Repatriation of Sale Proceeds: Real Estate is the premium segment of investment for both residents and NRIs. Time and again we have explored the benefits of investing in Real Estate and have carved out a special segment where you can browse through the highlights of investing in real estate in India. Covering all the various aspects such as which properties can NRIs buy or inherit in India along with the documentation requirements, benefits, and taxation that follow, it becomes necessary to address the concern of NRIs on how can they repatriate the sale proceeds covering valid points like the limits, channels and the associated rules and regulations around it. In this article, we will focus on this particular aspect. Below is a table for you to browse along the other important aspects concerning NRI selling and buying property in India.
NRI Investment in Real Estate in India in a Nutshell
NRI Selling Property in India: Repatriation of Sale Proceeds
As an NRI, there are 3 ways for you to associate yourself with a property in India, which are:
- You bought it as a resident and then became an NRI
- You bought the property as an NRI
- You inherited a property in India
Let’s explore these cases one by one focusing entirely on how you can repatriate the sale proceeds in each of these cases.
- Repatriation of sale proceeds from a property bought as a resident: This case is intriguing as it has certain limits for both holding the property with yourself before you can repatriate the proceeds and the amount that can be sent abroad. Let’s explore:
- The sale proceeds must be credited to your NRO Account
- There is a limit of USD 1 million per financial year for repatriation given that you have paid all the taxes due on the amount being sent abroad
- The repatriation is restricted to sale of 2 residential properties only
- A minimum holding period of 10 years is required in order to repatriate the sale proceeds. For example if you held the property for 7 years then you need to keep the sale proceeds in your NRO Account for 3 years. Only once the 10 year period is complete, can you repatriate these funds.
- Repatriation of sale proceeds from a property bought as an NRI: Here, the case becomes slightly different. There are certain conditions that need to be met before you can repatriate the sale proceeds. Let’s take a look:
- Compliance with the provisions of the foreign exchange law in force at the time of acquisition or the provisions of FEMA Regulations is mandatory
- The amount of repatriation can’t exceed the amount initially sent by the NRI or funds paid through NRE / FCNR Account for the purchase of the property
- The repatriation cannot exceed the amount of loan repayment made using foreign inward remittance or debit to Non Resident External accounts (NRE) or FCNR accounts.
- In all cases, the sale proceeds must be credited to your NRO Account
- There is a limit of USD 1 million per financial year for repatriation given that you have paid all the taxes due on the amount being sent abroad
- The repatriation is restricted to sale of 2 residential properties only
- There is no holding period of 10 years for properties bought by NRIs using their foreign funds
- Repatriation of sale proceeds from a property inherited by an NRI: Inheritance of a property by an NRI is a different case altogether. Nevertheless, the process of repatriation of sale proceeds is somewhat similar. Let’s glance through:
- Documentary evidence to support the inheritance of property is required
- Necessary Tax Clearance Certificates from the Income Tax Department are required
- There is a limit of USD 1 million per financial year for repatriation
Process of Repatriation of Sale Proceeds
Exploring the cases above, we can figure out that for repatriation of sale proceeds in each case the NRO Account is mandatory. It is the only medium to send the funds abroad to your overseas bank account. So, let’s understand the process and the documents required for the same.
| Account | Process | Limit |
|---|---|---|
| NRO | All the following documents are needed to be submitted at the Bank Branch (in India). You can either submit it when you arrive here or download it online and send the signed copies to bank branch via courier: – Form 15CA (The purpose of this document is to ensure that taxes are collected on the funds before they are remitted abroad as it becomes difficult to recover taxes at a later stage) – Form 15CB (Certificate of an Accountant)(The Accountant fills the form and shares it with the account holder. The account holder then sends it to the bank via courier) – Form A2 (Form for remittance) – Request Form from the Bank (for details to debit funds from your account) | USD 1 million |
Note: Click on forms 15CA and 15CB to download
Key points to keep in mind while repatriation using NRO Account:
- Form 15CB is not required for remittances below Rs.50,000 (single transaction) and Rs. 2,50,000 (annually)
- The exchange rates prevailing at the time of repatriation will be applicable
- It can take up to 2 days for the transfer to get completed
Investing in Real Estate in India and repatriation of sale proceeds need close guidance from experts to sort out your taxation and other related aspects. Click on the button below to connect directly with our expert for customized assistance with NRI Investment in Real Estate in India and the taxation that follows. Also, visit our blog and Youtube channel for more details.
NRI Selling Property in India: FAQs
NRIs or PIOs are allowed to repatriate the sale proceeds of immovable property in India through their NRO Accounts. There are certain documents required to certify that all the taxes are paid on the proceeds. The process is the same as the process of repatriation from NRO Account.
Yes. A foreigner can sell property in India if he/she has an Indian origin. Foreign nationals of non Indian origin resident outside India are not permitted to acquire any immovable property in India unless such property is acquired by way of inheritance from a person who was resident in India.
NRIs selling property in India has to get their capital gain computed by the income tax officer. Instead, NRI sellers can avail a lower or No TDS Deduction Certificate by applying for Form 13 online from the Income Tax Department.
Property sold in India is generally subject to a tax deduction. The person buying the property must deduct taxes at the rate applicable to the NRI’s income slab if the property is a short term asset. If the property is a long term asset, 20% LTCG tax applies.
