WHO IS AN NRI ?
NRI is defined separately under income tax laws and under foreign exchange laws. The definition of NRI under the tax laws is relevant for all income tax related matters. The definition of NRI under the foreign exchange regulations is relevant for purposes such as banking, repatriation, investments, etc.
NRI under the tax laws : Under the income tax laws, an individual is considered as an NRI for a financial year if he is either a citizen of India or a person of Indian origin, and is a non-resident in India for that year. An individual is considered as a non-resident in India for a financial year if:
i) He was present in India for less than 60 days in the financial year, OR
ii) He was present in India for a period of 60 days or more but for less than 182 days in the financial year AND he was in India for a period less than 365 days during the preceding 4 financial years, OR
iii) He was present in India for a period of 60 days or more but for less than 182 days in the financial year AND he, being an Indian citizen, either left India during the year for the purposes of employment outside of India or he, being a person of Indian origin or an Indian citizen, came to visit India during the year.
NRI under the foreign exchange regulations : An individual is considered as an NRI if he is a non-resident of India for that year and is either a citizen of India or a person of Indian Origin. An Individual is considered as a non-resident if he has left India for the purposes of taking up employment outside of India or carrying out a business/profession outside of India or for any other reason with an intention to stay outside of India for an indefinite period of time.
CAN AN NRI BUY PROPERTY IN INDIA ?
Yes, an NRI can purchase immovable property in India other than an agricultural / farm land.
DO AN NRI NEED RBI PERMISSION FOR BUYING PROPERTY IN INDIA ?
No, an NRI does not need to obtain permission from RBI for buying immovable property (other than agricultural/farm land) in India.
WHAT ARE THE DOCUMENTS REQUIRED FOR OBTAINING HOME LOANS FOR NRI'S & PIO'S ?
NRIs are required to submit additional documents than is normally required for a resident Indian :
- A copy of the passpor
- A copy of the works contract(also sometimes referred to as the contract card/labor card).
- The power of attorney (POA). The POA is required because the borrower is not based in India and in such a scenario, the HFC would need a representative 'in lieu of' the NRI to deal with as required. Although not compulsory, the POA is usually drawn on the NRI's parents, wife or children.
WHAT IS THE MODE OF PAYMENT FOR NRI HOME / PLOT LOANS ?
The loan towards the home has to be paid upfront for the entire tenure of the loan by way of direct remittances from abroad through normal banking channels or from accounts that are allowed by RBI. Currently, payments are done through NRO, NRE, NRNR and FCNR accounts. These accounts change on the basis of RBI permissions to each HFC.
WHAT IS THE REPAYMENT PERIOD FOR A NRI HOME LOAN ?
The housing/plot finance offered to NRIs normally do not exceed 5 years. However, some HFCs offer loans for a term of 7 years. The repayment for the loan is by way of EMIs. The EMIs begin only after the entire loan is disbursed. In case of a part disbursement, you pay simple interest at the rate applicable on the loan amount that is disbursed to you.
WHAT IS THE ELIGIBILITY FOR OBTAINING NRI HOME / PLOT LOANS ?
The eligibility for an NRI is calculated on the same lines as a resident Indian. Emphasis is placed on the following for an NRI :
- Qualifications - the NRI applicant has to be graduate.
- Current job profile & past experience.
- Probability of staying abroad for the entire loan tenure.
- Probability of servicing the loan with an extended tenure in case you have to return to India.
CAN AN NRI GIVE POWER OF ATTORNEY FOR PROPERTY PURCHASE TRANSACTIONS ?
Yes, an NRI can give a power of attorney for property purchase transactions.
ARE THERE ANY LIMITS ON THE AMOUNT THAT CAN BE REPATRIATED ?
The current regulations allow an individual to repatriate up to one million dollars from the NRO account. For most NRIs this amount would be comforting considering that for a family of 3, the total amount which can be repatriated annually would work out to USD 3 million (or Rs. 18 crore rupees assuming an exchange rate of Rs. 60).Additionally, upon sale of a house, an NRI can repatriate the cost of up to 2 residential houses sold.