or for his own business purposes in India.

  4. The loan shall not be utilized, either singly or in association with other person, for any of the activities in which investment by persons resident outside India is prohibited, namely;

    1. the business of chit fund, or

    2. Nidhi Company ,or

    3. agricultural or plantation activities or in real estate business, or construction of farmhouses, or

    4. Trading in Transferable Development Rights (TDRs)

    Explanation:the purpose of item (c) above, real estate business shall not include development of townships, construction of residential / commercial premises, roads or bridges.

  5. The loan amount should be credited to the NRO a/c of the NRI /PIO. Credit of such loan amount may be treated as an eligible credit to NRO a/c.

  6. The loan amount shall not be remitted outside India.

  7. Repayment of loan shall be made by way of inward remittances through normal banking channels or by debit to the Non-resident Ordinary (NRO)/ Non-resident External (NRE) / Foreign Currency Non-resident (FCNR) account of the borrower or out of the sale proceeds of the shares or securities or immovable property against which such loan was granted.

Q. 5. Can a resident individual make a rupee gift to a NRI/PIO who is a close relative of resident individual, by of crossed cheque/ electronic transfer?

A resident individual can make a rupee gift to a NRI/PIO who is a close relative of the resident individual [‘close relative’ as defined in Section 6 of the Companies Act, 1956] by way of crossed cheque /electronic transfer. The amount should be credited to the Non-Resident (Ordinary) Rupee Account (NRO) a/c of the NRI / PIO and credit of such gift amount may be treated as an eligible credit to NRO a/c. The gift amount would be within the overall limit of USD 250,000 per financial year as permitted under the LRS for a resident individual. It would be the responsibility of the resident donor to ensure that the gift amount being remitted is under the LRS and all the remittances made by the donor during the financial year including the gift amount have not exceeded the limit prescribed under the LRS.

Q. 6. Can the loans of Non-resident be repaid by resident close relatives?

Where an authorised dealer in India has granted loan to a non-resident Indian in accordance with Regulation 7 of the Notification No. FEMA 4/2000-RB dated May 3, 2000, such loans may also be repaid by resident close relative (‘relative’ as defined in section 6 of the Companies Act, 1956) of the Non-Resident Indian by crediting the borrower’s loan account through the bank account of such relative.

Q. 7. What are the prohibited items under the Scheme?

The remittance facility under the Scheme is not available for the following:

  1. Remittance for any purpose specifically prohibited under Schedule-I (like purchase of lottery tickets/sweep stakes, proscribed magazines, etc.) or any item restricted under Schedule II of Foreign Exchange Management (Current Account Transactions) Rules, 2000.

  2. Remittance from India for margins or margin calls to overseas exchanges / overseas counterparty.

  3. Remittances for purchase of FCCBs issued by Indian companies in the overseas secondary market.

  4. Remittance for trading in foreign exchange abroad.

  5. Capital account remittances, directly or indirectly to countries identified by the Financial Action Task Force (FATF) as “non- cooperative countries and territories�?, from time to time.

  6. Remittances directly or indirectly to those individuals and entities identified as posing significant risk of committing acts of terrorism as advised separately by the Reserve Bank to the banks.

Q. 8. Under LRS are resident individuals required to repatriate the accrued interest/dividend on deposits/investments abroad, over and above the principal amount?

The investor can retain and reinvest the income earned on investments made under the Scheme. At present, the residents are not required to repatriate the funds or income generated out of investments made under the Scheme. However, a resident individual who has made overseas direct investment in the equity shares and compulsorily convertible preference shares of a Joint Venture or Wholly Owned Subsidiary outside India, within the LRS limit then he/she shall have to comply with the terms and conditions as prescribed by our overseas investment guidelines under Notification No. 263/ RB-2013 dated August 5, 2013.

Q. 9. Can remittances under the LRS facility be consolidated in respect of family members?

Remittances under the facility can be consolidated in respect of close family members subject to the individual family members complying with the terms and conditions of the Scheme. However, clubbing is not permitted by other family members for capital account transactions such as opening a bank account/investment/purchase of property, if they are not the co-owners/co-partners of the investment/property/overseas bank account.

Q. 10. Can one use the LRS for purchase of objects of art (paintings, etc.) either directly or through auction house?

Remittances under the Scheme can be used for purchasing objects of art subject to the provisions of other applicable laws such as the extant Foreign Trade Policy of the Government of India.

Q.11. Is the AD required to check permissibility of remittances based on nature of transaction or allow the same based on remitters declaration?

AD will be guided by the nature of transaction as declared by the remitter in Form A2 and ‘Application cum declaration for purchase of foreign exchange under LRS of USD 250,000’ and will thereafter certify that the remittance is in conformity with the instructions issued by the Reserve Bank in this regard from time to time.

Q.12. Can an individual, who has availed of a loan abroad while as a non-resident Indian repay the same on return to India, under this Scheme as a resident?

Yes, this is permissible.

Q. 13. Is it mandatory for resident individuals to have PAN number for sending outward remittances under the Scheme?

Yes, it is mandatory to have PAN number to make remittances under the Scheme. However, PAN card need not be insisted upon for remittance made towards permissible current account transactions up to USD 25,000.

Q. 14. In case a resident individual requests for an outward remittance by way of issuance of a demand draft (either in his own name or in the name of the beneficiary with whom he intends putting through the permissible transactions) at the time of his private visit abroad, whether the remitter can effect such an outward remittance against self-declaration?

Such outward remittance in the form of a DD can be effected against the declaration by the resident individual in the format prescribed under the Scheme.

Q. 15. Are there any restrictions on the frequency of the remittance?

There are no restrictions on the frequency of remittances under LRS. However, the total amount of foreign exchange purchased from or remitted through, all sources in India during a financial year should be within the cumulative limit of USD 2,50,000. Once a remittance is made for an amount up to USD 2,50,000 during the financial year, a resident individual would not be eligible to make any further remittances under this scheme, even if the proceeds of the investments have been brought back into the country.

Q. 16. Whether LRS facility is in addition to existing facilities detailed in para 1 of Schedule III of FEM (CAT) Amendment Rules, 2015?

. No. The existing facilities detailed in Para 1 of Schedule III to FEM (CAT) Amendment Rules, 2015, have been subsumed under the limit of USD 2,50,000 available to resident individuals per financial year under the LRS scheme w.e.f. May 26, 2015. However, for emigration; expenses in connection with medical treatment abroad and studies abroad, individuals may avail of exchange facility for an amount in excess of the overall limit prescribed under the LRS, if it is so required by a country of emigration, medical institute offering treatment or the university respectively.

Q. 17. What are the purposes under FEM (CAT) Amendment Rules, 2015, under which a resident individual can avail of foreign exchange facility?

Individuals can avail of foreign exchange facility for the following purposes within the limit of USD 2,50,000 only on financial year basis.

  1. Private visits to any country (except Nepal and Bhutan)

  2. Gift or donation.

  3. Going abroad for employment

  4. Emigration

  5. Maintenance of close relatives abroad

  6. Travel for business, or attending a conference or specialized training or for meeting expenses for meeting medical expenses, or check-up abroad, or for accompanying as attendant to a patient going abroad for medical treatment/ check-up.

