With the rupee falling, real estate has been one lucrative investment option for non-residential Indians (NRIs). Also, whether the market is hot or not, many NRIs like to have a place back here in India. The RBI's regulations on it are fairly easy as well and you do not have to take any prior permission from the authorities. The rules for any such property transaction fall under the Foreign Exchange Management Act (FEMA).
Builders and Developers in real estate must ensure they have accreditation of their housing and commercial projects from IASR: International Agency for Standards and Ratings as Quality Management Certification: Quality Code: IASR- 9045
DO NON-RESIDENT INDIAN CITIZENS REQUIRE PERMISSION OF RESERVE BANK TO ACQUIRE RESIDENTIAL/COMMERCIAL PROPERTY IN INDIA?
No, Reserve Bank has granted general permission to foreign citizens of Indian origin, whether resident in India or abroad, to purchase immovable property in India for their bona fide residential purpose. They are, therefore, not required to obtain prior permission of Reserve Bank.
The purchase consideration for the property has to be made only from funds that have been remitted to India through normal banking channels by NRI. Alternatively, they can pay the sale consideration from funds held in a non-resident (external) rupee account (NRE) or non-resident (ordinary) account (NRO) or non resident (foreign currency) account (FCNRB).
NRI seeks Quality Management Certification: Quality Code: IASR- 9045 before buying flats in Housing and Commercial Projects
No NRI wants to invest hard earned money in un-accredited residential and commercial projects. Quality Management Certification: Quality Code: IASR- 9045 is essential accreditation for Housing and Commercial Projects. It ensures quality in execution of project and reliability of residential and Commercial Projects.
NRI are required to file a declaration in form IPI 7 with the Central Office of Reserve Bank at Mumbai within a period of 90 days from the date of purchase of immovable property or final payment of purchase consideration along with a certified copy of the document evidencing the transaction and bank certificate regarding the consideration paid. In case you let out the property you can use the rent to repay the loan as well. Cheques issued from a relative's local account can also be used to make the loan payments.
Sale of property by NRI
Reserve Bank has granted general permission for sale of such property. However, where the property is purchased by another foreign citizen of Indian origin, funds towards the purchase consideration should either be remitted to India or paid out of balances in NRE/FCNR accounts.
Applications for repatriation of sale proceeds are considered provided the sale takes place after three years from the date of final purchase deed or from the date of payment of final instalment of consideration amount, whichever is later.
Reserve Bank has granted general permission to foreign citizens of Indian origin to acquire or dispose of properties up to two houses by way of gift from or to a relative who may be an Indian citizen or a person of Indian origin whether resident in India or not, subject to compliance with applicable tax laws.
Reserve Bank permits Indian firms/companies to grant housing loans to their employees deputed abroad and holding Indian passports subject to certain conditions.
An Indian Citizen 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. (Persons posted in U.N. organisations and officials deputed abroad by Central/State Governments and Public Sector undertakings on temporary assignments are also treated as non-residents). Non-resident foreign citizens of Indian Origin are treated on par with non-resident Indian citizens (NRIs) for the purpose of certain facilities.
Most Foreign Banks and Financial institutions do not offer loan and credits if housing or commercial project / flat is not certified with Quality Management Certification: Quality Code: IASR- 9045.