| 2. |
Government
servants who are posted abroad on duty
with the Indian Mission and similar
other agencies set up abroad by the
Government of India where the officials
draw their salaries out of Government
resources; OR, |
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|
| 3. |
Government servants
deputed abroad on assignments with foreign
government or regional / international
agencies like the World Health Organisation
(WHO), Economic and Social Commission
for Asia and the Pacific (ESCAP); OR, |
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|
| 4. |
Official of the
State Government and Public Sector Undertakings
deputed abroad on temporary assignments
or posted to their branches or offices
abroad. |
What
kind of Bank Accounts can be operated by NRIs?
A. Non Resident (Ordinary) Account
Who can open and how?
An existing bank account of an Indian national
going abroad and becoming a non-resident Indian
is automatically designated as Non Resident
(Ordinary) Account (NRO). An NRI can also
open such ordinary accounts even by making
remittances from abroad or by transfer from
an existing non-resident account in India
in his own name. Such accounts can be opened
by overseas corporate bodies (OCBs). NRO accounts
can be opened while an NRI is on a visit to
India or simply by making remittances from
abroad. NRO account can be in the sole name
of an NRI or in joint names of more than one
NRI or in joint names with any of the close
relatives in India. In other types of joint
accounts, prior permission of Reserve Bank
of India (RBI) is required.
What
types of accounts can be opened?
NRO account can be opened in the categories
of current, savings, recurring and term deposit
accounts.
What
types of transactions are permitted?
All types of transactions of deposits and
withdrawals to and from NRO account are normally
permitted. However, the RBI has prescribed
certain transactions, which requires to be
reported to RBI in prescribed forms.
Can these funds be repatriated?
The funds can be freely withdrawn for the
local disbursements without RBI approval.
Interest is now repatriable.
Is interest earned exempt from tax?
Interest on NRO account is not exempt from
Income tax and balances to the credit of NRO
account are not exempt from wealth tax.
B. Non Resident External Account (NRE)
Who can open and how?
NRI as well as OCBs are permitted to open
NRE accounts. NRE accounts can be opened by
depositing foreign currency along with the
account opening application form. The account
opening form may be signed by the NRIs abroad
and the signature of NRI may be verified by
a bank abroad or by Indian Embassy or by notary
public official abroad. NRE account can be
opened during the visit to India by tendering
foreign currency, travelers cheques or foreign
currency notes.
What types of accounts can be opened?
All types of accounts, that is current, savings,
recurring and term deposit, can be opened
under NRE accounts scheme. NRE accounts can
be opened in single or joint name. However,
in case of account opened in joint name, all
the joint holders should be resident of external
group of countries.
Can funds be repatriated?
As per the Liberalized Exchange Rate Management
System (LERMS) all the remittances of foreign
exchange to NRE accounts are converted into
Indian rupee at the market rate of exchange
and credits are given in terms of Indian rupees.
Similarly, at the time of repatriation, the
amount to be repatriated is converted into
the designated foreign currency at the prevailing
market rate of exchange. NRE account offers
all the facilities of the NRO account plus
complete repatriation without informing the
Reserve Bank of India.
Is interest earned exempt from tax?
Interest on NRE account is exempt from income
tax and balances to the credit of NRE account
are exempt from wealth tax.
C.
Foreign Currency Non Resident Account (FCNR)
Who can open and how?
All Non Resident Indians, resident in external
group of countries and OCBs are eligible to
open FCNR accounts. FCNR accounts are permitted
only in four currencies:
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| a. |
Pound
Sterling (GBP) |
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| b. |
US Dollar (USD) |
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| c. |
Euro |
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| d. |
Japanese Yen (JPY) |
The rate of interest
on the above account vary for each type
of designated currency.
What types of accounts can be opened?
FCNR account is permitted in the form of
fixed deposits for a maximum period of three
years. Current and savings accounts are
not available under this scheme.
Is interest earned exempt from tax?
Interest earned on FCNR account is exempt
from income tax and the balance in the account
is exempted from wealth tax.
What are the options available to depositor
at maturity?
There are three options available to a depositor
at maturity of FCNR account:
| a. |
To
ask for the repayment in designated
foreign currency. |
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|
| b. |
To ask for the
repayment in Indian rupees or in any
foreign currency other than designated
foreign currency. |
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| c. |
To ask for the
conversion of FCNR account into NRE
fixed deposit. |
How
does it differ from NRE account?
The FCNR account, primarily differs from
NRE account on the point of fact that balance
in FCNR account is denominated in designated
foreign currency in which the account is
opened and thus unlike NRE accounts, there
is no loss either on account of difference
between buying and selling rates or on account
of fluctuation in exchange rates. The deposits
in FCNR accounts can be withdrawn prior
to maturity date.
