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AVR Chowdary
G&C Global

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Mr. Chowdary will host this monthly segment on
Virijallu which will air 2nd Sunday of every month.

He will present the real estate outlook in India as well as answer any questions listeners might have.

Here's another highlight - you can post your question on any topic pertaining to Indian Real Estate. Your question will be directly sent to AVR Chowdary who will personally answer each question within 48hrs. The communication between you & G&C Global team is completely confidential.

Monthly Blog by AVR Chowdary - Feb 2015

Repatriation of Sale Proceeds of

Real Estate Assets in India by NRIs

In this article, we talk about basics of repatriation of both sale proceeds and rental income earned from selling or renting out of residential and commercial properties in India by NRIs (Non-Resident Indian) & PIOs (Person of Indian Origin).

SHORT VERSION

Good news! NRIs are allowed to repatriate upto $ 1 Million per annum per person out of sale proceeds of their real estate properties in India and there is NO LIMIT on number of properties that can be bought, sold and repatriated by NRIs. And when it comes to repatriation of rental income, an unlimited amount of money can be repatriated every year. And as a couple, you can repatriate upto $ 2 Million per annum (approx Rs.6 crores based on current exchange rate) out of sale proceeds and an unlimited amount of rental income every year.

 

 LONG VERSION

To make it easier to understand, we will talk separately about repatriation of Principal amount (i.e. the original funds invested) and repatriation of the capital gains (profits earned on the sale of property).

REPATRIATION OF PRINCIPAL AMOUNT

(original amount of investment / capital invested) :

1. If property was purchased entirely with funds brought into India through banking channels (i.e. external funds that were either directly transferred to builder or seller’s account or funds that were transferred to your own NRE/NRO account first and then paid to builder/seller through issue of a cheque from this account) or through funds already available in your NRE account, the entire principal amount can be repatriated without any lock-in period for an unlimited number of properties (incase of residential properties, repatriation is allowed for unlimited amount for the first 2 properties and for the third property onwards, there is a limit of $ 1 Million per person per annum as explained below).

Restriction : Incase of residential property, unrestricted repatriation of principal is allowed only for first 2 properties purchased and sold by an NRI in his lifetime. From the 3rd property onwards, the principal portion has to be first deposited in an NRO account from which a maximum of USD 1 Million (approx Rs.6 crores) can be repatriated per financial year per person. This annual limit is explained in detail in the following paragraphs. Incase of commercial property, there is no restriction on number of properties who’s principal amount can be freely repatriated.

2. If property was purchased entirely with funds existing in NRO account :

The entire sale proceeds (both principal and profits) must first be deposited into an NRO account and then a maximum amount of USD 1 Million can be repatriated per person per financial year. This limit of USD 1 million per person per financial year also applies to repatriation of sale proceeds of property acquired through inheritance.

3. If property has been purchased with a combination of existing funds in NRO account and fresh funds remitted from outside India or from balances existing in NRE/FCNR accounts :

The respective rules explained above apply in proportion of funds invested. Which means, the principal invested out of NRO account can be repatriated only to the extent of USD 1 million and the principal invested from external sources or NRE/FCNR funds can be repatriated completely without any limit (but subject to restriction on number of residential properties as explained in point number 1).

 

 REPATRIATION OF PROFITS / CAPITAL GAINS

Irrespective of source of principal investment i.e. whether investment was made using existing funds in NRO account (rupee funds) or through external remittances or funds paid out of NRE/FCNR accounts, the entire capital gains / profit must be deposited in an NRO account. From here, you can repatriate upto USD 1 Million (approx Rs.6 crores) per financial year per person AFTER paying applicable capital gains taxes - which is 30% if the property is sold before 3 years from date of purchase and 20% if property is sold after 3 years from date of purchase.

For more information on capital gains taxes applicable on real estate transactions, read our article titled “Taxation of Real Estate Investments in India”.

 

 REPATRIATION OF RENTAL INCOME

·         NRIs can freely rent out their immovable property, whether purchased through domestic funds (rupee funds available in NRO account) or foreign funds (funds remitted into India or funds existing in NRE/FCNR accounts), without seeking any permission from the RBI.

·         The rental income being a current account transaction, is fully repatriable outside India, only if proper tax is paid or provided for.

·         There is no limit on amount of repatriation of rental income.

