Legal Corner » NRO account

How soon can one repatriate the dollar amount put in to buying a flat?

atoneplace — Mon, 03 Oct 2011 10:57:05 +0000

Question asked by Mathi Jay from Chennai, India:
I have procured a flat in Chennai, India. Paid 70% thru foreign remittance (for which have proof). Planning to sell the same, how soon can I repatriate the dollar amount I put in? If I submit the proof of the wire transfers, can I get them repatriated as soon as I sell? Also note my first dollar payment was in Jan 2007 and the last dollar payment in Sep 2008. If the sale proceeds were to be in Indian Rupees, what type of account should I put in to have it repatriated at the earliest? If I put it in a NRO in a foreign bank (e.g. citi), can I get them repatriated immediately if I produce certificates of foreign wire transfer?
Thanks
Mathi Jay
Veena Answers:
We are of the view that the money received from sales proceeds allowed for repatriation to any country subject to USD 1 million in a year. Proceeds exceeding 1 million can be repatriated in the subsequent years. The sales proceeds have to be deposited in NRO (rupee account). Further, the source of funding needs to be certified by a Chartered Accountant and copies of inflow to be provided for review of the chartered accountant. Any NRO account can be opened in any bank. However, if there is any tax liability on the sale proceeds, the same needs to be cleared or undertaking needs to be procured that such liability shall be cleared.
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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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