  7. Expenses in connection with medical treatment abroad

  8. Studies abroad

  9. Any other current account transaction

Any additional remittance in excess of the said limit for the above mentioned purposes shall require prior approval of the Reserve Bank of India. “Any other current account transaction�? as given at (ix) above is to cover any other current account transactions which were available to individuals in the erstwhile Schedule III to FEM (CAT) Rules, 2000 dated May 3, 2000, and which do not appear above/ in Schedule III to FEM (CAT) Amendment Rules, 2015. However, for purposes such as emigration; expenses in connection with medical treatment abroad and studies abroad, individuals may be permitted to avail of exchange facility for an amount in excess of the overall limit prescribed under the LRS, if it is so required by a country of emigration, medical institute offering treatment or the university respectively. (To be read along with Q 21, Q24 and Q25). The AD bank may undertake the remittance transaction without RBI’s permission for all residual current account transactions which are not prohibited/ restricted transactions under Schedule I, II or III of FEM (CAT) Rules, 2000, as amended from time to time. It is for the AD bank to satisfy themselves about the genuineness of the transaction, as hitherto. The resident individual needs to fill up the Form A2 as well as the ‘Application cum declaration for purchase of foreign exchange under LRS of USD 250,000’.

Q.18. how much foreign exchange can one buy when traveling abroad on private visits to a country outside India?

For private visits abroad, other than to Nepal and Bhutan, any resident can obtain foreign exchange up to an aggregate amount of USD 2,50,000, from an Authorised Dealer or FFMC, in any one financial year, irrespective of the number of visits undertaken during the year. This limit has been subsumed under the Liberalised Remittance Scheme w.e.f. May 26, 2015. If an individual has already remitted any amount under the Liberalised Remittance Scheme in a financial year, then the applicable limit for travelling purpose for such individual would be reduced from USD 250,000 by the amount so remitted. The resident individuals shall have to fill Form A2 and ‘Application cum declaration for purchase of foreign exchange under LRS of USD 250,000’ while availing foreign exchange for travelling purposes from AD banks and FFMCs. No foreign exchange is available for visit to Nepal and/or Bhutan for any purpose. A resident Indian is allowed to take INR of denomination of Rs.100 or lesser denomination, to Nepal and Bhutan, without any limits. For denominations of Rs 500 and Rs1,000, the limit is Rs 25,000. Further, all tour related expenses including cost of rail/road/water transportation charges outside India and remittances relating towards cost of Euro Rail; passes/tickets, etc. for Indian travelers, and overseas hotel/flight charges have been subsumed under the new enhanced limit of USD 250,000. The tour operator can collect this amount either in INR or in FCY.

Q. 19. How much foreign exchange can a resident send as gift / donation to a person resident outside India?

Any resident individual/ entity (trust; company; partnership firm, etc.), may remit up-to USD 2,50,000 in one financial year as gift to a person residing outside India or as donation to an organization outside India. Remittances exceeding the limit of USD 2,50,000 will require prior permission from the Reserve Bank. It is clarified that a resident cannot gift to another resident, in foreign currency, for the credit of the latter’s foreign currency account held abroad under LRS. Further, general permission is available to persons other than individuals’ to remit towards donations up-to one per cent of their foreign exchange earnings during the previous three financial years or USD 5,000,000, whichever is less, for (a) creation of Chairs in reputed educational institutes, (b) contribution to funds (not being an investment fund) promoted by educational institutes; and (c) contribution to a technical institution or body or association in the field of activity of the donor Company. Any additional remittance in excess of the same shall require prior approval of the Reserve Bank of India.

Q. 20. How much foreign exchange is available to a person going abroad on employment?

A person going abroad for employment can draw foreign exchange up to USD 2,50,000 per financial year from any Authorised Dealer in India on the basis of self-declaration in Form A2 and ‘Application cum declaration for purchase of foreign exchange under LRS of USD 250,000’. This limit has been subsumed under the Liberalised Remittance Scheme w.e.f. May 26, 2015. If an individual remits any amount under the Liberalised Remittance Scheme in a financial year, then the applicable limit for such individual would be reduced from USD 250,000 by the amount so remitted.

Q. 21. How much foreign exchange is available to a person going abroad on emigration?

A person going abroad on emigration can draw foreign exchange from AD Category I bank and AD Category II up to the amount prescribed by the country of emigration or USD 250,000. This amount is only to meet the incidental expenses in the country of emigration. Further, this remittance is not for undertaking any capital account transactions such as overseas investment in government bonds; land; commercial enterprise; etc. No amount of foreign exchange can be remitted outside India to become eligible or for earning points or credits for immigration.

Q. 22. How much foreign exchange can a person resident in India remit towards maintenance of close relatives abroad?

. A person resident in India can remit up-to USD 250,000 per financial year towards maintenance of close relative (‘relative’ as defined in section 6 of the Companies Act, 1956) abroad. . This limit has been subsumed under the Liberalised Remittance Scheme w.e.f. May 26, 2015. If an individual remits any amount under the Liberalised Remittance Scheme in a financial year, then the applicable limit for such individual would be reduced from USD 250,000 by the amount so remitted.

Q. 23. How much foreign exchange is available for a business trip?

For business trips to foreign countries, resident individuals/ individuals having proprietorship firms can avail of foreign exchange up to USD 2,50,000 in a financial year irrespective of the number of visits undertaken during the year. This limit has been subsumed under the Liberalised Remittance Scheme w.e.f. May 26, 2015. Visits in connection with attending of an international conference, seminar, specialized training, apprentice training, etc., are treated as business visits. Release of foreign exchange exceeding USD 2,50,000 for business travel abroad, irrespective of the period of stay, by residents require prior permission from the Reserve Bank. However, if an employee is being deputed by a company and the expenses are borne by the company, then such expenses shall be treated as residual current account transactions and may be permitted by the AD bank, without any limit, subject to verifying the bonafides of the transaction.

Q. 24. How much foreign exchange can be drawn for medical treatment abroad?

AD Category I banks and AD Category II, may release foreign exchange up to USD 2,50,000 or its equivalent to resident Indians for medical treatment abroad on self-declaration basis in Form A2 and ‘Application cum declaration for purchase of foreign exchange under LRS of USD 250,000’, without insisting on any estimate from a hospital/doctor in India/abroad. However, a person visiting abroad for medical treatment can obtain foreign exchange from AD banks exceeding the above limit, provided the request is supported by an estimate from a hospital/doctor in India/abroad. In addition to the above, an amount up to USD 250,000 per FY is allowed to a person for accompanying as attendant to a patient going abroad for medical treatment/check-up.

Q. 25. What is meant by ‘any other current account transaction�? as given at item no. (ix) of para 1 of Schedule III to FEM (CAT) Amendment Rules, 2015?

“Any other current account transaction�? as given at item no. (ix) of Rules ibid is to cover any other current account transactions which were available to individuals in the erstwhile Schedule III to FEM (CAT) Rules, 2000 dated May 3, 2000, and which do not appear in Para 1 to Schedule III to FEM (CAT) Amendment Rules, 2015.

Q. 26. Resident individuals (but not permanently resident in India) can remit up to net salary after deduction of taxes. However, if he has exhausted the limit of USD 2,50,000 as net salary remittance and desires to remit any other income under LRS is it permissible as the limit will be over and above USD 2,50,000?

A person who is resident but not permanently resident in India and

(a) is a citizen of a foreign State other than Pakistan; or

(b) is a citizen of India, who is on deputation to the office or branch of a foreign company or subsidiary or joint venture in India of such foreign company, may make remittance up to his net salary (after deduction of taxes, contribution to provident fund and other deductions).

Explanation:For the purpose of this item, a person resident in India on account of his employment or deputation of a specified duration (irrespective of length thereof) or for a specific job or assignments, the duration of which does not exceed three years, is a resident but not permanently resident. It is clarified that salary includes earnings from stage shows and other earnings from modeling assignments and acting assignments etc. Further, resident individuals (but not permanently resident in India) who have remitted their entire earnings and salary and wish to further remit ‘other income’ may approach RBI through their AD bank for consideration with documents.

