N.R.I.s
have been given a boost by the Government of India for purchase of immovable property in
India. Laws have been very much relaxed. Infact the liberalisation policy of the
Government of India has opened up the doors for foreign investment in a big way.
Let us find out what the Reserve Bank has done in this respect ?
The Bank has granted general permission under section 31(l) of the Foreign Exchange
Regulation Act, to foreign person of Indian origin whether residents of India or outside
to acquire, hold, transfer or dispose off by way of sale or even inheritance, Immovable
property situated in India. The condition is that when such property is acquired it shall
be for the purchaser's bonafide residential purpose or giving it on leave licence basis.
The purchase consideration should be made either out of inward remittance in foreign
exchange through normal banking practice or out of the funds form NRE/FCNR accounts
maintained with banks in India. As a mere formality, it is required to submit a
declaration to the Reserve Bank of India within a period of ninety days from the date of
purchase of the property together with documentary evidence in support of either transfer
of registration of the property in the name of the purchaser It is important to note here
that if any land has been obtained against NRFIFCNR account and the same has been used for
the purchase of immovable property situated in India then the said amount shall be treated
as paid from the non resident original account. The same cannot be repatriated. Moreover
the N.R.1 has to make an application for the same to the Reserve Bank of India for its
approval.
Is it possible for an N.R.I. to send a draft directly in favour of a Cooperative Housing
Society or Estate for acquisition of residential flats in India? The answer to this is in
the affirmative. More over the Reserve Bank of India has issued another scheme on 31st May
1994, allowing N.R.I.s to hold 100% share in equity in housing and repatriation benefits.
However, it is to be remembered that only the original investment would be allowed to be
repatriated. There is also a lock-in period of three years. It is quite interesting to
note that now existing or new Indian companies with 100% N.R.1 equity capital can
undertake development of plots and built up residential premises and commercial premises.
It also includes roads, bridges, development of township, development of a city,
development of regional, local and urban infrastructure facilities. It has also the right
of financing Housing Development out of the balance which remains in NRF/FCNR accounts. It
should be borne in mind that neither sale proceeds nor any income arising out of the
investment of such sale proceeds can be repatriated outside India.
It is a well known fact that in a country like India where the weaker section of society
is more and it is essential for removal of slums and construction of new roads and
bridges, large sums of money are required. India can certainly depend upon their own
children, their wealthy brothers namely the NRI'S. It therefore becomes very necessary
that all impediments in the way of NRI's should be removed at once.
It is my opinion that the first change which is required is in the Urban Land Ceiling and
Regulations Act 1976. To my. mind this law has outlived its usefulness and should be
scrapped immediately. If this is done then I am of the opinion that the NRI'S. would come
forward in a big way to finance the stock of housing which would not only benefit them but
would also be a great help to India.
Moreover, it is my contention that over and above the scrapping of the Urban Land
Ceiling Act, incentives should be given to the NRI'S. I would suggest that the NRI's
should be given a seven year tax holiday over and above higher depreciation allowances
should be provided.
Now laws are further liberalised and let us find out in what way the
Government has tried to attract foreign capital?
Firstly an NRI does not require any permission to buy residential or commercial immovable
property in India. Secondly an NRI as well as a foreign citizen of Indian origin is also
permitted very liberal repatriation facility on the sale of immovable property. It is no
doubt true that NRI's are not allowed to invest in agricultural land, farm houses or
plantations. This is understandable because India is essentially an agricultural country
and inroads in the same should not be allowed. Moreover NRI's as well as foreign citizens
of Indian origin are permitted to invest upto I 00 % repatriation facility in companies
which are engaged in Real Estate Development. Foreign companies who have been allowed to
carry on business in India has the right to acquire immovable property incidental to the
carrying on of their business.
|
