Further to our Part I, this Part seeks to outline the rights of the OCI cardholders with regards to buying immovable property in India.
Indian expats, the world’s second-largest diaspora, have since many years been some of the biggest investors in India and the depreciating Indian rupee has particularly intensified investments, especially in the real estate sector. Additionally, owing property in India gives expats a sense of attachment and security. To fortify this bond, GOI has given them preferential treatment as compared to other foreign investors.
With the passing of the Act, expats under the OCI card scheme have the following rights with regards to buying of immovable property in India:
- General permission has been granted by the Reserve Bank of India (“RBI”) for purchase of residential and commercial property; with specific exclusion of agricultural land/plantation property/ a farmhouse.
- There are no restrictions on the number of properties that can be purchased although restrictions are levied on repatriation of funds for multiple properties.
- Payments for buying of property can be made by way of any of the non-resident accounts – Non-Resident External[1] (“NRE”), Non-Resident Ordinary account[2] (”NRO”) or Foreign Currency Non-Resident Account[3] (“FCNR”) (B) and there are no upper limits for inward remittances.
- Income tax will not be levied while acquiring property.
- For buying property in India, subject to certain conditions, they are eligible for housing loans from Indian banks. They are also eligible to take interest-free loans from close relatives who are resident in India.
- All kinds of property, including agricultural land/plantation property/ a farmhouse, can be inherited by them; from a person resident in and out of India.
The next post seeks to examine the major overhauls brought in by GOI post promulgating the Ordinance to engage more meaningfully with Indian expats.
[1] NRIs and PIOs are permitted to open these accounts in Indian Rupee with authorized dealers and authorized banks in any form, e.g. saving, current, recurring or fixed deposit subject to the conditions specified in Schedule 1 of the Deposit Regulations.
[2] Any person resident outside India may open NRO account in Indian Rupee with authorized dealers and authorized banks for the purpose of putting through bona fide transactions in rupees’ subject to the conditions specified in Schedule 3 to the Deposit Regulations.
[3] NRIs and PIOs are permitted to open these accounts in any permissible foreign currency with authorized dealers subject to the conditions specified in Schedule 2 of the Deposit Regulations.
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