Q. 27. Whether the limit of USD 2,50,000 per financial year as mentioned in Para 1 of Schedule III of FEM (CAT) Amendment Rules, 2015 is also applicable to person other than individuals?

Yes, the limit of USD 2, 50,000 is applicable to persons other than individuals (such as corporate, trusts; etc.) who wish to avail of facilities under Para 1 of Schedule III to FEM (CAT) Amendment Rules, 2015. Such entities will have to fill up the Form A2 while remitting foreign exchange. However, all residual current account transactions undertaken by such entities are otherwise permissible without any specified limit as hitherto. All such residual current account transactions, irrespective of the amount, are to be disposed off at the level of AD Category I bank, as hitherto. It is for the AD Category I bank to satisfy themselves about the genuineness of the transaction.

Q. 28. How much foreign currency can be carried in cash for travel abroad?

Travellers going to all countries other than (a) and (b) below are allowed to purchase foreign currency notes / coins only up to USD 3000 per visit. Balance amount can be carried in the form of travelers’ cheque or banker’s draft. Exceptions to this are (a) travellers proceeding to Iraq and Libya who can draw foreign exchange in the form of foreign currency notes and coins not exceeding USD 5000 or its equivalent per visit; (b) travellers proceeding to the Islamic Republic of Iran, Russian Federation and other Republics of Commonwealth of Independent States who can draw entire foreign exchange (up-to USD 250, 000) in the form of foreign currency notes or coins. For travellers proceeding for Haj/ Umrah pilgrimage, full amount of BTQ entitlement (USD 250, 000) in cash or up to the cash limit as specified by the Haj Committee of India, may be released by the ADs and FFMCs.

Q 29. How much Indian currency can be brought in while coming into India?

A resident of India, who has gone out of India on a temporary visit may bring into India at the time of his return from any place outside India (other than Nepal and Bhutan), currency notes of Government of India and Reserve Bank of India notes up to an amount not exceeding Rs.25,000. A person may bring into India from Nepal or Bhutan, currency notes of Government of India and Reserve Bank of India notes, in denomination not exceeding Rs.100. Any person resident outside India, not being a citizen of Pakistan and Bangladesh and also not a traveller coming from and going to Pakistan and Bangladesh, and visiting India may bring into India currency notes of Government of India and Reserve Bank of India notes up to an amount not exceeding Rs. 25,000 while entering only through an airport. Any person resident in India who had gone to Pakistan and/or Bangladesh on a temporary visit, may bring into India at the time of his return, currency notes of Government of India and Reserve Bank of India notes up to an amount not exceeding Rs. 10,000 per person.

Q. 30. How much foreign exchange can be brought in while visiting India?

A person coming into India from abroad can bring with him foreign exchange without any limit. However, if the aggregate value of the foreign exchange in the form of currency notes, bank notes or travellers cheques brought in exceeds USD 10,000 or its equivalent and/or the value of foreign currency alone exceeds USD 5,000 or its equivalent, it should be declared to the Customs Authorities at the Airport in the Currency Declaration Form (CDF), on arrival in India.

Q.31. How many days in advance one can buy foreign exchange for travel abroad?

Permissible foreign exchange can be drawn 60 days in advance. In case it is not possible to use the foreign exchange within the period of 60 days, it should be immediately surrendered to an authorised person. However, residents are free to retain foreign exchange up to USD 2,000, in the form of foreign currency notes or TCs for future use or credit to their Resident Foreign Currency (Domestic) [RFC (Domestic)] Accounts.

Q.32. Can one pay by cash full rupee equivalent of foreign exchange being purchased for travel abroad?

Foreign exchange for travel abroad can be purchased from an authorized person against rupee payment in cash below Rs.50,000/-. However, if the sale of foreign exchange is for the amount equivalent to Rs 50,000/- and above, the entire payment should be made by way of a crossed cheque/ banker’s cheque/ pay order/ demand draft/ debit card / credit card / prepaid card only.

Q.33. Is there any time-frame for a traveller who has returned to India to surrender foreign exchange?

On return from a foreign trip, travellers are required to surrender unspent foreign exchange held in the form of currency notes and travellers cheques within 180 days of return. However, they are free to retain foreign exchange up to USD 2,000, in the form of foreign currency notes or TCs for future use or credit to their Resident Foreign Currency (Domestic) [RFC (Domestic)] Accounts.

Q.34. Should foreign coins be surrendered to an Authorised Dealer on return from abroad?

The residents can hold foreign coins without any limit.

Q 35. What are the documents required for withdrawal/remittance of foreign exchange for purposes mentioned in para 1 of Schedule III to FEM (CAT) Amendment Rules, 2015?

RBI will not prescribe any documentation to be submitted to ADs except the ‘Application cum Declaration for purchase of foreign exchange under LRS of USD 250,000’ for purchase/ remittance of foreign exchange under the Liberalised Remittance Scheme and Form A2. All other documentation may be done as advised by the Authorised Dealer. The different limits stipulated [as in Schedule III of FEM (CAT) Amendment Rules, 2015] for various current account transactions like travel; gift; maintenance of close relatives; etc. have been subsumed within the LRS limit of USD 250, 000. Individuals remitting under Schedule III to FEM (CAT) Amendment Rules, 2015 will have to fill up the Form A2 and ‘Application cum Declaration for purchase of foreign exchange under the Liberalised Remittance Scheme of USD 250,000’. Authorized dealers need not obtain any document, including Form A-2, except a simple letter from the applicant (containing the basic information, viz., names and the addresses of the applicant and the beneficiary, amount to be remitted and the purpose of remittance) as long as the foreign exchange is being purchased for a permissible current account transaction (not included in the Schedules I and II of Government Notification on Current Account Transactions), and the amount does not exceed USD 25000 or its equivalent and the payment is made by a cheque drawn on the applicant's bank account or by a Demand Draft. AD banks shall prepare dummy A-2 so as to enable them to provide purpose of remittance for statistical inputs for Balance of Payment. AD bank shall have to necessarily collect declarations from each traveller (of a group or a customised tour package) relating to compliance with the extant LRS limit, before allowing remittances from the tour operator’s INR or Special Foreign Currency account.

Q.36. Is there any category of visit which requires prior approval from the Reserve Bank or the Government of India?

Dance troupes, artistes, etc., who wish to undertake cultural tours abroad, should obtain prior approval from the Ministry of Human Resources Development (Department of Education and Culture), Government of India, New Delhi.

Q.37. Whether permission is required for receiving grant/donation from abroad under the Foreign Contribution Regulation Act, 1976?

The Foreign Contribution Regulation Act, 1976 is administered and monitored by the Ministry of Home Affairs whose address is given below: Foreigners Division, Jaisalmer House, 26,Mansingh Road, NewDelhi-110011 No specific approval from the Reserve Bank is required in this regard

Q.38. Who is permitted to hold International Credit Card (ICC)/ATM/Debit card for undertaking foreign exchange transactions?

