Legal Corner » Repatriate

Can one repatriate money back to US if in case he has not registered the property in his name?

atoneplace — Tue, 27 Oct 2009 07:18:18 +0000

Question asked by Karan Chandran from USA:
Hello, I am an NRI(Indian Citizen – US Green Card Holder) living in the United States. I am in the process of buying a flat with a builder in Bangalore. I have paid about 80% of the flat’s price so far. The price of the flat is around 58 Lakhs + Registration (around 5 lakhs) + Car Park + misc. The Builder has not registered the flat in my name yet, so I have not paid the registration fees yet. I have sent all the money for the purchase from United States through a Citibank NRE account. Here are my 3 questions:
1. Can I sell the flat to someone now without registering it? My plan is to register it in their name directly. This way I will avoid the Registration fees and can sell it for a lower price thereby both the buyer and myself will gain.
2. If I can sell it, what taxes will I have to pay to the Indian Government? Will it be a percentage of the capital gains (the difference between the sales price and the price I purchased it at)?
3. Will I be able to repatriate the money back to US in this case since I have not registered the property in my name? If so, how long can I keep the money in rupees in an account before I repatriate it? (The dollar value is pretty high now and I would like to repatriate it when it is a little lower)
I greatly appreciate any insight you can provide to my questions. Also, please let me know if there is a way for me to consult with you via phone for about 1/2 hour regarding this and what your charges would be.
Thank you
Karan
Vatsala Answers:
1.Yes, you can assign your rights in the agreement to a third party thereby avoiding registration fees.
2.The capital gains tax will have to be paid on the profit you make. There are routine ways whereby it is possible to avoid this, but they are outside the purview of this column.
3. NRI / PIO may repatriate the sale proceeds of immovable property in India
(a) If the property was acquired out of foreign exchange sources i.e. remitted through normal banking channels / by debit to NRE / FCNR (B) account
The amount to be repatriated should not exceed the amount paid for the property:
1. in foreign exchange received through normal banking channel or
2. by debit to NRE account(foreign currency equivalent, as on the date of payment) or debit to FCNR (B) account.
Repatriation of sale proceeds of residential property purchased by NRI / PIO out of foreign exchange is restricted to not more than two such properties.
Capital gains, if any, may be credited to the NRO account from where the NRI/PIO may repatriate an amount up to USD one million, per financial year, as discussed below.
(b) If the property was acquired out of Rupee sources, NRI or PIO may remit an amount up to USD one million, per financial year, out of the balances held in the NRO account (inclusive of sale proceeds of assets acquired by way of inheritance or settlement), for all the bona fide purposes to the satisfaction of the Authorized Dealer bank and subject to tax compliance.
4.All questions on charges are to be directed to the web master of atoneplace.com
Vatsala
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What are the latest Indian rules for repatriation and what is the procedure to follow?

atoneplace — Sat, 24 Oct 2009 08:40:26 +0000

Question asked by Shiva Badruswamy from New York, USA :
Hello there:
Thank you for being very informative about real estate Indian laws. I am about to inherit a property in India worth roughly $1 million. I am a US Citizen of Indian Origin. I want to sell the property and bring the cash over to the US or buy another property in another country or invest in any security. What are the latest rules and what is the procedure to follow?
Best wishes,
Shiva Badruswamy
New York, NY, USA
Vatsala Answers:
You can sell the property and repatriate the funds. NRI / PIO may repatriate the sale proceeds of immovable property in India. The following are the latest rules:
(a) If the property was acquired out of foreign exchange sources i.e. remitted through normal banking channels / by debit to NRE / FCNR (B) account. The amount to be repatriated should not exceed the amount paid for the property:
1. in foreign exchange received through normal banking channel or
2. by debit to NRE account(foreign currency equivalent, as on the date of payment) or debit to FCNR (B) account.
Repatriation of sale proceeds of residential property purchased by NRI / PIO out of foreign exchange is restricted to not more than two such properties.
Capital gains, if any, may be credited to the NRO account from where the NRI/PIO may repatriate an amount up to USD one million, per financial year, as discussed below.
(b) If the property was acquired out of Rupee sources, NRI or PIO may remit an amount up to USD one million, per financial year, out of the balances held in the NRO account (inclusive of sale proceeds of assets acquired by way of inheritance or settlement), for all the bona fide purposes to the satisfaction of the Authorized Dealer bank and subject to tax compliance.
If you invest in another country where the double taxation avoidance treaty has been signed, you have to pay only the difference in the taxation amount.
Vatsala
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What is the best method of transaction so that a NRI can pay the minimum capital gains tax, registration tax and is able to repatriate the sale proceeds of a house?

atoneplace — Tue, 30 Jun 2009 10:18:57 +0000

Question asked by Mr. Vishal Sinha from USA :

