Investments
NRIs/PIOs are allowed to invest in India in following two ways:
- Repatriation Basis
- Non-Repatriation Basis
| Repatriation Basis | Non-Repatriation Basis |
|---|---|
NRIs may, without limit, purchase on repatriation basis:
|
NRI may, without limit, purchase on non-repatriation basis :
Note: NRIs are not permitted to invest in small savings or Public Provident Fund (PPF). |
Investment in Immovable Property
- NRI / PIO / Foreign National who is a person resident in India (citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan would require prior approval of the Reserve Bank) may acquire immovable property in India other than agricultural land/ plantation property or a farm house out of repatriable and / or non-repatriable funds.
- The payment of purchase price, if any, should be made out of
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- funds received in India through normal banking channels by way of inward remittance from any place outside India or
- funds held in any non-resident account maintained in accordance with the provisions of the Act and the regulations made by the Reserve Bank.
Note : No payment of purchase price for acquisition of immovable property shall be made either by traveller’s cheque or by foreign currency notes or by other mode other than those specifically permitted as above.
- NRI may 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
- NRI may 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
An NRI may transfer any immovable property in India to a person resident in India.
- NRI may 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.
- In respect of such investments, NRIs are eligible to repatriate:
- The sale proceeds of immovable property in India if the property was acquired out of foreign exchange sources i.e. remitted through normal banking channels / by debit to NRE / FCNR (B) account.
- The amount to be repatriated should not exceed the amount paid for the property in foreign exchange received through normal banking channel or by debit to NRE account (foreign currency equivalent, as on the date of payment) or debit to FCNR (B) account.
- In the event of sale of immovable property, other than agricultural land / farm house / plantation property in India, by a person resident outside India who is a citizen of India / PIO, the repatriation of sale proceeds is restricted to not more than two residential properties subject to certain conditions.
- If the property was acquired out of Rupee sources, NRI or PIO may remit an amount up to USD one million per financial year out of the balances held in the NRO account (inclusive of sale proceeds of assets acquired by way of inheritance or settlement), for all the bonafide purposes to the satisfaction of the Authorized Dealer bank and subject to tax compliance.
- Refund of (a) application / earnest money / purchase consideration made by house-building agencies/seller on account of non-allotment of flats / plots and (b) cancellation of booking/deals for purchase of residential/commercial properties, together with interest, net of taxes, provided original payment is made out of NRE/FCNR (B) account/inward remittances.
- Repayment of Housing Loan of NRI / PIOs by close relatives of the borrower in India Housing Loan in rupees availed of by NRIs/ PIOs from ADs / Housing Financial Institutions in India can be repaid by the close relatives in India of the borrower.
Facilities to returning NRIs/PIOs
- Returning NRIs/PIOs may continue to hold, own, transfer or invest in foreign currency, foreign security or any immovable property situated outside India, if such currency, security or property was acquired, held or owned when resident outside India
- The income and sale proceeds of assets held abroad need not be repatriated. Foreign Currency Account
- A person resident in India who has gone abroad for studies or who is on a visit to a foreign country may open, hold and maintain a Foreign Currency Account with a bank outside India during his stay outside India, provided that on his return to India, the balance in the account is repatriated to India. However, short visits to India by the student who has gone abroad for studies, before completion of his studies, shall not be treated as his return to India.
- A person resident in India who has gone out of India to participate in an exhibition/trade fair outside India may open, hold and maintain a Foreign Currency Account with a bank outside India for crediting the sale proceeds of goods on display in the exhibition/trade fair. However, the balance in the account is repatriated to India through normal banking channels within a period of one month from the date of closure of the exhibition/trade fair. Resident Foreign Currency Account
- Returning NRIs /PIOs may open, hold and maintain with an authorised dealer in India a Resident Foreign Currency (RFC) Account to transfer balances held in NRE/FCNR(B) accounts.
- Proceeds of assets held outside India at the time of return can be credited to RFC account.
- The funds in RFC accounts are free from all restrictions regarding utilisation of foreign currency balances including any restriction on investment in any form outside India.
- RFC accounts can be maintained in the form of current or savings or term deposit accounts, where the account holder is an individual and in the form of current or term deposits in all other cases.
RFC accounts are permitted to be held jointly with the resident close relative(s) as defined in the Companies Act, 1956 as joint holder (s) in their RFC bank account on ‘former or survivor basis’. However, such resident Indian close relative, now being made eligible to become joint account holder shall not be eligible to operate the account during the life time of the resident account holder.
General facilities
Can Exchange Earners Foreign Currency (EEFC) accounts be held jointly with a -resident Indian?
- Yes, EEFC account of a resident individual can be held jointly with a resident close relative on a ‘former or survivor’ basis. However, such resident Indian close relative will not be eligible to operate the account during the life time of the resident account holder.
Can a resident individual holding a savings bank account include nonresident close relative as a joint account holder?
- Yes, individuals resident in India are permitted to include non-resident close relative(s) as a joint holder(s) in their resident bank accounts on ‘former or survivor’ basis. However, such non- resident Indian close relatives shall not be eligible to operate the account during the life time of the resident account holder.
Can a resident individual gift shares/securities/convertible debentures etc to NRI close relative?
- Yes, a resident individual is permitted to gift shares/securities/convertible debentures etc to NRI close relative up to USD 50,000 per financial year subject to certain conditions.
Can a resident individual give rupee gifts to his visiting NRI/PIO close relatives?
- Yes, a resident individual can give rupee gifts to his visiting NRI/PIO close relatives by way of crossed cheque/electronic transfer within the overall limit of USD 200,000 per financial year for the resident individual and the gifted amount should be credited to the beneficiary’s NRO account.
What types of services can be provided by a resident individual to his / her nonresident close relatives?
- A resident may make payment in rupees towards meeting expenses on account of boarding, lodging and services related thereto or travel to and from and within India of a person resident outside India who is on a visit to India. Further, where the medical expenses in respect of NRI close relative are paid by a resident individual, such a payment being in the nature of a resident to resident transaction may also be covered under the term “services”.
- Other
| Regulation | Related To | NRI | PIO |
|---|---|---|---|
| FEM (Deposit) Regulations | Bank Accounts | Non-resident Indian (NRI)’ means a person resident outside India who is a citizen of India. Eg Indians working/living abroad, and holding Indian citizenship, will qualify as NRI. | ‘PIO’ means a citizen of any country other than Bangladesh or Pakistan, if he satisfies below conditions* |
| FEM (Borrowing and Lending In Rupees) Regulations | Loans | ||
| FEM (Investment in Firm or Proprietary Concern in India) Regulations | Setting up Proprietorship or Being Partner in Partnership Firm | PIO’ means a citizen of any country other than Bangladesh or Pakistan or Sri Lanka, if he satisfies below conditions* | |
| FEM (Transfer or Issue of Security by a Person Resident Outside India) Regulations | Foreign Investment in India | ||
| FEM (Remittance of Assets) Regulations: | Non-resident Indian (NRI)’ means a person resident outside India who is a citizen of India. | ‘PIO’ means a citizen of any country other than Bangladesh or Pakistan, if he satisfies below conditions* | |
| FEM (Acquisition and Transfer of Immovable Property In India) Regulations | Buy/Sell Immovable Property In India | ‘PIO’ means an individual (not being a citizen of 8 countries**) and who also satisfies the below conditions*** |