Banks authorised to deal in foreign exchange are permitted to issue International Debit Cards (IDCs) which can be used by a resident for drawing cash or making payment to a merchant establishment overseas during his visit abroad. IDCs can be used only for permissible current account transactions and the usage of IDCs shall be within the LRS limit. AD banks can also issue Store Value Card/Charge Card/Smart Card to residents traveling on private/business visit abroad which can be used for making payments at overseas merchant establishments and also for drawing cash from ATM terminals. No prior permission from Reserve Bank is required for issue of such cards. However, the use of such cards is limited to permissible current account transactions and subject to the LRS limit. Resident individuals maintaining a foreign currency account with an authorised dealer in India or a bank abroad, as permissible under extant Foreign Exchange Regulations, are free to obtain International Credit Cards (ICCs) issued by overseas banks and other reputed agencies. The charges incurred against the card either in India or abroad, can be met out of funds held in such foreign currency account/s of the card holder or through remittances, if any, from India only through a bank where the card-holder has a current or savings account. The remittance for this purpose, should also be made directly to the card-issuing agency abroad, and not to a third party. It is also clarified that the applicable credit limit will be the limit fixed by the card issuing banks. There is no monetary ceiling fixed by the RBI for remittances, if any, under this facility. The LRS limit shall not apply to the use of ICC for making payment by a person towards meeting expenses while such person is on a visit outside India. Use of ICCs/ ATMs/ IDCs can be made for travel abroad in connection with various purposes and for making personal payments like subscription to foreign journals, internet subscription, etc. However, use of ICCs/ATMs/Debit Cards is NOT permitted for prohibited transactions indicated in Schedule -1 of FEM (CAT) Amendment Rules 2015 such as purchase of lottery tickets, banned magazines etc. Use of these instruments for payment in foreign exchange in Nepal and Bhutan is not permitted.

Q.39. Is it required to follow complete export procedure when a gift is sent outside India?

A person resident in India is free to send outside India (export) any gift article, which may be free to be exported as per the extant Foreign Trade Policy, of value not exceeding Rs.5,00,000/- in value, subject to the exporter submitting a declaration that goods / gift are not more than Rs.5,00,000/- in value. Such gifts may be sent outside India without furnishing the declaration in Form EDF/ SOFTEX, as the case may be.

Q.40. How much jewellery can be carried while going abroad?

Taking personal jewellery out of India is as per the Baggage Rules, governed and administered by Customs Department, Government of India. While no approval of the Reserve Bank is required in this case, approvals, if any, required from Customs Authorities may be obtained.

Q.41. Can a resident extend local hospitality to a non-resident?

A person resident in India is free to make any payment in Indian Rupees towards meeting expenses, on account of boarding, lodging and services related thereto or travel to and from and within India, of a person resident outside India, who is on a visit to India.

Q. 42. Can residents purchase air tickets in India for their travel not touching India?

Residents may book their tickets in India for their visit to any third country. For instance, residents can book their tickets for travel from London to New York, through domestic/foreign airlines in India. However, the same (air tickets) would be a part of the traveller’s overall entitlement of USD 250,000

Q. 43. Can a resident open a foreign currency denominated account in India?

Persons resident in India are permitted to maintain foreign currency accounts in India under the following three Schemes:

a. Exchange Earners Foreign Currency Accounts:-

All categories of resident foreign exchange earners can credit up to 100 per cent of their foreign exchange earnings, as specified in the Schedule to Notification No. FEMA 10/2000-RB dated 3rd May, 2000 as amended from time to time, to their EEFC Account with an Authorised Dealer in India. The 100 per cent credit is however, subject to the condition that the sum total of the accruals in the account during a calendar month should be converted into Rupees on or before the last day of the succeeding calendar month after adjusting for utilization of the balances for approved purposes or forward commitments. Funds held in EEFC account can be utilised for all permissible current account transactions and also for approved capital account transactions as specified by the extant Rules/Regulations/ Notifications/ Directives issued by the Government/RBI from time to time. The account is maintained in the form of a non-interest bearing current account.

b. Diamond Dollar Account (DDA):-

Under the scheme of Government of India, firms and companies dealing in purchase / sale of rough or cut and polished diamonds / precious metal jewellery plain, minakari and / or studded with / without diamond and / or other stones, with a track record of at least 2 years in import / export of diamonds / coloured gemstones / diamond and coloured gemstones studded jewellery / plain gold jewellery and having an average annual turnover of Rs. 3 crores or above during the preceding three licensing years (licensing year is from April to March) are permitted to transact their business through Diamond Dollar Accounts. It may be noted that the sum total of the accruals in the account during a calendar month should be converted into Rupees on or before the last day of the succeeding calendar month after adjusting for utilization of the balances for approved purposes or forward commitments. Such firms and companies may be allowed to open not more than five Diamond Dollar Accounts with their banks.

c. Resident Foreign Currency Accounts :-

A person resident in India may open, hold and maintain with an Authorised Dealer in India a Resident Foreign Currency (RFC) Account to keep their foreign currency assets which were held outside India at the time of return can be credited to such accounts. The foreign exchange received as (i) pension of any other superannuation or other monetary benefits from the employer outside India; (ii) received or acquired as gift or inheritance from a person referred to sub-section (4) of section 6 of FEMA, 1999 or (iii) referred to in clause (c) of section 9 of the Act or acquired as gift or inheritance there from or (iv) received as the proceeds of life insurance policy claims/maturity/ surrender values settled in foreign currency from an insurance company in India permitted to undertake life insurance business by the Insurance Regulatory and Development Authority; may also be credited to this account. RFC account can be maintained in the form of current or savings or term deposit accounts. The funds in RFC account are free from all restrictions regarding utilisation of foreign currency balances including any restriction on investment outside India.

d. Resident Foreign Currency (Domestic) Account:-

A resident Individual may open, hold and maintain with an Authorized Dealer in India, a Resident Foreign Currency (Domestic) Account, out of foreign exchange acquired in the form of currency notes, Bank notes and travellers cheques, from any of the sources like, payment for services rendered abroad, as honorarium, gift, services rendered or in settlement of any lawful obligation from any person not resident in India. The account may also be credited with/opened out of foreign exchange earned abroad like proceeds of export of goods and/or services, royalty, honorarium, etc., and/or gifts received from close relatives (as defined in section 6 of the Companies Act, 1956) and repatriated to India through normal banking channels. The account shall be maintained in the form of Current Account and shall not bear any interest. There is no ceiling on the balances in the account. The account may be debited for payments made towards permissible current and capital account transactions. It may be noted that the sum total of the accruals in the account during a calendar month should be converted into Rupees on or before the last day of the succeeding calendar month after adjusting for utilization of the balances for approved purposes or forward commitments.

Q.44. Can a person resident in India hold assets outside India?

In terms of sub-section 4, of Section (6) of the Foreign Exchange Management Act, 1999, a person resident in India is free to hold, own, transfer or invest in foreign currency, foreign security or any immovable property situated outside India if such currency, security or property was acquired, held or owned by such person when he was resident outside India or inherited from a person who was resident outside India. Further, a resident individual can also acquire property and other assets overseas under the Liberalised Remittance Scheme.

Q.45. Para 5.4 of AP DIR Circular 106 dated June 01, 2015 states that the applicants should have maintained the bank account with the bank for a minimum period of one year prior to the remittance for capital account transactions. Whether this restriction applies to current account transactions?

No. The rationale is that remittance facility is up to the LRS limit of USD 250, 000 for current account transactions under Schedule III of FEM (CAT) Amendment Rules, 2015, such as for private and business visits which can also be provided by FFMCs. As FFMCs cannot maintain accounts of remitters the proviso (as mentioned in para 5.4 of the circular ibid) has been confined to capital account transactions. However, FFMCs, are required to ensure that the "Know Your Customer" guidelines and the Anti-Money Laundering Rules in force have been complied with while allowing the current account transactions.

Q.46. Are there any restrictions towards remittances to Mauritius and Pakistan for permissible current account transactions?

No. However, capital account remittances for capital account transactions, directly or indirectly to countries identified by the Financial Action Task Force (FATF) as “non- cooperative countries and territories�?, from time to time; and remittances directly or indirectly to those individuals and entities identified as posing significant risk of committing acts of terrorism as advised separately by the Reserve Bank to the banks are not permissible.

Q.47. Can FFMCs now provide remittance facilities to their customers?

FFMCs cannot provide remittance facilities to their customers.

Q.48. What are the requirements to be complied with by the remitter?

