NRI

About Pune

Destination Pune. Driven with Passion.

India, a nation well and truly set on the path of growth. This growth has just received a tremendous thrust. A skilled workforce combined with a developing economy has translated into a lot of infrastructure development across India. Existing cities are thriving and many new ones are taking shape. In this vibrant growth story, Pune has grown by leaps and bounds. In fact, internationally recognised organisation Cushman & Wakefield has identified Pune as the city with a high return potential on real estate investments.

Recognized as the seventh largest metropolis in India, Pune City has witnessed tremendous growth over the last decade. With an expanding presence of IT companies and leading names from the automobile sector, the landscape of Pune has been completely transformed.

The city's growth is well-rounded. Already well-established IT hubs are developing further around the suburbs of Hinjewadi, Hadapsar and Kharadi, while the automobile industry is setting up substantial units around Chakan. Educational institutes of national and international prominence are further enhancing the 'Oxford of the East' reputation of Pune. This has been complemented with growth of healthcare facilities, basic infrastructure needs like roads and public transport and lifestyle landmarks across retail and entertainment sector.

Pune is definitely one of the preferred investment destinations. With fast developing suburbs all around, and a more positive outlook towards the economy and investments; the time is ripe to invest in a property in Pune.

Pune Properties - The Perfect Investment

  • Known as ‘Cultural Capital of Maharashtra”, Pune is situated at an altitude of 1837 feet above MSL and is the center point of various business districts like Mumbai, Nashik, Aurangabad and Kolhapur.
  • World class expressways connect Pune with Mumbai as well as capital cities of adjoining states - Bangalore and Hyderabad and Chennai etc.
  • Attracts investors in properties from people living in oversaturated cities like Mumbai, Delhi and other metros of India/world. This ensures quicker and higher appreciation of property and real estate prices.
  • Well-developed civic infrastructure that is governed by two of the largest Municipal Corporations in Asia – the Pune Municipal Corporation and the Pimipri Chinchwad Municipal Corporation.
  • Cosmopolitan culture with a migrant population of 20 percent, which includes migrants from other Indian states as well as expats and students from almost every country.
  • Pune is popularly known as the “abode of education” due to its world class University, educational institutes, Colleges and research foundations.
  • British Council Library, Max Mueller Foundation and other foreign institutions of cultural and educational importance have their centers in Pune.
  • One of the major IT hubs of India, Pune is a home to major IT giants like Infosys, Accenture, Veritas, Tech Mahindra and Wipro – to name a few!
  • Major Automobile manufacturing hub of India. Companies like Mercedes Benz, Jaguar, Volkswagon, Bajaj Auto Ltd., and Tata Motors (Telco).
  • Balanced Industrial growth in other manufacturing as well as service sectors that is supported by world class Industrial estates and business centers.
  • Well-developed road network and a proposed international standard ring road which will help decongest the city traffic considerably.
  • An airport that is close to the city with regular inbound and outbound flights that connect Pune with all major cities of India as well as major International destinations.
  • Pune railway station, considered one of the oldest railway stations in India, is supported by other proximate stations – Shivajinagar, Khadki and Talegaon. Excellent rail connectivity to other parts of the country.
  • Proposed Metro Rail project in consultation with Delhi Metro Rail Corporation will ensure that the city gets its own rapid transit system by 2020.
  • Pune has its own race course, boat club, Gymkhana as well as world class stadiums like the Jawarharlal Nehru Stadium, Subrata Roy Stadium, The PCMC Astroturf Hockey Stadium and Shiv Chattrapati Sports Complex to name a few.
  • Host of world class townships, apartments that offer luxurious self-contained condominiums at affordable prices. Most of the projects are located at strategic and picturesque locations in and around Pune.
  • Well-developed green spots and gardens like the Saras Baug, Pu La Deshpande garden, Kamla Nehru Park, Sambhaji Park, Bund Garden, and Empress Park.
  • Pune is dotted with some of the best shopping malls in the Country, offering all major national and international brands of clothing, foodstuff, beverages, artifacts and furniture etc.
  • Great Nightlife and free cosmopolitan culture. Five star hotels like the Holiday Inn, JW Marriott, The Orchid Group and several international hospitality chains have their presence in Pune.
  • Several food joints that offer world cuisine as well as local yummy food that suit all types of budgets.
  • Pune is blessed with pleasantly warm and dry climate for most part of the year and four distinct seasons, making Pune an ideal choice for professionals as well as pensioners.
  • Close proximity to hill stations such as Mahabaleshwar, Matheran, Bhimashankar as well as coastal areas of Konkan region which is famous for its virgin beaches and coastal cuisine.
  • Pune is surrounded by several lakes and reservoirs equipped with water filtration plants that ensure clean drinking water all year round.
  • The proximity of Pune with major agricultural areas like Baramati, Talegaon, Kolhapur, Satara etc. ensures that the residents get a consistent and fresh supply of Fruits and Vegetables.  Pune is also known for its dairy, meat and Poultry products. There are innumerous floriculture projects in and around Pune that ensure fresh supply of flowers to the city, each day.
  • Good Law and order that offers safety to the residents living in the Municipal as well as adjoining areas.

