FINANCE TIP OF THE DAY
Can you afford your loan?!
Know the quantity of loan you can afford. The banks may sanction loan based on your income but you should look at your monthly expenditure and see if you can afford the maximum that banks offer. As a thumb rule, remember not to let your credit exceed 40% of your income!
Can an NRI buy property in India?!
The government of India has offered permission for the Non-Resident Indian (NRI) and Person of Indian origin (PIO) to purchase immovable property in India. This is a general permission and it covers only the purchase of residential and commercial property. The purchase of agricultural land, plantation property or farmhouse in India is not permitted. The government has not fixed any limitation on the number of residential or commercial properties that can be purchased by the NRIs or PIO.
If the NRI purchases a property under the general permission, he/she does not have to file any documents or reports with the Reserve Bank.
A foreign national of non-Indian origin, resident outside India cannot purchase any immovable property in India unless such property is acquired by way of inheritance from a person who was resident in India. An NRI can take on lease an immovable property for a period not exceeding five years for without taking permission from the RBI.
A NRI or a PIO can acquire immovable property in India by way of gift either from a person resident in India or an NRI. The property can however be only commercial or residential in nature. Agricultural land, plantation property, farmhouse in India etc cannot be acquired by way of gift. The government of India has offered permission for branch office of a foreign company to purchase immovable property in India.
A foreign company, which has established a Branch Office or other place of business in India, in accordance with the Foreign Exchange Regulations, 2000, can acquire any immovable property in India, which is necessary to carry out their business activities. The payment for acquiring such a property should be made by way of foreign inward remittance through the proper banking channels. A declaration in form IPI should be filed with the Reserve Bank within ninety days from the date of acquiring the property. Such a property can also be mortgaged with an Authorized Dealer as a security for loan purposes. In case the business is to be closed, the sale proceeds of the property can be repatriated only with the prior approval of the Reserve Bank.
It is important for entities incorporated in Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan and who have set up Branch Offices in India to get prior approval of the Reserve Bank if they want to acquire any immovable property in the country.
However, if the foreign company has established a Liaison Office in India, it cannot acquire immovable property. In such cases, Liaison Offices can acquire property by way of lease not exceeding 5 years.
The NRIs who have property acquired in the country can rent out the property without the approval of the Reserve Bank. The rent received can be credited to NRO or NRE account or remitted abroad. Authorized dealers could allow the income to be taken home by those who do not maintain an NRO account in India based on an appropriate certification by a Chartered Accountant, certifying that the amount proposed to be remitted is eligible for remittance and that applicable taxes have been paid.