The individual will have to designate a branch of an AD through which all the remittances under the Scheme will be made. The applicants should have maintained the bank account with the bank for a minimum period of one year prior to the remittance for capital account transactions only. . For remittances pertaining to permissible current account transactions, if the applicant seeking to make the remittance is a new customer of the bank, Authorised Dealers should carry out due diligence on the opening, operation and maintenance of the account. Further, the AD should obtain bank statement for the previous year from the applicant to satisfy themselves regarding the source of funds. If such a bank statement is not available, copies of the latest Income Tax Assessment Order or Return filed by the applicant may be obtained. He has to furnish the ‘application-cum-declaration for purchase of foreign exchange under the LRS of USD 250,000’ in the specified format along with Form A-2 regarding the purpose of the remittance and declare that the funds belong to him and will not be used for purposes prohibited or regulated under the Scheme.

Q.49. Can remittances be made only in US Dollars?

The remittances can be made in any freely convertible foreign currency.

Q.50. Are intermediaries expected to seek specific approval for making overseas investments available to clients?

Banks including those not having operational presence in India are required to obtain prior approval from Reserve Bank for soliciting deposits for their foreign/overseas branches or for acting as agents for overseas mutual funds or any other foreign financial services company.

Q.51. Are there any restrictions on the kind/quality of debt or equity instruments an individual can invest in?

No ratings or guidelines have been prescribed under the Liberalised Remittance Scheme of USD 2,50,000 on the quality of the investment an individual can make. However, the individual investor is expected to exercise due diligence while taking a decision regarding the investments which he or she proposes to make.

Q.52. Whether credit facilities (fund or non-fund based) in Indian Rupees or foreign currency can be extended by AD banks to resident individuals?

No, LRS does not envisage extension of credit facility by the AD banks to their resident individual customers to facilitate remittances for capital account transactions under LRS. However, AD banks may extend funded and non-funded facilities to resident individuals to facilitate current account remittances under the Scheme.

Q.53. Can bankers open foreign currency accounts in India for residents under LRS?

No, banks in India cannot open foreign currency accounts in India for residents under the Scheme.

Q.54. Can an Offshore Banking Unit (OBU) in India be treated on par with a branch of the bank outside India for the purpose of opening of foreign currency accounts by residents under the Scheme?

No, for the purpose of the Scheme, an OBU in India is not treated as an overseas branch of a bank in India.

Q.55. Are individuals resident in India permitted to include non-resident close relatives as joint holder(s) in their resident bank accounts?

Individuals resident in India are permitted to include non-resident close relative(s) (‘relatives’ as defined in section 6 of the Companies Act, 1956) as joint holder(s) in their resident bank accounts on ‘former or survivor’ basis. However, such non-resident Indian close relatives shall not be eligible to operate the account during the life time of the resident account holder.

Q.56. Can a Non-Resident Indian (NRI) open NRE/FCNR (B) account with their resident close relative?

Non-Resident Indian (NRI), as defined in FEMA Notification No. 5/ 2000-RB dated May 3, 2000 may be permitted to open NRE/FCNR(B) account with their resident close relative (‘relative’ as defined in Section 6 of the Companies Act , 1956) on ‘former or survivor’ basis. The resident close relative shall be eligible to operate the account as a Power of Attorney holder in accordance with the extant instructions during the life time of the NRI/PIO account holder.

Q.57. Is meeting of medical expenses of a NRI close relative, in India, by Resident Individuals permitted?

Where the medical expenses in respect of NRI close relative [‘relative’ as defined in section 6 of the Companies Act, 1956) are paid by a resident individual, such a payment being in the nature of a resident to resident transaction may be covered under the term “services related thereto�? under Regulation 2(i) of Notification No. FEMA16/ 2000-RB dated May 3, 2000.

Q.58. What is the reporting format to be complied with by the ADs?

AD banks have to report remittances under LRS on a monthly basis to External Payments Division, Foreign Exchange Department, Central office, Mumbai, in Online Returns Filing System (ORFS).

Q.59. Whether documents viz 15 CA, 15 CB have to be taken in all outward remittance cases including remittances for maintenance etc.?

In t/o A. P. (Dir Series) circular No. 151 dated June 30, 2014, Reserve Bank of India will not issue any instructions under the FEMA, regarding the procedure to be followed in respect of deduction of tax at source while allowing remittances to the non-residents. It shall be mandatory on the part of Authorised Dealers to comply with the requirement of the tax laws, as applicable.

General Information:For further details/guidance, please approach any bank authorised to deal in foreign exchange or contact Regional Offices of the Foreign Exchange Department of the Reserve Bank.

'person resident in India' is defined in Section 2(v) of FEMA, 1999 as :

A person residing in India for more than one hundred and eighty-two days during the course of the preceding financial year but does not include

(A) a person who has gone out of India or who stays outside India, in either case - for or on taking up employment outside India, or for carrying on outside India a business or vocation outside India, or for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period;

(B) a person who has come to or stays in India, in either case, otherwise than for or on taking up employment in India ,or for carrying on in India a business or vocation in India, or for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period any person or body corporate registered or incorporated in India, an office, branch or agency in India owned or controlled by a person resident outside India, an office, branch or agency outside India owned or controlled by a person resident in India

B. Features of various deposit scheme

C. facilitiees to NRI_PIO

Q.1. What are the different types of accounts which can be maintained by an NRI/PIO in India?

If a person is NRI or PIO, she/ he can, without the permission from the Reserve Bank, open, hold and maintain the different types of accounts given below with an Authorised Dealer in India, i.e. a bank authorised to deal in foreign exchange. NRO Savings accounts can also be maintained with the Post Offices in India.

Q.2. Types of accounts which can be maintained by an NRI / PIO in India

A. Non-Resident Ordinary Rupee Account (NRO Account)

Any person resident outside India may open NRO account with an authorised dealer or an authorised bank for the purpose of putting through bona fide transaction in rupees. Opening of accounts by individual/ entities of Pakistan and entities of Bangladesh require prior approval of Reserve Bank of India. NRO accounts may be opened / maintained in the form of current, savings, recurring or fixed deposit accounts.

  • Savings Account - Normally maintained for crediting legitimate dues /earnings / income such as dividends, interest etc. Banks are free to determine the interest rates.

  • Term Deposits - Banks are free to determine the interest rates. Interest rates offered by banks on NRO deposits cannot be higher than those offered by them on comparable domestic rupee deposits.

  • Account should be denominated in Indian Rupees.

  • Permissible credits to NRO account are transfers from rupee accounts of non-resident banks, remittances received in permitted currency from outside India through normal banking channels, permitted currency tendered by account holder during his temporary visit to India, legitimate dues in India of the account holder like current income like rent, dividend, pension, interest, etc., sale proceeds of assets including immovable property acquired out of rupee/ foreign currency funds or by way of legacy/ inheritance.

  • Eligible debits such as all local payments in rupees including payments for investments as specified by the Reserve Bank and remittance outside India of current income like rent, dividend, pension, interest, etc., net of applicable taxes, of the account holder.

  • NRI/PIO may remit from the balances held in NRO account an amount not exceeding USD one million per financial year, subject to payment of applicable taxes.

  • The limit of USD 1 million per financial year includes sale proceeds of immovable properties held by NRIs/ PIOs.

  • Other than current income and the limit of USD 1 Mn per financial year applicable to NRIs/PIOs, balances in NRO accounts cannot be repatriated without the prior approval of RBI.

  • The accounts may be held jointly with residents and / or with non-resident Indian.

  • The NRO account holder may opt for nomination facility.

  • NRO (current/savings) account can also be opened by a foreign national of non-Indian origin visiting India, with funds remitted from outside India through banking channel or by sale of foreign exchange brought by him to India. The details of this facility are given in the FAQs on “Accounts opened by Foreign Nationals and Foreign Tourists�? available on the RBI website.