FAQ'S

Terms and Definitions

Who qualifies as a Non-Resident Indian (NRI)?

Indian citizens, who hold a valid passport of the Union of India, but live outside of this Union for an indefinite period, the duration of which is not less than six months. Are granted the status of Non-Resident Indian (NRI) or Pravasi Bharatiya by the Indian Government.
An NRI may remain absent from the country citing reasons of work, pleasure and foreign residency among others. Employees of the United Nations and internationally stationed diplomats are treated on par with NRIs.

Who qualifies as a Person of Indian Origin (PIO)?

A Person of Indian Origin is one who was born, or whose father or paternal grandfather was born in India. PIOs are not, however, citizens of the Union of India. Those who have previously held Indian passports but have since taken up citizenship in other countries also qualify as Persons of Indian Origin.
Citizens of Bangladesh, Afghanistan, Pakistan, Sri Lanka, Iran, Bhutan, China and Nepal are not eligible to be designated as PIOs

Who is OCI?

(a) A person who is of the prime age and capacity:

  • Who is a citizen of another country, but was a citizen of India at the time of, or at any time after, the commencement of the constitution, or
  • Who is a citizen of another country, but was qualified to become a citizen of India at the time of the commencement of the constitution, or
  • Who is currently a citizen of another country, but hails from a region that became part of India after the 15th Day of August 1947.
  • Who is a child of such a citizen, or
  • (b) A person, who is minor child of a person mentioned in clause (a)
    If no person, who is or had been a citizen of Pakistan, Bangladesh shall be eligible for registration as an Overseas Citizen of India.

Regulations & Eligibility

Is it possible for NRIs / PIOs avail of fiscal services in India?

Yes, NRIs and PIOs are free to maintain bank accounts, invest in domestic corporations and immovable properties on producing valid documents (PIO card) that is issued by appropriate Embassies and Consulates

Can NRIs / PIOs sell immovable property in India without taking the consent of the Reserve Bank of India?

Yes, within the following caveats:

  • Property bought in foreign exchange may not be sold for three years of purchasing it. Only two such properties maybe transacted simultaneously while funds for the same maybe transferred overseas.
  • In case of commercial realty, any number of properties can be sold, the entire proceeds remaining transferable.
  • Proceeds from sale of property originally bought in Indian rupees must remain in India and cannot be transferred overseas.
  • An NRI may sell to an Indian resident, another NRI or a PIO.
  • A PIO may sell to an Indian resident, an NRI, or to another PIO ( Reserve bank of India approval required).
  • All proceeds gained from the sale of immovable property are liable to capital gains tax.

Is there a restriction on the number of immovable properties that can be purchased by an NRI / PIO?

Current regulations permit NRIs and PIOs to purchase any number of residential and or commercial properties.

Can NRIs / PIOs obtain or dispose of immovable property in India by way of gifting it to another?

Yes. Reserve Bank of India regulations permits NRIs and PIOs to gift their properties to proven relatives. Beneficiaries may be resident Indians or other NRIs/ PIOs. If property is being transferred as a gift to a foreign national, RBI approval is mandatory

How can NRIs / PIOs pay for their purchases of immovable property?