What is the position regarding acquisition
of immovable property by NRI?
Consequent to the liberalization in exchange
control policy and procedures, certain relaxations
in the existing regulations and procedures
governing the acquisition, holdings, etc.,
of immovable property in India have been
announced. The current position is therefore
as under:
| 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 account
or NRE account or FCNR account.
|
| |
|
| 3. |
RBI has given
general permission to Non Resident Indians
holding foreign passport (i.e., foreign
citizens of Indian origin) to acquire,
hold, transfer or dispose off by way
of sale or inheritance immovable properties
situated in India provided:
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| |
| |
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| a. |
The
property is for the purchaser's
bonafide residential purpose.
|
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| b. |
The purchase
consideration is met either by
remittance of funds from abroad
through normal banking channels
or out of NRE account or FCNR
account.
|
|
| |
|
| 4. |
Foreign citizens
of Indian origin are required to declare
the properties to RBI within a period
of 90 days from the date of purchase
in form IPI 7. The following documents
must be submitted along with the declaration. |
| |
| |
|
| a. |
A
certified copy of the purchase
deed or a certificate from the
Co-operative Housing Society or
an Association of the apartment
owners as an evidence of transfer
/ registration of the property
in the declarant's name. |
| |
|
| b. |
Certificate
from the declarant's bankers in
India evidencing receipt of inward
remittance(s) in foreign exchange
through normal banking channel
or withdrawal of funds from declarant's
NRE account or FCNR account or
FCNR Special Deposit Account and
payment of consideration for the
property out of those funds. |
|
| |
|
| 5. |
Where a foreign
citizen of Indian origin wishes to acquire
a property out of funds held in NRO
account then the permission from RBI
will be required which can be applied
for in form IPI 1. |
| |
|
| 6. |
Where a foreign
citizen of Indian origin wishes to acquire
a property from the sale proceeds of
another property, prior permission of
RBI is essential and may be obtained
by applying in form IPI 1. |
| |
|
| 7. |
Any number of
properties can be acquired by Non Resident
Indians regardless of whether they are
holding Indian passport provided they
are required for bonafide residential
purposes. |
| |
|
| 8. |
A person residing
outside India who has established in
India a branch or place of business
(but not a mere liaison office) in accordance
with RBI regulations, can acquire any
immovable property in India, which is
necessary or incidental to carrying
on such activity. |
an
NRI avail loans for purpose of immovable
property?
The loan amount shall not exceed 85% of
the cost of the dwelling unit.
For what purposes are loans available to
NRIs?
NRIs can avail loan for buying or constructing
a new home, extending or improving an existing
home or even for buying a plot.
What is meant
by "Own Contribution"?
How is "Own Contribution" to be
paid?
"Own Contribution" is the cost
of the dwelling unit financed, less the
loan amount. The "Own Contribution"
should be met from direct remittances from
abroad through normal banking channels or
from the Non Resident (External) Account
/ Non Resident (Ordinary) or the Non Resident
special rupee account in India.
What are the common documents to be submitted
along with the application?
The following documents are required along
with the application form:
| ·
|
Photocopy
of the labour contract duly countersigned
by your employer (translated to English
for Non-English documents) |
| |
|
| ·
|
Latest salary
certificate (in English) specifying
the following: |
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|
| · |
Name (as it appears
in the passport) |
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|
| · |
Date of joining |
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| ·
|
Designation |
| |
|
| · |
Perquisites and
salary |
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|
| · |
Photocopy of passport
|
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|
| · |
Photocopy of labour
card / identity card |
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|
| · |
Photocopy of valid
resident visa stamped on the passport |
| |
|
| · |
Photocopy of last
three months' monthly statements of
local bank account |
| |
|
| · |
Property related
documents |
What security will NRIs have to provide?
Typically the security for the loan is first
mortgage of the property to be financed,
normally by way of deposit of title deeds
and / or such other collateral security
as may be necessary. In addition, interim
security may be required, if the property
is under construction. Collateral or interim
security could be in the form of assignment
of life insurance policies, surrender value
of which is at least equal to the loan amount,
pledge of shares and such other investments.
Can NRIs give a Power of Attorney in favour
of a person of his choice in India to complete
loan formalities on his behalf?
Yes, normally it is desirable to appoint
a Power of Attorney in India to represent
him in dealings in India. The Power of Attorney
should be executed as per drafts provided
by the housing finance company. The Power
of Attorney can be given to any person of
his choice in India.
Can the house
occupied by NRI be let out?
The RBI has granted general permission to
NRIs and foreign citizens of Indian origin,
to let out their residential properties
acquired for their bonafide residential
purpose but which on account of their residence
abroad, are not required for their immediate
residential purpose. The rental income cannot
be repatriated. Thus rental income must
be credited to the NRO account / resident
accounts in India.
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