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BENEFITS TO NRIs FOR INVESTMENT IN REAL ESTATE
      Covers
  * NRIs Investment in Immovable Property in India:
  * Acquisition and Transfer of property in India
  * Repatriation by the NRI
  * Budget sops for housing sector
  * NRI Investment rules simplified
  * Is this the right time for NRIs to invest in real estate?

  NRIs Investment in Immovable Property in India:

  As per section 6(3) and 47(2), the FEMA has made the Foreign Exchange Management   (Acquisition and transfer of immovable property in India) Regulations, 2000 vide   notification no. FEMA 21/2000-RB dated May 3, 2000. The regulations have come into   force on June 1, 2000. Under regulation 3, any NRI who is a citizen of India is allowed   to   acquire any immovable ] property in India other than agricultural/plantation/farm   house.  Likewise, he is allowed to transfer any immovable property in India to a person   resident   in India. Thus, an NRI can 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.

  Acquisition and Transfer of property in India


  Acquisition and Transfer of Property in India: As per regulation 4, a person of Indian   origin resident outside India i.e. an NRI may -
  (a) Acquire any immovable property other than agricultural land/farm house/ plantation   property in India by purchase, from out of (i) funds received in India by way of inward   remittance from Any place outside India or (ii) funds held in any non-resident account   maintained in accordance With the provisions of the FEMA and the regulations made by   the Reserve Bank under the FEMA;
  (b) 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;
  (c) 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;
  (d) Transfer any immovable property in India other than agricultural land/farm   house/plantation property, by way of sale to a person resident in India;
  (e) Transfer agricultural land/farm house/ plantation property in India, by way of gift or   sale to a person resident in India who is a citizen of India;
  (f) Transfer residential or commercial property in India by way of gift to a person   resident in India or to a person resident outside India who is a citizen of India or to a   person of Indian Origin resident outside India;

  Thus, we have seen that there is a difference between regulations concerning NRIs   who are Indian citizens and other NRI\'\'s who are not Indian citizens. In the case of   the latter, there are requirements for obtaining permission from the Reserve Bank and   the conditions in there case are stringent while in the case of an NRI who is an Indian   citizen, he can acquire and transfer any immovable property in India other than   agricultural land, Plantation or farmhouse to any Indian resident without complying with   the formalities of obtaining the RBI permission.

  Repatriation by the NRI

  In the event of general sale of immovable property other than agricultural land/farm   house/ plantation property in India by an NRI, the authorised dealer may allow   repatriation of the sale proceeds outside India on the fulfillment of certain conditions.   One of the important conditions as per regulations 6 is that the immovable property   was acquired by the seller in accordance with the provisions of foreign exchange law in   force at the time of acquisition by him or the provisions of these regulations. Where   the sale takes place after three years from the date acquisition of such immovable   Property or from the date payment of final installment of consideration for its     acquisition, whichever is later, the repatriation of the sale proceeds outside India   would be allowed by the authorised dealer.
  In case of residential property, the repatriation of sale proceeds is restricted to not   more that two such properties as laid down in regulation 6(b). Another important   regulation to be remembered in this connection is that the amount to be repatriated   should not exceed -
  (a) The amount paid for accusation of the immovable property in foreign exchange     received through normal banking channels or out of funds held in Foreign Currency   Non-Resident Account or
  (b) The foreign currency equivalent, as on the date of payment, of the amount paid   where such payment was made from the funds held in Non-Resident External account   for acquisition of property. Another very important regulation is no.7 which provides   that no person being a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China,   Iran, Nepal or Bhutan is permitted to acquire or transfer immovable property in India,   other than lease, not exceeding five years, without prior permission of the Reserve   Bank.

  Budget sops for housing sector

  In order to maintain the momentum of growth triggered earlier, the budget for 2003-04   has continued its thrust on housing sector by extending the deduction under income     tax up to Rs 1,50,000, for construction or purchase of a self-occupied house property.   There was apprehension earlier following the Kelkar committee's recommendation over   the continuance and phased withdrawal of fiscal incentives on home loans. Now it has   been given a decent burial as far as incentive to availing home loan is concerned in     view of the importance of the sector and its contribution to employment.
  Income from housing projects for construction of residential units of prescribed   specification, approved by the local authorities upto March 31, 2005, will be exempt   from income tax. It is not only the limitation on the year of sanction which was frozen   earlier which has been extended but the benefits of the scheme will be made available   irrespective of the year of completion. This will provide a big boost to the mass   housing projects. There are indications about further incentives by the federal   government for green-field housing projects in the days ahead.
  A major thrust given to infrastructure, principally to roads, railways, airports and     seaports through innovative funding mechanisms will certainly benefit the housing   sector by way of encouraging more people to move to suburbs in search of better   accommodation and availability of transport network. Besides easing the congestion in   the metros, this will contribute to the growth of the peripheral and suburban areas.   However, the removal of exemption on withholding tax on external commercial   borrowings will hit the housing finance companies leading to high cost of borrowing.   Hosing finance companies will lose the benefit on all overseas commercial borrowings   where the Centre approves the loan agreements after May 31, 2003. Unfortunately,   banks having access to cheap funds and private sector housing finance companies   made to fend for themselves will not create a level playing field in the housing finance   sector. The hike in services tax will hit the broking community.
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