Payments can be made through staple banking channels that include:

  • Foreign Currency Non-Resident Accounts
  • Non-Resident (External) Rupee Accounts
  • Non-Resident (Ordinary) Rupee Accounts
  • Remittance from abroad through applicable methods of fund transfer

Who is eligible to purchase immovable property in India?

The following categories of individuals can freely purchase immovable property in India under current RBI guidelines:

  • Non-Resident Indian (NRI)
  • Person of Indian Origin (PIO)
RBI permission does not extend to agricultural land/ plantation property or farm house in India

Can a NRI/PIO acquire agricultural land/plantation property/farm house in India?

To acquire agricultural land/plantation property/ farm houses within India, prior approval from the Reserve Bank of India, in consultation with the Government of India is mandatory.

Buyer Agreement & Documentation

What are the documents required for buying a property?

• Pan card (Permanent account number)
• OCI/PIO card (In case of OCI/PIO)
• Passport (If the person is a NRI)
• Passport size photographs
• Address proof.

Taxations

What is the Tax treatment for income gathered from property selling or renting for NRI/ PIO/OCI?

The basic procurement of property does not warrant income tax. However, any income accruing from the ownership of it, in the form of rent (annual value of the house) (if it is not let out and it is not the only residential property owned by that person in India) and/or capital gains (short term or long term) arising on the sale of this house or part thereof is liable to be taxed in the hands of the owner

Do NRI/PIO/OCI have to file return in India for their property rental income and Capital Gains Tax?

The Government of India has granted general permission to NRI/PIO/OCI to purchase property in India, without levying any taxes while acquiring property in India. Although, taxes will be levied, if they sell this property. Any form of Rental income earned is taxable by law within India, hence will have to obtain a PAN and file return of income if they have rented this property. When the property is sold, the profit earned on sale shall be subject to capital gains. If the property was held for less than or equal to 3 years after acquiring possession then the gains would be short term capital gains, which are to be included in their total income as tax as per the normal slab rates shall be payable and if the property has been held for more then 3 years then the resultant gain would be long term capital gains subject to 20% tax plus applicable cess

How does the Double Taxation Avoidance Agreement work in the context of tax on income and Capital Gains tax paid in India by NRI?

India DTAA’s with a number of countries provides a favorable tax treatment in respect of certain brackets of income. However, in the case of selling immovable property, the DTAA with most countries provide that the capital gains will be inclusive of taxation in the country where the immovable property is located. Hence, a non-resident will have to incur taxation in India on the capital gains which come up upon the sale of immovable property in India. Letting of immovable property in India would be taxed under most tax treaties in light of the fact that the property is located in India

Does Capital Gains Tax (CGT) apply to NRI/PIO/OCI?

Yes. Long and short-term capital gains are taxable for non-residents.

How is Rate of CGT computed?

Type of asset: Assets such as house property, land and building, jewellery, development rights etc.
Rate of tax deduction at source (TDS)
Long term - 20.6%
Short term - 30.9%
Exemption available (only for long term capital gains)
The long term capital gains arising out of sale of a residential house can be invested in buying/constructing another residential house, within the prescribed time. The exemption is restricted to the amount of capital gains or amount invested in new residential house, whichever is lower. If the amount of capital gains is invested in bonds of National Highways Authority of India (NHAI) or Rural Electrification Corporation, then the entire capital gains is exempted, else the proportionate gain is exempted. As per the financial budget 2007-08, a cap of Rs. 50 lakhs has been imposed on investment that can be made in capital tax saving bonds.

How does Double Taxation Avoidance Agreement work in the context of CGT paid in India on the foreign tax treatment?

In case a non-resident pays tax on capital gains existing in India, they may obtain tax credit in relation to the taxes paid in India in the home country, because income in India would also be included in the country of tax residence. The amount of tax credit is also the basis of computing tax credit that can be claimed are specified in the respective country’s DTAA, also relies on laws of the home country where the tax payer is a tax.

Repatriation of funds

What are the rules governing the repatriation of the proceeds of sale of immovable properties by NRI/PIO as prescribed by the Reserve Bank of India?

