NRI Investments in India & Overseas Investments by Indians

Transcription

1 NRI Investments in India & Overseas Investments by Indians -Anup P. Shah 25th December, 2011 JB Nagar CPESC of WIRC

2 PROI & NRI PRAVIN P. SHAH & CO. 2

3 Person Resident Outside India PRII S.2 Any person who has stayed in India For more than 182 days in Preceding PY Ram is in India in for 315 days In he would be in India only for 170 days since he would go abroad for medical treatment Status for : PRII since in he was in India for > 182 days Preceding PY s stay is relevant and not current PY Any person not a PRII is a PROI PRAVIN P. SHAH & CO. 3

4 Person Resident Outside India Student going abroad for Studies Treated as NRIs? Correct? Are they eligible for all facilities which NRIs get under FEMA? Educational Loans availed of by them as Residents Continue to be available PRAVIN P. SHAH & CO. 4

5 PRII- Exceptions PROI inspite of staying in India > 182 days in Preceding PY Goes abroad on Employment Goes abroad on Business Goes abroad for: any other purpose in such circumstances which indicate an intention to stay abroad for an uncertain period PRII inspite of not staying in India > 182 days in Preceding PY If he comes for Other than 3 purposes On Employment For Business / Vocation For: any other purpose in such circumstances which indicate an intention to stay in India for an uncertain period PRAVIN P. SHAH & CO. 5

6 PRII- Exceptions Ali who is living in India all his life goes to Dubai to start a business on 30 th Mar 2011 Patel comes to India on 1 st Oct 2010 for a job. He has never been to India before Gita goes to Harvard for an MBA on 1 st June 2011 John comes to India for the first time and stays for 150 days in for medical treatment PRAVIN P. SHAH & CO. 6

7 NRI & PIO NRI: PROI who is an Indian Citizen or PIO PIO: Citizen of any Country (Other than Bangladesh / Pakistan): At any time held an Indian Passport Whose Parents at any time were Indian citizens Whose Grand Parents at any time were Indian citizens Whose Spouse is an Indian Citizen PRAVIN P. SHAH & CO. 7

8 Visas OCI Card Dual Citizenship Multiple Entry Lifelong Visa No need for registration with FPRO Parity with NRIs in Economic benefits But no Voting Rights PIO Card Multiple Entry 15 Years Visa Need for registration with FPRO PRAVIN P. SHAH & CO. 8

9 FDI & Instruments PRAVIN P. SHAH & CO. 9

10 Key Types of Foreign Invst. Invst by PROI in Capital of an Indian Co. Foreign Investment Purchase by PROI of Shs. Of Indian Co. Primary - FDI Secondary Direct Downstream Portfolio Off-Market Repatriable FIIs Non-repatriable NRIs / PIOs PRAVIN P. SHAH & CO. 10

11 PIS PRAVIN P. SHAH & CO. 11

12 PIS NRIs /PIOs can Buy / Sell on St. Ex. Through a Bank Branch approved by RBI Limit per NRI: Up to 5% of Paid-up value of Shares Total Limit for all NRIs: 10% Can be Extended Up to: 24% No Speculative Trades only Delivery based Payment by: Inward Remittance / NRE/ FCNR - if on R basis Inward Remittance / NRE/ FCNR / NRO - if on NR basis PRAVIN P. SHAH & CO. 12

13 PIS NRIs /PIOs can trade on St. Ex. No Sectoral Caps or Restrictions Can they buy Retail, Real Estate, NBFC, Telecom, etc. stocks listed on BSE/ NSE? What about Min. Area Conditions / Min. Cap / Lock-in as under FDI Sale Proceeds After tax to be Credited to: To NRO A/c. If on NR Basis To NRE / FCBR / NRO / Abroad If on R Basis PRAVIN P. SHAH & CO. 13

14 PIS NRIs /PIOs can trade on St. Ex. Shares purchased under PIS cannot be gifted / sold by Private Arrangement However, NRIs can gift them to their Relatives or to a registered Charity Trust Relatives: S.6 of Companies Act Must be sold on the Stock Exchange alone Can invest in Exchange Traded Derivatives But on NR Basis PRAVIN P. SHAH & CO. 14

15 Non-Repatriable PRAVIN P. SHAH & CO. 15

16 Non-Repatriable FDI Meaning: Only Dividend / Interest can be sent back abroad Principal + Gains cannot be repatriated Must be credited to NRO A/c. NRI/PIO can buy shares on NR Basis: Without any limit Not Nidhi / Chit Fund / Plantations/ Farm Houses / Dealing in TDRs PRAVIN P. SHAH & CO. 16

