The Government of India has laid down certain rules for investments by NRIs and PIOs in the loans, securities, shares etc. Let’s take the investment opportunities to open to NRIs and PIOs one by one.
Remittance Facilities
Remittance of capital assets in India by a person whether resident in or outside India requires the approval of the Reserve Bank of India. Other rules laid down by the Foreign Exchange Management Act, 1999 (FEMA) with regard to the remittance facilities for NRIs and PIOs are as follow:
- Remittance of assets by NRI and PIO
- NRI/PIO may remit up to 1,00,000 per year out of the balance in his Non Resident (ordinary) account or from the sale proceeds of assets
- NRI/PIO may remit sales proceeds of immovable property sold by him out of rupee funds provided that he owned the property for a period of not less than 10 years.
- Repatriation of sale proceeds of residential property purchased by NRIs /PIOs out of the foreign exchange
- NRIs/PIOs can repatriate sales proceeds of maximum two residential properties purchased by them.
- NRIs/PIOs can remit funds of application/earnest money with interest on account of non-allotment provided that the original payment was made out of NRE (Non External Rupee) or FCNR (Foreign Currency Non-resident) account.
- Remittance of current income
- NRIs/PIOs are permitted to remit their current income like rent, dividend, pension, interest etc. provided that they do not maintain NRO (Non resident ordinary rupee) accounts. This can be done only after an authorised certification by a Charted Accountant certifying that the amount proposed to be remitted is eligible for remittance and that applicable taxes have been paid for.
- NRIs/PIOs can credit the current income to their Non-Resident (External) Rupee account provided the authorised dealer is satisfied that the credit represents current income of the non-resident account holder and income tax thereon has been deducted/provided for.
- Remittance of Rent
NRIs/PIOs can freely rent out their immovable property in India without the prior permission of the RBI. If the house rented by the NRI/PIO is financed by the way of a housing loan, the entire rental income (even if it is more than the prescribed instalment) has to be adjusted towards the repayment of the loan. If the rental income is less than the prescribed instalment, the borrower should remit the outstanding loan amount from abroad or from his NRE, FCNR or NRO account in India. - International Credit Cards
NRI and PIOs can apply for international credit cards without the prior permission of the RBI.
Immovable Property
Following are the regulations laid under FEMA (Foreign Exchange Management Act) in relation to the transactions of immovable property in India by NRIs and PIOs.
- A foreign citizen who is a resident of India can purchase immovable property (IP) in India without any approval from the RBI.
- Citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan (whether resident in India or not) are prohibited from acquiring or transferring any IP in India without prior approval of the RBI.
- Investment in agricultural property, plantation and farmhouse is prohibited for all classes of persons resident outside India, be it NRIs/OCBs/ foreign citizens or other foreign entities.
The Chief General Manager,
Exchange Control Department,
Foreign Investment Decision (III),
Reserve Bank of India
Mumbai-400 001
Shares and securities
NRIs and PIOs can invest in Government shares and securities, bonds and mutual funds. But, there are certain rules laid under FEMA that need to be followed.
For more details on business intricacies and investment opportunities in India, visit our 'Business' section.
