Repatriation of Sale Proceeds of Immovable Property By NRI

Repatriation of Sale Proceeds of Immovable Property

Many NRIs, even though they live abroad, have a lot of financial transactions in India. One of the main transactions in India for NRIs is the buying and selling of immovable property in India. In many cases, NRIs also inherit property from their parents or other relatives, which they then wish to sell. If you are selling your immovable property in India, then you may be under doubt regarding the repatriation of sale proceeds of immovable property by NRI. You may not be sure about the steps of NRI property sale repatriation, documents and the legal implications when you repatriate money from the sale of property by NRI in India, and how to transfer money from India abroad. Keeping all this in mind, we have created an NRI guide to selling property in India, focusing on repatriation of sale proceeds of immovable property by NRI.

NRI Property Sale Repatriation

Often, there are several private players who offer services of repatriating your money from sales proceeds abroad. However, this private method is known as ‘havala’, and is an illegal method of remitting funds abroad, which is often used to convert black money. By choosing this channel, you also run a risk of not receiving your funds in the country of residence. However, with the modernization of the Indian banking industry, it has become much simpler to repatriate funds that are accounted for, using safe and fast legal banking methods.

Step By Step Guide To Repatriate Sales Proceeds From India

The RBI has delegated its powers to banks and other authorized dealers to repatriate funds abroad. However, there are several restrictions and rules that are currently in place.

If your property was purchased with remitted funds from abroad, then the principal amount can be repatriated immediately. The balance, if any, is to be deposited in an NRO account. For instance, suppose you spent USD 100,000 to purchase a property in India. Five years later, you sold the same property for a value of USD 200,000. In this case, USD 100,000 (the principal amount) can be repatriated immediately. The remaining USD 100,000 has to be deposited in your NRO account. Previously, there was a lockdown period of 3 years for this extra USD 100,000, but this has now been removed by the RBI. In case your property was purchased using the Indian Rupee, then the sales proceeds can be deposited in your NRO account directly.

NRIs can then repatriate an amount of USD 1 million, per year, without explicit permission from the RBI. This includes proceeds from the sale of up to two immovable properties per year. If the amount to be repatriated exceeds this amount, then you will have to get permission from the RBI to repatriate these funds.

Therefore, the first step to repatriate your sale proceeds is to deposit in your NRO account before you can repatriate it.

The second step is to take the services of a Chartered Accountant, which is explained below.

CA Certificate – Is it compulsory?

While the CA certificate was mandatory until a few years ago, this may not be mandatory for you today. The Chartered Accountant has to fill in a form called 15CB, which can be downloaded from the government’s website. This serves as proof that you have not obtained your money through illegal channels. The CA will attest that the amount held by you is from the sale of immovable property. After this step is done, you will need to fill in Form 15CA, which is explained below.

What is Form 15CA?

This is a form that deals with the applicable taxes on your transaction. This form can be filled online. You will require information proved by your Chartered Accountant to complete this form. Once the form is uploaded, you should receive a confirmation number as the form is sent to the relevant tax authorities.

Once this is done, the next step is to take both these forms to the bank where you have your NRO account. Additional documents, like the sale document of property and your valid ID proof, should also be provided by you. Once this is done, you can now repatriate your funds from the NRO account to the country of residence. No other permission from RBI is necessary if the amount repatriated by you is less than USD 1 million.

By now, you should know that whether you have inherited property in India that you wish to sell, or you wish to sell an immovable property purchased by you, it is possible to repatriate money from the sale of property, within the framework laid down by the Reserve Bank of India. We hope that this NRI guide to selling property in India has made the step by step process of repatriation of sale proceeds of immovable property by NRI, and how to transfer money from India abroad very clear and uncomplicated for you. We highly recommend, however, that you contact a qualified Chartered Accountant before selling your property in India because a CA would be able to give you personalized, expert advice on the entire procedure. If you still are having doubts, you can also drop us a query, and we will get back to you.

Related Questions

Q: What are the tax exemptions incomes for NRIs?

A: * Interest on NRE & FCNR(Foreign Currency Non- Repatriable) account * Interest on government-issued savings certificates, notified bonds * Dividends from shares of domestic companies * Long term...

Q: Why ITR should be filed by NRI?

A: * If the Tax deducted at source is more than the actual tax liability of the NRI, then refund can be claimed by the NRI only after filling return along with interest. * If the NRI has incurred any...

Q: What is tax consideration of NRE/NRO account?

A: Considering the interest income in NRE/ NRO Account, NRI can file their return in India. The income of NRE Account shall be exempt whereas, Income in NRO Account shall be taxable.

Q: What are the tax deductions that are not allowed to NRIs?

A: * Investment in PPF * Investments made in NSCs * Post Office 5 Year Deposit Scheme * Senior Citizen Savings Scheme