Dear Sir, I am an Australian citizen and currently on work visa in USA for the past 2 years. I was born in India and my parents/brothers are settled there and hence I have a PIO (Person of Indian Origin) card. I need to assist my brother with 13 Lakhs INR rupees that I will send from USA. In Lieu of this my mom would like to give a house that is in her name to me. The house is worth 40 lakhs INR that she has built 15 years ago. My question is what is the best method of transaction so I pay the minimum capital gains tax, registration tax and am able to repatriate the sale proceeds of the house when I sale it later while claim the 13 lakhs that I am going to send now. What happens if my mom sells the house herself in 40 lakhs INR and then gifts the cash to me? Do I need to pay any tax on this cash? Can I repatriate this cash to USA/AUSTRALIA?
In place if she gifts the house to me, When I sell the house, do I have to pay capital gains on whole of 40 Lakhs INR or just the (sale price – cost of building the house that my mom spent)?
Third option would be that mom could sell part of the house to me and part of the house gives me as gift to counter the 13 lakhs INR that I am paying her. She will then give 13 lakhs INR to my brother who has already a loss of 13 lakhs in his business.
I need to know what is the best option where for getting the control of the house and immediately and have to pay less taxes.
Thank you for your help!
Vishal Sinha
USA

Vatsala Answers:

1) Your mother can sell you the property for Rs. 13 lakhs. After the sale, it will be taxed in the hands of your mother for a notional value which will be the guideline value. i.e., you motherâ€™s capital gains will be taxed using the notional value as her deemed cost of sale. When you sell the property, the amount you have invested to purchase it can be repatriated, subject to compliance with tax laws and a ceiling of 1 million U.S. dollars per financial year. But if you show low cost of acquiring the asset in the sale deed, the capital gains will be more at the time of sale in your hands. There will be no notional cost of acquisition. But in India you can get around this by showing a lesser value in the sale deed when you sell the asset. This way your capital gains can be reduced.
2) There is no tax on cash gifts from mother to son.
3) If the house is gifted to you, the guideline value will be taken as the notional value, which is used to compute the cost of acquisition in your hands.
4) You cannot partly gift and partly sell the same property.
Vatsala

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Repatriation by an NRI of All Proceeds from Sale of Residential Real Property in India, Purchased With Foreign Exchange

atoneplace — Tue, 19 Feb 2008 03:20:46 +0000

QuestionÂ asked by MrÂ Suphal Agrawal from USA:Â

Gentlemen, I was referred to your site by one of my relatives in India.
I am a male of Indian origin, now a U.S. Citizen for several years. I am interested in purchasing residential real property near Mumbai with a goal to sell it later on (time not definite yet, but could be anytime after a year or so, depending upon the local market situation and my own financial plans) and then buy something else, but eventually I intend to repatriate all proceeds — my original investment and all gains — back into the U.S. Based on my extensive search on this topic, here is what I understand:
1) I am classified as an NRI due to having held an Indian passport previously, and due to both my parents being Indian
2) As such, I can buy residential real property in India without any specific permissions; I can pay for it via wire transfer from my US bank to the seller’s bank in India; later, I can sell it to an Indian citizen or another NRI but must hold it for at least three years after my last payment (or three years after registration, if paying all cash) — language is confusing on this three-year-hold point; through an NRO account, I can have the seller repatriate proceeds to my US bank, but ONLY in an amount not to exceed my original payment for the property
3) As an NRI, I can only do a maximum of two such sales and repatriations (principal investment only) in my lifetime
Specifically, my key concerns are: 1) Can I repatriate all gains and all investments from the sale of residential real property purchased by paying for it in forex? 2) Can I do it as and when I choose? And, 3) Does my registration as a People of Indian Origin — PIO — have any impact on my ability to do these things?
I would very much appreciate your time in helping me with the above specific questions (particularly, repatriation of all proceeds from the sale of real residential property), and I will be especially grateful if you could reply at your earliest. My contact information is noted below. Thanks again.
Sincerely,
Mr. Suphal Agrawal, USA

Vatsala Answers:Â

1. You can very well purchase residential properties in India out of foreign remittance from abroad without any prior permission of the RBI.
2. However, the repatriation of sale proceeds of residential properties is restricted only to two properties.
3. There is no lock in holding period for sale and repatriation.
4. The amount repatriable will be restricted to the amount brought in by way of foreign currency. If it was acquired out of balances in FCNR/NRE account, it will be restricted to the value of foreign currency equivalent of the Indian Rupee used for acquisition on the respective dates on which the Indian rupees were paid for purchase of the properties.
5. The repatriation option is further subject to the condition of the applicable capital gains tax on the property having been paid already. Vatsala

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Information about selling gifted property.

atoneplace — Sun, 17 Feb 2008 04:53:23 +0000

QuestionÂ asked by MrÂ Asma Ashfaq:

Hello
I am interested in selling a property received through a gift deed from my father. Will this invite capital gains tax ?
Regards
Asma Ashfaq

Vatsala Answers:

You can sell the property received through gift deed from your father. It will definitely attract capital gains tax. After payment of the applicable capital gains tax, the balance amount can be repatriated upto a maximum of 1 million US Dollars. Vatsala

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