The last time we saw the basic rules and regulations in respect of NRI to buy property in India. This time we take a look at what happens when you sell property in India. We will only look at the properties purchased by a person, either before or after he became an NRI. The rules governing the sale of property acquired by gift or inheritance will be covered in the next column.

Can an NRI sell property in India? 
Yes, an NRI can sell residential or commercial property in India. He can sell to:

- A person resident in India (the definition of resident in this case will be as per FEMA)

- An NRI

- A Person of Indian Origin (PIO)

However, an NRI can sell agricultural or plantation land or a farm house only to a person who is resident in India and a citizen.

In which account must the sales proceeds be credited?
There are two scenarios that may arise here:

1. Sale of property purchased as a resident Indian

The sale proceeds in such cases would have to be credited in the Non Resident Ordinary (NRO) Account.

2. Sale of property purchased as a non-resident Indian

If the property was acquired by rupee resources, that is, income earned in rupees or Property loan is repaid by a parent who is a resident of India, the amount should be credited to NRO account.

In all other cases, there are limits to repatriation that are discussed in the next question.

What are the rules for repatriation of sale proceeds of property sold in India?
If the property was acquired while he was a resident of India, then the product must be credited to NRO account. You may repatriate up to $ 1 million per calendar year of their NRO account (including all capital transactions), provided you have paid all taxes.

Now, if the property was purchased while you were a non-resident, you can repatriate the proceeds outside India provided that you fulfill certain conditions:

1. You should have purchased the property in accordance with the foreign exchange laws prevalent at the time you bought the property

2. The amount to be repatriated will follow these limits:

a. If you purchased by remitting foreign exchange to India through normal banking channels, then the repatriation cannot exceed the amount that you remitted

b. If you purchased using funds in the Foreign Currency Non Resident (FCNR) Account, then the repatriation cannot exceed the amount paid through this account

c. If you purchased using funds lying in your Non Resident External (NRE) Account, then the repatriation cannot exceed the foreign exchange equivalent, as on date of purchase, of the amount paid through NRE Account.

d. If you purchased a property by taking a home loan, then repatriation cannot exceed the amount of loan repayment that has been done using foreign inward remittances or debit to NRE/ FCNR Accounts.

e. If you purchased the property using balance in your NRO account, then the sale proceeds must be credited to your NRO account and you can repatriate to the extent of USD 1 million (including all other capital account transactions.)

In all these cases, the balance of the proceeds will be credited to NRO account and you will be able to repatriate up to $ 1 million per calendar year (including all other transactions on capital account).

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Mr. Vikas Vasal as Executive Director (ED) of KPMG  India, said: "This limit of $ 1 million, is the limit to which you can return without the permission of the RBI If you have a need to repatriate more than this limit, you can do a special. application to the RBI to increase the limit back. "

In all cases, repatriation is limited to the sale of two residential properties.

Source: [ET]