17 Non-repatriable Non-repatriable FDI Q Would the Sectoral Caps and Limits of Repatriable FDI apply? Sale Proceeds credited to NRO A/c. Q. Is Repatriation Possible from NRO A/c.? PRAVIN P. SHAH & CO. 17

18 Transfer of Shares From / To NRI PRAVIN P. SHAH & CO. 18

19 Share Sale by Resident to NRI Auto Route of FIPB, except in following: Sectors with caps Including: Defence Air transport ARC / banks Broadcasting Commodity Exchanges Credit Info Cos. Insurance Print Telecom / satellites PRAVIN P. SHAH & CO. 19

20 Share Sale by Resident to NRI Auto Route of RBI, even where: FIPB approval required for Transfer Cases where Takeover Regs. attracted Provided pricing Guidelines met Co. in Financial Services / Banks, Insurances, NBFCs, ARCs, etc. NOC from Financial Service Regulator obtained Pricing Guidelines not met Provided FDI Policy met, SEBI Regulations complied, CA s Certificate to this effect annexed Approval if Consideration is deferred PRAVIN P. SHAH & CO. 20

21 Share Sale by Resident to NRI Auto Route of RBI: Pricing Guidelines Listed Cos. as per Preferential Issue Price Unlisted Cos. Equal to or Higher than DCF Valuation of Company by CA / MB Form FC-TRS should be filed with documents Quadruplicate With Bank Undertaking from NRI: He is eligible to Buy Copy of SPA PRAVIN P. SHAH & CO. 21

22 Share Sale by NRI to Resident Auto Route of RBI: Pricing Guidelines Listed Cos. as per Preferential Issue Price Unlisted Cos. Equal to or Lower than DCF Valuation of Company by CA / MB Even if Pricing G/L not met FEMA /FDI Policy & SEBI Regs. met & CA s Cert. Form FC-TRS should be filed with documents Quadruplicate With Bank Copy of SPA Tax Clearance from AO / CA s Certificate PRAVIN P. SHAH & CO. 22

23 Share Sale by NRI to NRI / PROI Sale by NRI to NRI Automatic Route permission of RBI No documentation No Pricing Guidelines Sale by NRI to any PROI Automatic Route available? Documentation? Pricing Guidelines? PRAVIN P. SHAH & CO. 23

24 Other Instruments PRAVIN P. SHAH & CO. 24

25 Other Instruments NRI / PIO can purchase : On Repatriation Basis Without any Other Limit G-Secs / T-Bills / Units of MFs PSU Bonds PSU Divestment Shares On NR Basis Above Instruments NSCs PRAVIN P. SHAH & CO. 25

26 Other Instruments NRI / PIO can purchase : Foll. Issued by Banks - Re. denominated Perpetual Debt Instruments: Total Ceiling of 24% of each Issue Per NRI: 5% of each issue Debt Capital Instruments As per the applicable policy from time to time What about: PPF Senior Citizen Bonds / RBI 8% Taxable Bonds PRAVIN P. SHAH & CO. 26

27 Loans by NRIs PRAVIN P. SHAH & CO. 27

28 Loans by NRIs To Close Relatives To Ind/Firm/LLP in Rupees Loans by NRIs In NCDs of Co. Public Deposits Deposits with Firm/Co/Sole PRAVIN P. SHAH & CO. 28

29 Loans by NRIs Close Relatives NRIs may lend to close relatives in India Up to $250,000 Limit is per Individual relative in India Thus, an NRI can lend up to $250,000 to each relative Minimum maturity of Loan: 1 year Interest-free Loan Inward remittance / NRE/FCNR Close Relative: S.6 ~ Companies Act PRAVIN P. SHAH & CO. 29

30 Loans by NRIs Rupees NRI /PIO may lend to Individuals / Firms/ LLPs To Residents Loan in Rupees Not to Indian Companies Maximum Tenure of Loan: 3 years 2%over Bank Rate Inward remittance / NRE/FCNR Principal cannot be repatriated Credited to NRO A/c. PRAVIN P. SHAH & CO. 30

31 Loans by NRIs Rupees NRI /PIO may lend to Individuals / Firms/ LLPs Borrower not in Chit fund / Agr. Plantation / Real Estate Business / TDRs trading Borrower cannot use loan for: Capital / Equity Contribution in a Firm / Co. / Proprietory Concern Relending PRAVIN P. SHAH & CO. 31