(a) If the property was acquired by means of foreign exchange sources i.e. remitted through normal banking channels/by debit to NRE/FCNR(B) account, the amount meant to be repatriated should not exceed the amount paid for the original property:

  • In foreign exchange procured via a normal banking channel or
  • By debit to NRE account (foreign currency equivalent, as on the date of payment) or debit to FCNR(B) account.
Repatriation of sale proceeds of residential property purchased by NRI’s/PIO’s from foreign exchange is restricted to not more than two such properties. Capital gains, if any, may be credited to the NRO account from where the NRI’s/PIO’s may repatriate an account up to USD one million, per financial year, as discussed below.
(b) If the property was acquired out of a Rupee origin, NRI/PIO may remit an amount up to USD one million, per financial year, out of the balances held in the NRO account (inclusive of sale proceeds of assets acquired by way of inheritance or settlement), for all the bonafide purposes to the satisfaction of the Authorized Dealer bank and subject to tax compliance. The NRI/PIO may use this facility to remit capital gains, where the acquisition of the subject property was made by funds sourced by remittance through normal banking channels/by debit to NRE/FCNR(B) account.

Is the rental income from property repatriable and what are the RBI rules?

Being a current account transaction, the rental agreement is repatriable, in accordance to appropriate deduction of tax and certification thereof by a Chartered Accountant in practice. Repatriation of sale proceeds is subject to specific conditions. The amount of repatriation cannot exceed the amount paid for acquisition of the immovable property in foreign exchange.

Financial & Loans

Can NRIs acquire home loans from financial institutions in India?

Yes. Certain financial institutions and authorised dealers in India have been licensed by the Reserve Bank to grant housing loans to NRIs. While the criteria regarding purpose, marginal money and the quantum of the loan are the same as those applicable to resident nationals, certain other conditions apply to NRIs:

  • Loan is required to be repaid within a period of fifteen years.
  • Method of repayment used must be:
  • Inward remittance through banking channels; or
  • Payments from the purchaser’s FCNR/ NRE/ NRO accounts.
In some instances, lenders may insist that the purchaser provides the reference of a resident national who holds a power of attorney on the purchaser’s behal

Can NRIs / PIOs lease out their property even though they do not reside in India?

Yes, with the following restrictions:

  • Proceeds garnered by all leave and license agreements are taxable.
  • Proceeds cannot be transferred overseas for a period of three years

Income Tax

Who should file tax returns?

An NRI/OCI/PIO, would have to file income tax returns if either of the following conditions are fulfilled:

  • Taxable income in India during the year was above the basic exemption limit of ` 1.6 lakh OR
  • Earned short-term or long-term capital gains from sale of any investments or assets, even if the gains are less than the basic exemption limit.
Note: The enhanced exemption limit for senior citizens and women is applicable only to residents and not to non-residents.

Are there any exceptions?

Yes, there are two exceptions:

  • If your taxable income consisted only of investment income (interest) and/or capital gains income and if tax has been deducted at source from such income, you do not have to file your tax returns.
  • If you earned long-term capital gains from the sale of equity shares or equity mutual funds, you do not have to pay any tax and therefore you do not have to include that in your tax return
Tip: You may also file a tax return if you have to claim a refund. This may happen where the tax deducted at source is more than the actual tax liability. Suppose your taxable income for the year was below ` 1.6 lakh but the bank deducted tax at source on your interest amount, you can claim a refund by filing your tax return.
Another instance is when you have a capital loss that can be set-off against capital gains. Tax may have been deducted at source on the capital gains, but you can set-off (or carry forward) capital loss against the gain and lower your actual tax liability. In such cases, you would need to file a tax return.

What’s the best way to file tax returns?

Traditionally, you could file your return either by giving a power of attorney to someone in India or by sending your form and documents to a tax expert in India who would then file returns on your behalf.
Though as easy method for NRIs to file their tax returns in India is online. There are several options to file online, on the appropriate government sanctioned website

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Contact: Mr. Vikrant : +91 77220 77758 (IND) | Email: vikrant@guardiandevelopers.com
                Mr. Rahul Jadhav : +91 8308380200 | Email: rahul@guardiancorp.in

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