Investment in real Estate

Repatriation of original investment in this case will be permitted by Reserve Bank only after a lock in period of three years from the date of issue of the equity shares / convertible debentures. Applications for the purpose should be made to Reserve Bank (Central Office) in Form IDS(R). OCBs are not permitted to invest in these areas.

Non-Resident Indian Investment in Housing

• The Indian Government has launched a scheme to attract NRI investment in housing and Real Estate development. A nodal cell in the National Housing Bank (NHB) has been created to co-ordinate decisions. The cell has representatives from State Governments and other agencies and will finalize policies and procedures related to NRI investment under the agencies of the Ministry of Urban Development.
• NRIs settled in various countries will be permitted to acquire, rent, gift property and trade in housing colonies in different cities, so long as they make payment in foreign exchange. The original investment will be allowed to be repatriated after taxation in respect of manufacture of building materials, ventures in real estate and housing finance institutions will be permitted. Reserve Bank of India will issue appropriate notifications.
• Upto 5% of sale proceeds in each scheme subject to a ceiling of Rs. 2.5 mln. excluding the foreign exchange for travel and advertisement will be released in foreign exchange to the builder’s towards expenses for making the houses including payment of commission and promotion of schemes on an international basis. Depending on the approved status of builder’s necessary clearance in respect of the builder’s project will be given for the construction and provision of services at the local level by the State and civic agencies. org.in

• Residential Property - Foreign citizens of Indian Origin, whether resident in India or not, are allowed to acquire, hold, transfer or dispose of, by sale or inheritance, immovable properties situated in India. The only condition is that the sale proceeds of such properties and income accruing thereon will not be eligible for repatriation outside India.
• Further incentives of foreign citizens of Indian Origin - Reserve Bank of India has since allowed repatriation of original investment in equivalent foreign exchange on residential properties, after obtaining prior approval, subject to a maximum of two houses, subject to the following conditions :
  • The residential properties are purchased on or after 26th May, 1993.
  • The properties are not transferred or disposed of by way of sale for a period of three years from the date of the final purchase deed or from the date of payment of final installment where the agreement for purchase so provides;
  • Only the amount of sale proceeds equivalent to the original investment in foreign exchange, if sold after three years, will be allowed to be repatriated outside India and the balance amount of sale proceeds of the property should be credited to seller's Non-resident Ordinary (NRO) Account with an authorized bank in India