32 Loans by NRIs NCDs Invst NRI /PIO may invest in NCDs of a Co. Issue by Public Offer Min. Tenure of NCDs: 3 years Interest < SBI s PLR + 3% Co. not in Agro Plantations / Real Estate Business/TDR trading / Nidhi / Chit Fund Max. Limit = Sectoral Cap for FDI for Co. Can be on R or NR Basis PRAVIN P. SHAH & CO. 32

33 Loans by NRIs Public Deposits NRI can place Public Deposits With Co / NBFCs As per Cos Deposit Rules u/s. 58A / NBFC Regulations Max maturity 3 years & up to 35% of NOF of Co. Out of NRE/NRO /Inward remittance Can be on R / NR Basis Not used in Agro Plantations / Real Estate Business/TDR trading / Nidhi / Chit Fund PRAVIN P. SHAH & CO. 33

34 Loans by NRIs Deposits NRI can place Deposits With Co / Firm / Sole Proprietary Concern / NBFC Pvt Arrangement / Public Deposit Scheme Max maturity 3 years Only from NRO A/c No Repatriation allowed Not from Inward Remittance / Transfer from NRE / FCNR A/c. balance Co. not in Agro Plantations / Real Estate Business/TDR trading / Nidhi / Chit Fund PRAVIN P. SHAH & CO. 34

35 Loans by NRIs NRIs cannot give any other loans to any Co./ Firm / Person in India It would become an ECB Must comply with ECB Regulations & Restrictions Only certain Lenders are eligible to lend Rate Cap End-use restrictions Involves Heavy penalties PRAVIN P. SHAH & CO. 35

36 Loans to NRIs PRAVIN P. SHAH & CO. 36

37 Loans to NRIs By Banks Banks can grant Loans in India to NRIs: Loans can be against: Shares Imm. Property For meeting Personal / Business purposes Not in restricted sectors Agr/ RE Bus. / TDR Loan credited to NRE/FCNR/NRNR A/c Cannot be remitted abroad Repayment - NRO / NRE/FCNR/ Inward Remittance Or by a close relative resident in India PRAVIN P. SHAH & CO. 37

38 Loans to NRIs- By Close Relatives Loan by Residents to Close Relative NRI/PIO : By credit to NRO A/c Cannot be remitted abroad Interest-free & minimum maturity of 1 year Within the LRS limit of $200,000 / FY For Borrowers personal requirements / business in India Not for Agr. / RE Business / Tdg in TDRs/ Nidhi Repymt by Inward remittance/nro/nre/fcnr/sale of Shares / Property against which loan granted PRAVIN P. SHAH & CO. 38

39 Gift by / to NRIs PRAVIN P. SHAH & CO. 39

40 Gift of Money Gift of money in forex by a Resident to NRI Earlier limit of $5,000 per annum Now under LRS Resident can remit up to $100,000 per recipient for maintenance of close relatives Gift of money in Rupees by Resident To NRI/PIO who is a Close Relative Credit to NRO A/c Within overall LRS limit of $200,000 PRAVIN P. SHAH & CO. 40

41 Gift of Money Gift of money by a NRI to Resident No prohibition in FEMA Gift must be Genuine Consider s.56(2) for Donee PRAVIN P. SHAH & CO. 41

42 Meeting of Expenses Person resident in India can make payments in Rupees For Boarding/Lodging / related Services / Travel to and From and Within India of NRIs on a visit to India For Medical Expenses in India of NRI who is a close relative of payer PRAVIN P. SHAH & CO. 42

43 Gift of Shares Gift of shares by R to NR Not on Automatic Route of RBI Prior permission required RBI considers the following: Donee is eligible to hold the shares under FEMA Gift 5% of paid-up capital Sectoral caps are not breached Donee and Donor are close relatives u/s. 6 of Companies Act PRAVIN P. SHAH & CO. 43

44 Gift of Shares Gift of shares by R to NR RBI considers the following: Total of all Gifts by way of shares by that Donor to any Donees in a calendar year $50,000 Earlier $25,000 Application must include: Relationship between Donor-Donee CA s Valuation NAV Certificate from MF for Units PRAVIN P. SHAH & CO. 44

45 Gift of Shares Gift of shares by R to NR Application must include: Certificate from Co. that Gift 5% of capital Reasons for Gift Genuineness of Gifts is very important Gift of foreign securities by NR to R General permission of RBI PRAVIN P. SHAH & CO. 45

