India has always been a country with rich human talent who have conquered various positions globally. Indians have settled across the world and most of them continue to or wish to hold / own property in India. Further many of them invest in Indian commercial / residential properties as a good investment option.
However, owning or transferring property in India is governed under various regulations in India and failure to comply with those regulations can attract monetary as well as other penal actions. One should be aware of the various provisions pertaining to the purchase or owning of immovable property in India under the Foreign Exchange Management Act (FEMA) as well as the Income Tax Act.
IMPORTANT DEFINITIONS
ACQUISITION OF IMMOVABLE PROPERTY
Various modes of acquisition of Immovable property can be summarized as follows:
Note:
- By Foreign embassies / diplomats / consulate generals,
- By Branch / Ofice for carrying out the permitted activity and
- By long-term Visa Holders residing in India who are citizens of Afghanistan / Bangladesh/ Pakistan belonging to minority communities in those countries i.e. Hindus, Sikhs, Buddhists, Jains, Parsis and Christians.
MODE OF PAYMENT
JOINT ACQUISITION OF PROPERTY BY THE SPOUSE OF A NRI OR AN OCI
A person resident outside India not being an NRI or an OCI, who is aspouse of an NRI or an OCI may acquire one immovable property (other than agricultural land/farmhouse/plantation property), jointly with his/her NRI/OCI spouse subject to below conditions:
PROHIBITION ON ACQUISITION AND TRANSFER BY CITIZENS OF CERTAIN COUNTRIES
MODE OF TRANSFER OF IMMOVABLE PROPERTY
Note:
NRIs/OCIs can transfer/gift any agricultural land/farmhouse and plantation property in India only to Residents of India.
REPATRIATION OF SALES PROCEEDS OF IMMOVABLE PROPERTIES
PROPERTY ACQUIRED OUT OF REPATRIABLE MODE-INWARD REMITTANCE/NRE/FCNR |
PROPERTY ACQUIRED BY WAY OF NON-REPATRIABLE MODE - NRO: |
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COMPLIANCE UNDER PROVISIONS OF INDIAN INCOME TAX
A. WHEN NON-RESIDENT (NR) IS SELLER
As per provisions of section 195 of Income Tax Act, any person making payment to a non-resident needs to deduct tax at source as per rates given in force. Accordingly, it is essential to take care of the below points while acquiring property from NR:
B. WHEN NON-RESIDENT (NR) IS BUYER
C. CONSEQUENCES OF NON-DEDUCTION/NON-PAYMENT AND NON-FILING OF TDS RETURN
26th February, 2020
GBCA & Associates LLP
Chartered Accountants
Disclaimer:
The information contained in this write-up is to provide a general guidance to the intended user. The information is based on our interpretation of various prevailing laws, rules, regulations, pronouncements as on date mentioned. The information should not be used as a substitute for specific consultations. The information has been provided in simplified manner for general reference of the public which can lead to interpretation not intended under law. No part of this document should be distributed or copied by anyone without express written permission of the publisher.