 

 OVERALL LIMIT OF USD 1 MILLION PER PERSON PER FINANCIAL YEAR

·         NRIs are permitted to repatriate a total of only/upto USD 1 Million or approx Rs.6 crores per financial year per person (April to March) out of total balance held in their NRO account (which basically refers to income that is not freely repatriable i.e. income that is repatriable but is subject to certain restrictions).

·         This is the limit that we have been referring to in above paragraphs and it includes all and any kind of repatriable income of the NRI such as sale proceeds (principal + profits) of immovable property purchased through NRO/rupee funds or acquired through inheritance, profits from sale of properties acquired through funds remitted into India or funds existing in NRE/FCNR accounts (i.e. foreign funds), rental income from residential or commercial property, dividends from shares, pension, interest on loans, etc.

·         Hence, any income that is not freely repatriable (as explained in opening points) is subject to this limit.

·         This limit of USD 1 million is the limit upto which you can repatriate without any permission from RBI. If you have a genuine need to repatriate above this limit, you can make a specific application to RBI for increasing the repatriation limit.

ADVANTAGE YOU HAVE AS A COUPLE

Since the above explained $ 1 Million limit is applicable “per person per financial year” –it means that incase of a married couple, both husband and wife get an individual limit of USD 1 Million, effectively giving them a total repatriation limit of USD 2 Million per financial year. Incase the couple have a major child (above 18 years of age), a further sum of USD 1 Million is allowed, hence giving them an effective total repatriation limit of USD 3 Million (approx Rs.15 crores). *1

 

 COMMON MYTH EXPLAINED

“in the case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties.”

If you have done your research on repatriation, you would have come across the above clause and be worried that you can repatriate sale proceeds of only 2 residential properties in your lifetime and from the 3rd property onwards, your money will be stuck in India and cannot be repatriated. Fortunately, this is only a misconception and the correct interpretation is given below :

Limit On Number Of Properties Where Funds Can Be Freely Repatriated :

As explained in Point #1 under Repatriation of Principal Amount, there is a restriction on the number of residential properties who’s sale proceeds can be FREELY repatriated. That is, incase of residential property, free and complete repatriation of the PRINCIPAL PORTION is allowed only for first 2 properties in the lifetime of an NRI, implying that the principal of 3rd and subsequent properties CANNOT be repatriated (the profits / capital gains in all such cases however, can anyways be repatriated, subject to annual limit of USD 1 million).

However, this does not mean that NRIs can repatriate capital of only 2 properties in their lifetime as from the 3rd and subsequent residential properties that an NRI purchases using either foreign or domestic funds, entire sale proceeds (both principal and profits) can be deposited into an NRO account out of which a total of upto USD 1 Million (approx Rs.6 crores) can be repatriated per person per financial year – a limit that has already been explained above.

For commercial properties, there is no limit on number of units whose sale proceeds can be repatriated in an NRI’s lifetime.

 

 TO SUM IT UP

To condense all the above rules into a simple sentence, it suffices to say that these limits pose no real restrictions or practical impediments to NRIs who want to make substantial and regular investments in India, and below explains why :

i)  NO REAL RESTRICTION on the number of residential properties whose sale proceeds an NRI can repatriate in his lifetime. Although only first 2 residential properties are freely repatriable, you can still purchase and repatriate sale proceeds (both principal and profits) of unlimited number of residential properties as the repatriation of 3rd and subsequent property is subject to an annual limit of $ 1 Million per person – which is more than sufficient as the average investment size incase of residential units is today between Rs.1 to Rs.3 crores (approx $0.15 to 0.5 Million).

Hence keeping in mind today’s real estate prices, in 9 out of 10 cases, NRIs can easily repatriate the entire principal amount and profits earned and they can infact repatriate sale proceeds of multiple properties within a single financial year through proper planning.

ii)  NO RESTRICTIONS on number of commercial properties who’s sale proceeds can be repatriated : As there is no limit on this, NRIs can freely buy and sell unlimited number of commercial properties without bothering about repatriability of funds.

 iii)  Rental income from any number of residential and commercial properties is freely repatriable : There is no limit on amount of rent that can be repatriated per annum and no restriction on number of rented properties who’s income can be repatriated.

iv)  Very High Repatriation Limit of USD 1 Million Per Person Per Financial Year : This high limit of approx Rs.6 crores per year per person means that an average investor can easily repatriate almost entire sale proceeds in a year as average investment size is Rs.1 to 2 crores. Hence this limit is not an actual concern 

v) Double Taxation Avoidance Agreement (DTAA) : India has these agreements with close to 84 countries including USA, UK, Canada, Singapore, Australia, UAE, Germany and more where any amount repatriated from India will not be taxed again (i.e. no double taxation) in the country of residence of the NRI and hence this becomes another motivating factor for NRIs to invest in the Indian real estate market.

