Repatriation of sale proceeds in the case of a sale of immovable property other than agricultural land or a farmhouse or plantation property in India by NRI or PIO. The repatriation of sale proceeds will be allowed provided;
- The seller acquired the immovable property as per the requirements of the foreign exchange law effective at the time of the acquisition by him or the requirements of FEMA Regulations;
- The fund to be repatriated does not exceed:
- The amount spent for the acquisition of immovable property in foreign exchange obtained by normal banking channels or out of amount held in Foreign currency Non-Resident (FCNR) Account or
- The foreign currency same as on the date of payment, of the amount paid where such payment was made from the amount held in Non-Resident External (NRE) account for the acquisition of the property in India.
3. However, In the matter of residential property, the repatriation of sale proceeds is limited to not more than two such properties. In the situation of sale of immovable property purchased out of Rupee funds, ADs may give the facility of repatriation of funds/amount out of balances owned by NRIs or PIO in their Non-resident Rupee (NRO) accounts up to US$ 1 million as per financial year directed to production of undertaking by remitter and also a certificate from the Chartered Accountant in the formats described by the CBDT.
There is one ambiguity in FEMA notifications in the sense that an individual covered under 6(5) of FEMA, 1999 (NRI who has bought the property while he was resident) cannot remit sale proceeds of such property outside India except with the earlier approval of Reserve Bank. However, on specific analysis, one would find that the Master Circular on Remittance Facilities for NRI/PIO mentions this prohibition very obliquely.
However, the repatriation must be done net of taxes. The NRI/PIO can easily rent out their immovable property in India and the rental income being a current account transaction can be easily remitted outside India.
The property owned by NRI or PIO can also be mortgaged to AD/ housing finance institution or an Indian Bank without any approval of RBI. However, the mortgage to a foreign bank would need the prior approval of RBI.
Documents required for repatriation of sale proceeds:
- Document confirming sale
- Application in a bank for foreign exchange
- Certificate from income tax (IT) department – Form 15 CA
- Certificate from Chartered Accountant (CA) – Form 15 CB
- Proof of inheritance in matter of sale of inherited property
It is advisable that one must hire a property management lawyer and a chartered accountant to ensure the proper documentation and smooth repatriation of sale proceeds.