  • Loans to non-resident account holders and to third parties may be granted in Rupees by Authorized Dealer / bank against the security of fixed deposits subject to certain terms and conditions.

B. Non-Resident (External) Rupee Account (NRE Account)

  • NRE account may be in the form of savings, current, recurring or fixed deposit accounts (with maturity of minimum one year). Such accounts can be opened only by the NRI (as defined under Regulation 2(vi) of Notification No. FEMA 5/2000-RB dated May 3, 2000) himself and not through the holder of the power of attorney.

  • NRIs may be permitted to open NRE account with their resident close relatives (relative as defined in Section 6 of the Companies Act, 1956) on ‘former or survivor ‘basis. The resident close relative shall be eligible to operate the account as a Power of Attorney holder in accordance with the extant instructions during the life time of the NRI/PIO account holder.

  • Account will be maintained in Indian Rupees.

  • Balances held in the NRE account are freely repatriable.

  • Accrued interest income and balances held in NRE accounts are exempt from Income tax and Wealth tax, respectively.

  • Authorised dealers/authorised banks may at their discretion/commercial judgement allow for a period of not more than two weeks, overdrawings in NRE savings bank accounts, up to a limit of Rs.50,000 subject to the condition that such overdrawings together with the interest payable thereon are cleared/repaid within a period of two weeks, out of inward remittances through normal banking channels or by transfer of funds from other NRE/FCNR accounts.

  • Savings - Banks are free to determine the interest rates.

  • Term deposits – Banks are free to determine the interest rates of term deposits of maturity of one year and above. Interest rates offered by banks on NRE deposits cannot be higher than those offered by them on comparable domestic rupee deposits.

  • Permissible credits to NRE account are inward remittance to India in permitted currency, proceeds of account payee cheques, demand drafts / bankers' cheques, issued against encashment of foreign currency, where the instruments issued to the NRE account holder are supported by encashment certificate issued by AD Category-I / Category-II, transfers from other NRE / FCNR accounts, sale proceeds of FDI investments, interest accruing on the funds held in such accounts, interest on Government securities/dividends on units of mutual funds purchased by debit to the NRE/FCNR(B) account of the holder, certain types of refunds, etc.

  • Eligible debits are local disbursements, transfer to other NRE / FCNR accounts of person eligible to open such accounts, remittance outside India, investments in shares / securities/commercial paper of an Indian company, etc.

  • Loans can be extended against security of funds held in NRE Account either to the depositors or third parties without any ceiling subject to usual margin requirements.

  • Such accounts can be operated through power of attorney in favour of residents for the limited purpose of withdrawal of local payments or remittances through normal banking channels to the account holder himself.

C. Foreign Currency Non Resident (Bank) Account – FCNR (B) Account

  • NRIs are eligible to open and maintain these accounts.

  • FCNR (B) accounts are only in the form of term deposits of 1 to 5 years

  • All debits / credits permissible in respect of NRE accounts, including credit of sale proceeds of FDI investments, are permissible in FCNR (B) accounts also.

  • Account can be held in any freely convertible currency.

  • Loans can be extended against security of funds held in FCNR (B) deposit either to the depositors or third parties without any ceiling subject to usual margin requirements.

  • The interest rates are stipulated by the Department of Banking Operations and Development, Reserve Bank of India. With effect from March 1, 2014, in respect of FCNR (B) deposits of maturities, 1 year to less than 3 years, interest shall be paid within the ceiling rate of LIBOR/ SWAP rates plus 200 basis points for the respective currency/ corresponding maturity. For FCNR(B) deposits with maturity of 3-5 years interest shall be paid within the ceiling rate of LIBOR/ SWAP rates plus 300 basis points. On floating rate deposits, interest shall be paid within the ceiling of SWAP rates for the respective currency/ maturity plus 200 bps/ 300 bps, as the case may be. For floating rate deposits, the interest reset period shall be six months.

  • When an account holder becomes a person resident in India, deposits may be allowed to continue till maturity at the contracted rate of interest, if so desired by him.

  • Terms and conditions as applicable to NRE accounts in respect of joint accounts, repatriation of funds, opening account during temporary visit, operation by power of attorney, loans/overdrafts against security of funds held in accounts, shall apply mutatis mutandis to FCNR (B). NRI can open joint account with a resident close relative (relative as defined in Section 6 of the Companies Act, 1956) on former or survivor basis. The resident close relative will be eligible to operate the account as a Power of Attorney holder in accordance with extant instructions during the life time of the NRI/ PIO account holder.

Q.3. Is the permission of the Reserve Bank required for opening the various accounts, mentioned above, by Bangladesh / Pakistan individuals/entities?

Opening of accounts by individuals/entities of Pakistan and entities of Bangladesh nationality requires prior approval of the Reserve Bank.. All such requests may be referred to the General Manager, Foreign Exchange Department, Central Office Cell, Reserve Bank of India, 6 Sansad Marg, New Delhi - 110 001. However, individuals of Bangladesh nationality are permitted to open NRO accounts without the prior approval of Reserve Bank of India, subject to conditions.

Q.4. Can an individual resident Indian borrow money from his close relatives outside India?

Yes, an individual resident Indian can borrow a sum not exceeding USD 250,000 or its equivalent from his close relatives3 staying outside India, subject to the conditions that:

  1. the minimum maturity period of the loan is one year;

  2. the loan is free of interest; and

  3. the amount of loan is received by inward remittance in free foreign exchange through normal banking channels or by debit to the NRE/FCNR (B) account of the NRI.

Q.5. Can an individual resident lend money to his close relative NRI / PIO?

Yes, an individual resident can lend money by way of crossed cheque /electronic transfer within the overall limit prescribed under the Liberalised Remittance Scheme, to meet the borrower’s personal or business requirements in India, subject to conditions. The loan should be interest free and have a maturity of minimum one year and cannot be remitted outside India.

Q.6.Can an individual resident repay loans of close relative NRIs to banks in India?

Yes, where an authorised dealer in India has granted loan to a non-resident Indian such loans may also be repaid by resident close relative (relative as defined in Section 6 of the Companies Act, 1956), of the Non-Resident Indian by crediting the borrower's loan account through the bank account of such relative.

Q.7. What are the other facilities available to NRIs/PIO?

A. Investment facilities for NRIs

NRI may, without limit, purchase on repatriation basis:

  • Government dated securities / Treasury bills

  • Units of domestic mutual funds;

  • Bonds issued by a public sector undertaking (PSU) in India.

  • Non-convertible debentures of a company incorporated in India.

  • Perpetual debt instruments and debt capital instruments issued by banks in India.

  • Shares in Public Sector Enterprises being dis-invested by the Government of India, provided the purchase is in accordance with the terms and conditions stipulated in the notice inviting bids.

  • Shares and convertible debentures of Indian companies under the FDI scheme (including automatic route & FIPB), subject to the terms and conditions specified in Schedule 1 to the FEMA Notification No. 20/2000- RB dated May 3, 2000, as amended from time to time.

  • Shares and convertible debentures of Indian companies through stock exchange under Portfolio Investment Scheme, subject to the terms and conditions specified in Schedule 3 to the FEMA Notification No. 20/2000- RB dated May 3, 2000, as amended from time to time.

NRI may, without limit, purchase on non-repatriation basis :

  • Government dated securities / Treasury bills

  • Units of domestic mutual fund

  • Units of Money Market Mutual Funds

  • National Plan/Savings Certificates

  • Non-convertible debentures of a company incorporated in India

  • Shares and convertible debentures of Indian companies through stock exchange under Portfolio Investment Scheme, subject to the terms and conditions specified in Schedules 3 and 4 to the FEMA Notification No. 20/2000- RB dated May 3, 2000, as amended from time to time.