 

 HOW TO REPATRIATE

Repatriation is a fairly simple process today with the advent of modern banking and online filing provisions provided by the income tax department of India.

i)             Funds in NRE or FCNR Account : Are freely repatriable without the need for prior permission from any regulatory authority and can be repatriated the minute you decide to bring back your money.

 

ii)            Funds in NRO Account : Can be repatriated upto a maximum of USD 1 Million (approx Rs.6 crores) per financial year per person.

·         You must first fill out and submit Form 15CA – an online application form with IT Department of India. This can be done by you or you can have a Chartered Accountant in India do this for you on your behalf.

·         You must then obtain form 15CB from a Chartered Accountant – this form certifies that you have paid necessary taxes on the amount that is going to be repatriated.

·         You must then submit both Form 15CA and 15CB to an authorized agent or bank who will help you obtain foreign currency and repatriate the same to your overseas bank accounts.

·         The process is as simple as explained above and can be done in 7 to 15 working days depending on how well prepared you are.

 

 CONCLUSION & NEXT STEPS

Hence it is easy to see why you as an NRI can continue to invest regularly and in a number of properties simultaneously without having to worry about whether or not your original capital and profits can be repatriated to your home country (country of residence). Given the immense potential that India has for the next 10 to 15 years, this is the right time for you to get started.

Visit www.gcglobal.in/mp to get an overview of latest investment opportunities available to NRIs in Indian real estate and how you can benefit by participating in India’s growth story.

 Article Authored By

A.V.R.Chowdary

Founder Chairman – G&C Global

E : avrc@gcglobal.in  |  India Mobile : +91 9980380000

Readers are welcome to contact the author via mail or over the phone for free advice as support to the Virijallu community.

*1 –This limit is allowed only if the spouse or child has ownership rights in the property that has been sold. I.e. only if the spouse or major child has ownership in the asset that has been sold, will they be eligible for additional repatriation limit of USD 1 million per person per financial year. 

© Copyright 2015 | G&C Global Consortium Pvt Ltd

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AVR Chowdary - Founder & Chairman - G&C Global Consortium Pvt Ltd

After 20 illustrious years of award winning performance at one of India's top PSUs, Mr.Chowdary setup G&C Global in 2004, which in a span of 10 years has grown to become South India's No.1 real estate consultancy and wealth management firm and among the top 3 in the country in its field of operations.

Through the unique investment offers designed in collaboration with India's leading developers, Mr.Chowdary has helped 1000s of families across the world in creating wealth to the tune of 100% to 400% ROI in real estate investments spanning all major verticals of the industry - that is commercial, residential, retail & hospitality.

Creating Wealth For All

With the above line as its motto, Mr.Chowdary's firm G&C Global works with India's leading builders to provide tailor made investment offers to its clients across the globe, helping them earn ROI of 100% to 400% in 2 to 4 years time depending on category and city. These offers are available only by invitation and only to G&C patrons and are not available in the open market.

G&C is today a one-stop shop for any Indian or NRIs real estate requirements and as on date, it has handled investments worth Rs.5250 crores. With a 60 member team across 14 offices in India & abroad, G&C is the go-to source for the smartest real estate investment opportunities in India.

Invited as Key Speaker on Real Estate across the World

With over a decade of experience in helping people create wealth through real estate, Mr.Chowdary is today considered an authority in the above subject and is invited as a key speaker at some of the largest professional and cultural conventions across the globe and predominantly in the USA and UK.

Some of such key conventions that he regularly speaks at are TANA (Telugu Association of North America), ATA (American Telugu Association), NATA (North American Telugu Association), NATS (North American Telugu Society), AKKA (American Kannada Koota Association), KKNC (Kannada Koota of Northern California), VPA (Vokkaligara Parishat of America), UKTA (United Kingdom Telugu Association) and WTF (World Telugu Federation, Malaysia) to name a few.

