Many NRIs, even though they live overseas, have a lot of financial transactions in India. One of the main transactions in India for NRIs is the purchasing and selling of immovable property in India. NRIs can inherit property and land from their parents or relatives, which they then want to sell. If you are selling your immovable land and property in India, then you may be under doubt about the repatriation of sale proceeds of immovable property by NRI. You may not be sure about the steps, documents and the legal implications when you repatriate money from the sale of land and property in India, and how to transfer money from India to abroad.
What is the Legal method to Repatriate Sale Proceeds of Immovable Property from India?
Usually, various private players offer services of repatriating your funds from sales proceeds abroad. However, this private method is called as ‘havala’ and is an illegal method of remitting funds abroad, which is often used to convert black money. By choosing this way, you also run a risk of not receiving your funds in the nation of residence. However, with the modernization of the banking industry in India, it has become much easier to repatriate money that is accounted for, using safe as well as fast legal banking systems.
Step by Step guidelines to Repatriate Sales Proceeds from India
The Reserve Bank of India has delegated its powers to banks and also authorized dealers to repatriate funds abroad. Though, various restrictions and rules are currently in place.
If your property was purchased with remitted funds from overseas, then the principal amount can be repatriated quickly. The balance is to be deposited in an NRO bank account. For example, suppose you spent USD 100,000 to buy a property in India. Five years later, you sold the same property for a cost of USD 200,000. In this case, USD 100,000 (the principal amount) can be repatriated directly. The left USD 100,000 has to be deposited in your NRO account. Earlier, there was a lockdown period of 3 years for this extra USD 100,000. However, this has now been eliminated by the RBI. In case your property was purchased using the Indian Rupee, then the sales proceeds can be deposited in your NRO account immediately.
NRIs can then repatriate an amount of USD 1 million, per year, without explicit permission from the RBI. This includes proceeds from the sale of up to two immovable properties per year. If the amount to be repatriated exceeds this amount, then you will have to get permission from the RBI to repatriate these funds.
- Hence, the first step to repatriate your sale proceeds is to deposit in your NRO bank account before you can repatriate it.
- The second step is to seek the services of a Chartered Accountant(CA), which is explained below.
CA Certificate – Is it compulsory?
While the CA certificate was compulsory until a few years ago, this may not be necessary for you now. The CA has to fill in a form named 15CB, which can be downloaded from the government’s website. This works as proof that you have not obtained your funds through illegal channels. The CA will attest that the amount held by you is from the sale of immovable property and land. After this step is done, you will require to fill in Form 15CA.
What is Form 15CA?
This form deals with the suitable taxes on your transaction. This form can be filled online. You will need information proved by your Chartered Accountant to complete this form. Once the form is uploaded, you should get a confirmation number as the form is forwarded to the appropriate tax authorities.
Once this is done, the next stage is to take both these forms to the bank where you have your NRO account. Additional documents, such as the sale document of property and your valid ID proof, should also be presented by you. Once this is done, you can immediately repatriate your money from the NRO account to the country of a dwelling. No other permission from RBI is required if the amount repatriated by you is less than USD 1 million.
Presently, you should know that whether you have inherited property in India that you want to sell an immovable property purchased by you, it is possible to repatriate money from the sale of property and land within the framework laid down by the RBI. As a law firm, we highly recommend that you must contact a qualified Chartered Accountant before selling your property in India because a CA would be able to provide you personalized, expert advice on the entire procedure.