  • Exchange traded derivative contracts approved by the SEBI, from time to time, out of INR funds held in India on non-¬repatriable basis, subject to the limits prescribed by the SEBI.

Note: NRIs are not permitted to invest in small savings or Public Provident Fund (PPF).

B. Investment in Immovable Property

  • NRI / PIO may acquire/transfer immovable property in India other than agricultural land/ plantation property or a farm house out of Repatriable and / or non-repatriable funds.

  • Foreign national of non Indian origin resident outside India shall not acquire/transfer any immovable property in India other than on lease not exceeding five years, without prior approval of Reserve Bank of India.

  • The payment of purchase price, if any, should be made out of

    1. Funds received in India through normal banking channels by way of inward remittance from any place outside India or

    2. Funds held in any non-resident account maintained in accordance with the provisions of the Act and the regulations made by the Reserve Bank.

    Note:No payment of purchase price for acquisition of immovable property shall be made either by traveller’s cheque or by foreign currency notes or by other mode other than those specifically permitted as above.

  • NRI may acquire any immovable property in India other than agricultural land / farm house plantation property, by way of gift from a person resident in India or from a person resident outside India who is a citizen of India or from a person of Indian origin resident outside India

  • NRI may acquire any immovable property in India by way of inheritance from a person resident outside India who had acquired such property 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 or from a person resident in India

  • An NRI may transfer any immovable property in India to a person resident in India.

  • NRI may transfer any immovable property other than agricultural or plantation property or farm house to a person resident outside India who is a citizen of India or to a person of Indian origin resident outside India.

  • In respect of such investments, NRIs are eligible to repatriate:

  • The sale proceeds of immovable property in India 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 in foreign exchange received through normal banking channel or by debit to NRE account (foreign currency equivalent, as on the date of payment) or debit to FCNR (B) account.

  • In the event of sale of immovable property, other than agricultural land / farm house / plantation property in India, by a person resident outside India who is a citizen of India / PIO, the repatriation of sale proceeds is restricted to not more than two residential properties subject to certain conditions.

  • If the property was acquired out of Rupee sources, NRI or 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.

  • Refund of (a) application / earnest money / purchase consideration made by house-building agencies/seller on account of non-allotment of flats / plots and (b) cancellation of booking/deals for purchase of residential/commercial properties, together with interest, net of taxes, provided original payment is made out of NRE/FCNR (B) account/inward remittances.

Repayment of Housing Loan of NRI / PIOs by close relatives of the borrower in India

Housing Loan in rupees availed of by NRIs/ PIOs from ADs / Housing Financial Institutions in India can be repaid by the close relatives in India of the borrower.

C. Facilities to returning NRIs/PIOs

  • Returning NRIs/PIOs may continue to hold, own, transfer or invest in foreign currency, foreign security or any immovable property situated outside India, if such currency, security or property was acquired, held or owned when resident outside India

  • The income and sale proceeds of assets held abroad need not be repatriated.

Foreign Currency Account

  • A person resident in India who has gone abroad for studies or who is on a visit to a foreign country may open, hold and maintain a Foreign Currency Account with a bank outside India during his stay outside India, provided that on his return to India, the balance in the account is repatriated to India. However, short visits to India by the student who has gone abroad for studies, before completion of his studies, shall not be treated as his return to India.

  • A person resident in India who has gone out of India to participate in an exhibition/trade fair outside India may open, hold and maintain a Foreign Currency Account with a bank outside India for crediting the sale proceeds of goods on display in the exhibition/trade fair. However, the balance in the account should be repatriated to India through normal banking channels within a period of one month from the date of closure of the exhibition/trade fair.

Resident Foreign Currency Account

  • A person resident in India may open, hold and maintain with an authorised dealer in India a Resident Foreign Currency (RFC) Account.

  • Proceeds of assets held outside India at the time of return can be credited to RFC account.

  • The funds in RFC accounts are free from all restrictions regarding utilisation of foreign currency balances including any restriction on investment in any form outside India.

  • RFC accounts can be maintained in the form of current or savings or term deposit accounts, where the account holder is an individual and in the form of current or term deposits in all other cases.RFC accounts are permitted to be held jointly with a resident close relative(s) as defined in the Companies Act, 1956 as joint holder (s) in their RFC bank account on ‘former or survivor basis’. However, such resident Indian close relative, now being made eligible to become joint account holder shall not be eligible to operate the account during the life time of the resident account holder.

Q.8. Can Exchange Earners Foreign Currency (EEFC) accounts be held jointly with a -resident Indian?

Yes, EEFC account of a resident individual can be held jointly with a resident close relative on a ‘former or survivor’ basis. However, such resident Indian close relative will not be eligible to operate the account during the life time of the resident account holder.

Q.9. Can a resident individual holding a savings bank account include non-resident close relative as a joint account holder?

Yes, individuals resident in India are permitted to include non-resident close relative(s) as a joint holder(s) in their resident bank accounts on ‘either or survivor’ basis subject to conditions.

Q.10 Can a resident individual gift shares/securities/convertible debentures etc to NRI close relative?

Yes, a resident individual is permitted to gift shares/securities/convertible debentures etc to NRI close relative up to USD 50,000 per financial year subject to certain conditions.

Q.11.Can a resident individual give rupee gifts to his visiting NRI/PIO close relatives?

Yes, a resident individual can give rupee gifts to his visiting NRI/PIO close relatives by way of crossed cheque/electronic transfer within the overall limit prescribed under Liberalised Remittance Scheme for the resident individual and the gifted amount should be credited to the beneficiary’s NRO account.

Q.12. What types of services can be provided by a resident individual to his / her non-resident close relatives?

A resident may make payment in rupees towards meeting expenses on account of boarding, lodging and services related thereto or travel to and from and within India of a person resident outside India who is on a visit to India. Further, where the medical expenses in respect of NRI close relative are paid by a resident individual, such a payment being in the nature of a resident to resident transaction may also be covered under the term “services�?.

D. Account Opened by Foreign Nationals and Foreign Tourists

Q.1. Can foreign tourists open a bank account in India during their short visit?

Yes. Foreign tourists during their short visit to India can open a Non-Resident (Ordinary) Rupee (NRO) account (Current / Savings) with any Authorised Dealer bank dealing in foreign exchange. Such account can be opened up to a maximum period of 6 months.

Q.2 What are the documents required for opening such accounts?

Passports and other valid identification proofs are required for opening the accounts. Authorised Dealer banks are also required to follow the Know Your Customer norms while opening of the accounts.

Q.3. What credits can be made to such accounts?

Funds remitted from outside India through banking channel or those obtained by sale of foreign exchange brought by the tourists to India can be credited to the NRO account.

Q4. Can the NRO account be used for making local payments?

Yes. Tourists can freely make local payments through the NRO account. All payments to residents exceeding INR 50,000 can be made only by means of cheques / pay orders / demand drafts.

Q.5. Can foreign tourists repatriate the balance held in their NRO account at the time of departure from India?

Authorised Dealer banks have been allowed to convert the balance in the account for payment to the account holder at the time of departure from India into foreign currency, provided the account has been maintained for a period not exceeding six months and the account has not been credited with any local funds, other than interest accrued thereon.

Q.6. What can be done to repatriate the proceeds of an account that has been maintained for more than six months?

In such cases, applications for repatriation of balance may be made on plain paper to the Foreign Exchange Department of the Regional Office concerned of the Reserve Bank through the Authorised Dealer bank maintaining the account.

Q.7. Can foreign nationals resident in India open resident account?