Invited to represent Indian Delegations at UK, Malaysia, Australia & Singapore

Mr.Chowdary has also been invited as a key member of India's reputed business organizations' delegations to various countries.

Conducted 300+ Investors Seminars / Clinics across India and Abroad

Mr.Chowdary is deeply passionate about helping people create safe and long term wealth for their families and has conducted over 300 investor seminars at 50+ cities across India, USA, UK, Singapore, Australia, Dubai and Mauritius in which he has educated over 4000 Indians and NRIs on the latest trends and opportunities for wealth creation through Indian real estate. All these seminars were hosted entirely by G&C, free of cost for attendees.

$200 Million Offshore FDI Fund

Mr.Chowdary intends to set-up an offshore private equity fund that will give Indian and foreign HNIs & NRIs a bigger platform to partner with some of the country's largest developers to take advantage of the country's tremendous growth opportunities for the next decade.

Professional Experience

Founder Chairman - G&C Global Consortium

June 2004 to Date
  • G&C is No.1 in South India and among the top 3 real estate consultancy and wealth management firms of India in its field of operations.
  • 14 branches across key cities of India & abroad (USA, Dubai, Singapore & Australia).
  • Expanding soon to London, Africa & Mauritius.
  • Rs.5250 crores worth of transactions facilitated since inception in 2004.
  • 7,50,000 relationships maintained around the globe to assist them in zeroing in onto the best options in the market.
  • Preferred Associate of 3 FDI realty funds of over $2 billion and investment advisor to one of those funds.
  • Preferred partner of India's top builders.
  • Act as single window for buying, re-selling & re-investing, which means a lifelong relationship with clients.
  • Provide PMS (Property Management Services) and NRI Services including home loans in India for NRIs.
  • Have structured major hospitality / retail deals in key cities & as on date hold mandates of 6.0 Million SFT out of which 2 Million SFT has been completed.

Served in Management Position in Bharat Petroleum

June 1986 to June 2004
  • Was rated the best Territory manager in the country in 1999 and 2000.
  • Wide experience in operations and sales equally.

Speaking Assignments

Mr.Chowdary has spoken on real estate as a business series invitee at :
  • ATA 2008 Convention - New Jersey
  • AKKA 2008 Convention - Chicago
  • TANA 2009 Convention - Chicago
  • KKNC 2010 Convention - California
  • ATA 2012 Convention - Atlanta
  • NATA 2012 Convention - Houston
  • AKKA 2012 Convention - Atlanta
  • VPA 2013 Convention - Chicago
  • WTF 2013 Convention - KL, Malaysia
  • TANA 2013 Convention - Dallas
  • NATS 2013 Convention - Dallas
  • ATA 2014 Convention - Philadelphia
  • NATA 2014 Convention - Atlanta
  • AKKA 2014 Convention - California


Legend :

  • ATA - American Telugu Association
  • TANA - Telugu Association of North America
  • NATA - North American Telugu Association
  • AKKA - American Kannada Koota Association
  • KKNC - Kannada Koota of Northern California
  • WTF - World Telugu Federation (based at Malaysia)
  • VPA - Vokkaligara Parishat of America

Other Credentials

G&C is a member of the following business associations :
  • Patron Member of NAREDCO - National Real Estate Development Council, an autonomous self-regulatory body under the Ministry of Housing and Urban Poverty Alleviation, Government of India
  • Mahratta Chamber Of Commerce Industries & Agriculture (MCCIA) - Pune
  • Federation of Indian Chambers of Commerce and Industry (FICCI) - Hyderabad
  • Hindustan Chamber of Commerce (HCC) - Chennai
  • Cochin Chamber of Commerce and Industry - Cochin
  • The Indus Entrepreneurs (TiE) - Bangalore & Kerala

Group Companies

Mr.Chowdary has also successfully co-founded the following companies :
  • M/s Money Tree Financial Services Pvt Ltd : Offers financial services and is trademark registered.
  • M/s G&C Design Consortium Pvt Ltd : Headed by a leading architect cum Interior Designer Mrs.Shyamala Prabhu as CEO (she is also the President Elect for IIID - Institute of Indian Interior Designers, Bangalore Chapter).
  • M/s G&C Infra Invest Pvt Ltd : This firm invests in boutique infrastructure and logistics related properties.

Educational Qualification

MBA in Marketing : Birla Institute of Technology (BITS), Mesra, Ranchi