Liberalization in NRI real estate policy

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Person resident outside India under FEMA has been defined as a Non Resident Indian or NRI. Non-Resident Indians are now permitted to enter into the business of real estate development. This can be done by either forming a partnership firm or investing in a company incorporated in India. The Reserve Bank of India has relaxed certain provisions with regard to investment in Indian companies engaged in housing and real estate development.
This change in NRI policy has added spurt to the construction and real estate sector in Kerala. Kerala flat and apartment builders have be infused with fresh blood and the inflow of much needed finance in to the sector moots well for the industry.
Under the general permission to NRIs holding foreign passport, the RBI has allowed them to acquire, hold, transfer or dispose off by way of sale or inheritance, immovable properties situated in India. The taxation provisions relating to purchase/sale of immovable property in India by NRIs are provided in the Income-Tax Act, 1961. Consequent on the liberalization in Exchange Control policy and procedures, the government has brought about major legislative and policy changes to encourage NRI investments in real estate subject to certain terms and conditions.
The RBI has also granted general permission to NRI citizens and foreign citizens of Indian origin, to let out their residential properties acquired for their legitimate residential purpose but which due to their foreign residence, are not required for their immediate residential purpose. The rental income is freely repatriable outside India.
In addition to all these, NRIs can now buy immovable properties in any country outside India and retain them even after their return to India for permanent settlement. Moreover, the amount lying in the Resident Foreign Currency Account (RFC) can also be utilized after their return to India for the subsequent purchase of immovable property abroad.