Yes. Foreign nationals employed in India holding valid visas can open and maintain a resident Rupee account in India in terms of Notification No.5/2000-RB dated May 3, 2000 viz., Foreign Exchange Management (Deposit) Regulations, 2000, as amended from time to time.

Q.8. Can AD Category-I banks remit proceeds of such accounts on closure?

Yes. But AD Category-I banks should ensure that the funds to be repatriated outside India were either received from abroad or they are repatriable in nature or permissible in terms of RBI notification No. FEMA 13/2000 dated 3rd May 2000, as amended from time to time. The foreign nationals employed in India holding valid visas are eligible to maintain resident accounts with an Authorised Dealer Category - I (AD Category-I) bank in India. In order to facilitate such foreign nationals to collect their pending dues in India, AD Category-I banks may, permit foreign nationals to re-designate their resident account maintained in India as NRO account on leaving the country after their employment to enable them to receive their pending bonafide dues, subject to conditions.

LEGAL INFORMATION

At NEWEDGE, we aim to help you resolve every concern and doubt. We have compiled basic legal information to help you buy a property in India. Read through the following points and get in touch with us if you have any more queries.

1. Non-resident Indians holding Indian passport do not require any permission from RBI for acquiring immovable property for bonafide residential purposes.

2. Non-resident Indians holding Indian passport may pay the purchase consideration either by remittance of funds from abroad through normal banking channels or out of NRO/ NRE/ FCNR account.

Get a copy of the title report by the solicitor of the property. Make sure that there are no conditions written in fine print and that there are no specific reservations by the state government.

Look for specific clearance reports. For instance, if the construction is near a seafront, you will need to check for a Coastal Regulation Zone (CRZ) clearance. If the project is being constructed over or in the close vicinity of a heritage building, you must check for any heritage reservations for the premises. The idea is to ensure that you do not get stuck with a property that is or may get caught in any sort of disputes. Lack of clearance of titles also means that you will not be able to avail home loans.

DOCUMENTS REQUIRED FOR BUYING PROPERTY

  • Pan card (Permanent account number)

  • OCI/PIO card (In case of OCI/PIO)

  • Passport (In case of NRI)

  • Passport size photographs

  • Address proof

If you are a NRI, acquiring a home loan in India can be a complicated and confusing process. Go through the following information to understand the process of receiving a home loan.

Broadly categorized, Non-Resident Indians qualifying for NRI housing loans are:

  • Indian citizens who stay abroad for employment or for carrying on business or vocation outside India or for any other purpose in circumstances indicating an indefinite period of stay abroad;

  • Government servants who are posted abroad on duty with the Indian missions and similar other agencies set up abroad by the Government of India where the officials draw their salaries out of Government resources;

  • Government servants deputed abroad on assignments with foreign Governments or regional/international agencies like the World Bank, International Monetary Fund (IMF), World Health Organization (WHO), Economic and Social Commission for Asia and the Pacific (ESCAP);

  • Officials of the State Government and Public Sector Undertakings deputed abroad on temporary assignments or posted to their branches or offices abroad.

NRI Home Loans can be availed for the following purposes:

  • To purchase a new home

  • To purchase a ready built house on resale

  • To construct your own house

  • To extend your house

  • To renovate your house

  • To purchase a plot of land in your preferred city or town

  • To purchase a plot of land in your preferred city or town and construct your house on it

ELIGIBILITY FOR NRI:

The eligibility criteria of NRIs differ from Resident Indians based on a few parameters. The parameters include:

  • Applicant should have a NRI/PIO status and must be working abroad with valid documents namely passport and visa or OCI card, as per RBI guidelines

  • Repayment capacity

  • Age

  • Educational qualifications

  • Stability and continuity of income

  • Number of dependents

  • Co-applicant’s income

  • Assets and liabilities, saving habits, and more

RBI DIRECTIVE LOANS:

The Reserve Bank of India (RBI) has clarified that Non-Resident Indians (NRIs) and Persons of Indian Origin (PIO), purchasing immovable property in India should pay for the acquisition by funds received in India through normal banking channels by way of inward remittance from outside the country.

The NRIs and Resident Indians can also acquire immovable property in India other than agricultural property, plantation or a farmhouse. It has issued certain directive for sanctioning home loans to Non-Resident Indians.

The guidelines provided are:

  • The home loan amount should not exceed 85% of the cost of the dwelling unit, as the remaining amount that is 15% needs to be provided an own contribution towards the cost of unit financed.

  • The cost of dwelling unit which is own contribution financed less the loan amount, can be met from direct remittances from abroad through normal banking channels, the Non-Resident (External) [NR(E)] Account and /or Non-Resident (Ordinary) [NR (O)] account in India.

  • However, repayment of the loan, comprising of the principal and interest including all the charges are to be remitted to the HFC from abroad through normal banking channels, the Non-Resident (External) [NR(E)] Account and /or Non-Resident (Ordinary) [NR (O)] account in India.

DOCUMENTS REQUIRED FOR LOAN:

The documentation required to be submitted by the NRIs are different from the Resident Indians as they are required to submit additional documents, like a copy of the passport, a copy of the works contract, etc. And of course NRIs have to follow certain eligibility criteria in order to get Home Loans in India.

Another vital document required while processing an NRI home loan is the power of attorney (POA). The POA is important because, since the borrower is not based in India; the HFC would need a 'representative' 'in lieu of' the NRI to deal with and if needed. Although not obligatory, the POA is usually drawn on the NRI's parents/wife/children.

General List (Documents for all applications):

1. Application form duly completed and signed

2. Copy of passport and stamped valid visa

3. Work Permit/ Labour card copy / Employment Identity card

4. Copy of Identity and address proof for Power of Attorney in India

Document list for salaried applicants:

1. Latest Salary Certificate from employer and last 3 months pay slips.

2. Copies of Appointment letter/ Employment contract

3. Copy of latest tax returns (as applicable)

4. Copies of Bank account statement for the last six months Overseas Bank Account and NRE/NRO /SB statement

5. Latest personal credit bureau report (as applicable)

Document List for Self-employed (Including self-employed professionals such as contracts and doctors):

1. Latest 3 years Audited Profit and Loss accounts & Balance sheet of the Company

2. Company Incorporation Certification along with Memorandum and Articles of Association

3. Copies of company bank account statement for the latest six months Overseas Bank Account and NRE/NRO /SB statement

4. Copies of proof of highest educational qualification

PROPERTY DOCUMENTS:

  • Original title deeds tracing the title of the property for a minimum period of the last 13 years

  • Encumbrance Certificate for the last 13 years

  • Agreement of sale /construction, if any

  • Receipts for payments made for purchase of the dwelling unit

  • Approved plan / license

  • ULC clearance /conversion order etc

  • Receipts for having invested the margin money through normal banking channels from the Non-Resident (External) account in India and / or the Non-Resident (Ordinary) account in India

  • Latest tax paid receipt

  • Allotment letter from the co-operative society / association of apartment owners

  • Agreement for sale / sale deed /detailed cost estimate from Architect / Engineer for property to be purchased / constructed /extended / improved

  • Copy of approved drawings of proposed construction/purchase/extension

  • Additional documents to be submitted by Person of Indian Origin

  • PHOTOCOPY OF PIO CARD:

    If the PIO card is not available, photocopies of any of the following documents:

    • The current passport, with birthplace as 'INDIA'

    • The Indian passport, if held by the individual earlier

    • Parents/grandparents Indian passport/birth certificate/marriage certificate substantiating the individuals claim as a person of Indian origin

    PERMISSIONS AND APPROVALS:

    Before a construction can begin, the builder must seek several permissions and approvals from relevant bodies. Without these clearances, the construction may come under litigation.

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