Remitting Sale Proceeds of Property for NRIs: Guidelines and Procedures

Non-Resident Indians (NRIs) often wonder whether they can remit the sale proceeds of properties in India abroad. The ability to repatriate sale proceeds depends on several factors, and here is a detailed explanation of the guidelines and procedures involved:

**1. Type of Property: Repatriation rules differ based on the type of property.

  • Residential Property: NRIs can remit the sale proceeds of up to two residential properties in India without any restrictions. However, the property should have been held for a minimum of three years to qualify for repatriation.
  • Commercial Property: For commercial properties, repatriation of sale proceeds is subject to specific conditions. The property must have been held for at least one year, and the remittable amount is limited to the original investment. Any amount exceeding this may require special approval from the Reserve Bank of India (RBI).

**2. Foreign Exchange Regulations: The repatriation of sale proceeds is subject to Foreign Exchange Management Act (FEMA) regulations. NRIs should ensure that they adhere to FEMA guidelines when remitting money abroad.

**3. Documentation: To repatriate the sale proceeds, NRIs must provide the following documents:

  • Sale Deed: A copy of the sale deed to prove the sale of the property.
  • Tax Certificates: A certificate from a chartered accountant confirming that all applicable taxes have been paid on the property sale.
  • Bank Certificates: A certificate from the buyer’s bank or a chartered accountant indicating the source of funds used for the purchase.
  • Foreign Exchange Declaration Form (FED): An FED form should be submitted to the bank.

**4. Bank Accounts: NRIs need to use their Non-Resident External (NRE) or Non-Resident Ordinary (NRO) accounts for the remittance of sale proceeds. The funds should be remitted through these accounts, and the bank will verify the necessary documentation.

**5. Form C: For properties purchased on or after May 26, 1993, a Form C should be submitted to the RBI or authorized dealer bank within 90 days of property sale. The form helps document the remittance details.

**6. Tax Clearance Certificate: NRIs selling a property in India must obtain a Tax Clearance Certificate (TCC) from the Income Tax Department. The TCC certifies that all applicable taxes have been paid, and it is required for repatriation of sale proceeds.

**7. Special Approval: If the property sale proceeds exceed the prescribed limit or do not meet the eligibility criteria, NRIs may seek special approval from the RBI for repatriation.

It’s crucial to consult with a legal expert or chartered accountant to navigate the repatriation process, as it involves compliance with various regulations. Additionally, staying informed about changing rules and regulations related to NRI property transactions is essential to ensure that the remittance of sale proceeds is carried out smoothly and in accordance with the law.

Join The Discussion

Compare listings