Tuesday, February 1, 2011

An NRI Can Remit One Million Dollars from Property Sales

An NRI/PIO is allowed to send abroad up to one million dollars from the sale of property in any one financial year. This amount should be the sale proceeds of property inherited by him out of Rupee funds. This transfer is subject to production of documentary evidence in support of acquisition, inheritance or legacy of assets by the NRI, and a tax clearance or a no objection certificate from the Income Tax Authority. The one million dollar remittance can also be made from the balances held in Non Resident Ordinary Rupee Account (NRO) bank accounts.

The prices of ancestral properties left in India by emigrating NRIs have escalated beyond their belief. Thus, NRIs have developed a new and intense interest in claiming their share especially with the recession biting hard in the West. In the last few years, the ancestral home in India is valued in ‘crores’ – tens of millions of Rupees. So these amounts become very attractive for NRIs to claim and remit. No wonder, in the recent past, the Reserve Bank of India has revised the maximum amount that can be sent abroad without special permissions. However, these properties should not be agricultural land, a farm house or a plantation.

After taking a dip after the financial crisis of 2008, property prices have bounced back and how. Despite the high price rise, more and more NRIs are keen to buy properties in India. Who can buy property in India? An NRI who is a citizen of India but resident outside India; or a ‘Person of Indian Origin' (PIO). A PIO is defined as an individual (not a citizen of Pakistan, Bangladesh, Sir Lanka, Afghanistan, China, Iran, Nepal or Bhutan) who held an Indian Passport at any time, or whose father or mother or grandfather or grandmother was a citizen of India.

The laws related to immovable properties in India are complex and are not uniform from one state to another, said Rajan D. Gupta, a senior lawyer and a qualified accountant with SRGR Law Offices. “A major concern is to determine the clear and marketable title of the land under question and to ensure that the land under question is free from any encumbrances such as litigation, prior mortgages, any third party interest or rights and any governmental actions such as compulsory acquisition proceedings. Again, in case of properties, especially agricultural properties, which are owned by farming families, there are a number of family law issues which again are myriad as there are a number of religions in India and most of them have their own characteristic legal frameworks. “

“To ward off such issues and be almost certain about the legal status of the property to be acquired, it is advisable that a competent legal professional must be engaged to conduct a title check and due diligence of the property to be acquired. It is also important to engage such a professional who practices within the jurisdiction where the property is situated so that he/she is aware of the local legal compliances and issues,” he adds.

NRIs face many legal tangles about their properties in India. These relate to the purchase, transfer and ownership of property, power of attorneys, management and eviction of tenants, remittance of the sale proceeds, illegal grabbing of their properties and other related issues. Their legal cases are pending in the courts for years, indeed decades. If an NRI is fighting a case with a resident Indian, he is at a disadvantage because the Indian is no hurry while the NRI has limited time to attend to his case during his visit to India or make special trips for court appearances.

Thus, NRIs have demanded the establishment of fast track courts in different parts of India to deal with their property cases – a demand the government has been considering for some years. This issue will no doubt resurface in the forthcoming Bharatiya Pravasi Divas (PBD) next month when NRIs are cajoled to invest in India. Before investing in property, the NRIs want to see some mechanism for speedy judgments for their court cases. Special committees have been formed by GOPIO – Global Organisation of Persons of Indian Origin – to deal with property problems. This committee has prepared and presented many proposals to ease the suffering NRIs at the hands of real estate developers, buyers, sellers and tenants and has a data base of thousands of such cases on their records.

The problems have been highlighted; now action is awaited.

1 comment:

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