46 Bank Accounts of NRIs PRAVIN P. SHAH & CO. 46

47 NRE A/c. Only NRIs / PIOs can open NRE A/c. Bangladesh / Pakistan Citizens need RBI Approval With Authorised Banks, Co-op Banks Cannot be opened by PoA Holder Savings, Current, FD Credits: Any Credit in any Currency Notes, TCs, DDs, etc. Transfer from other NRE/FCNR A/c. Interest, Refund of EMD, etc. PRAVIN P. SHAH & CO. 47

48 NRE A/c. Debits: Local debts Remittances abroad Transfer to NRE / FCNR Investments in India in Shares / Property Other permissible Debits Loans possible in certain cases against security of NRE A/c. Repatriation allowed fully PRAVIN P. SHAH & CO. 48

49 NRE A/c. Joint A/c: Resident Close Relative can be added as a Joint A/c. Holder Earlier not allowed On Former or Survivor Basis Resident Relative eligible to operate the A/c. as a Power of Attorney Holder during lifetime of NRI/PIO PRAVIN P. SHAH & CO. 49

50 NRE A/c. Others: Jt A/c. with other NRIs allowed NRI can open NRE A/c during visit to India Overdrawing up to Rs.50,000 may be allowed by Bank Nomination allowed Interest not taxable Rate of Interest: Savings FD PRAVIN P. SHAH & CO. 50

51 FCNR(B) A/c. Only NRIs / PIOs can open FCNR A/c. Bangladesh / Pakistan Citizens need RBI Approval Can be opened in any Foreign Currency Only Term Deposits All Debits / Credits permissible for NRE A/c. Interest on Half-yearly / Annual Basis Repatriable? JT A/c with Resident Close Relatives permissible Same as in case of NRE A/c PRAVIN P. SHAH & CO. 51

52 NRO A/c. Any PROI can open NRO A/c. Bangladesh / Pakistan Citizens need RBI Approval With Authorised Banks, Co-op Banks Savings, Current, FD Credits: Any remittances from abroad / Legitimate Dues Debits: All local payments Repatriation of Current Income Dividend, Interest, Rent PRAVIN P. SHAH & CO. 52

53 NRO A/c. Other than Current Income NO Repatriation However, now relaxation Others: Jt A/c. with other NRIs / Residents allowed Resident PoA Holder can operate NRE A/c. Nomination allowed Interest Rates: Savings FD PRAVIN P. SHAH & CO. 53

54 Repatriation from NRO A/c. NRO = Non-Repatriable However, Repatriation now possible by PIOs: Who has retired from Employment in India Inherited assets from a PROI who was resident in India Widow who is PROI and inherited assets of her Husband who was an Indian Citizen & PROI Can remit up to $1m / FY on production of: Documentary Evidence of Inheritance CA s Certificate for No Taxes PRAVIN P. SHAH & CO. 54

55 Repatriation from NRO A/c. Repatriation possible by NRIs / PIOs: Can remit up to $1m / FY Out of balances in NRO A/c. / Sale Proceeds of Assets / Assets acquired on Inheritance / Legacy On production of: Documentary Evidence of Acquisition / Inheritance CA s Certificate for No Taxes Under Deed of Settlement by Parents / Close Relative and Deed taking effect on death of Settler Original Deed of Settlement CA s Certificate for No Taxes PRAVIN P. SHAH & CO. 55

56 Repatriation from NRO A/c. Not available to citizens of foll. Countries If Sale Proceeds of Imm. Property Not Available To: Pakistan, Bangladesh, Nepal, Bhutan, Sri Lanka, China, Afghanistan, Iran If Sale Proceeds of Financial Assets Not Available To: Pakistan, Bangladesh, Nepal, Bhutan PRAVIN P. SHAH & CO. 56

57 Credit Cards to NRIs Indian Banks can issue International Credit Cards To NRIs/PIOs Payment for all charges / dues should be out of Inward Remittance / NRE/FCNR Can use them for all payments Including for import of Goods & Services from India Except Lottery, Banned Magazines, Call Back services, Sweepstakes PRAVIN P. SHAH & CO. 57

58 LRS Is the LRS of $200,000 available to NRIs? No Available only to Persons Resident in India If NRI becomes Resident (change of Status) then he can avail of LRS PRAVIN P. SHAH & CO. 58

59 Joint Holders Resident Individuals can add Close Relatives who are NRIs as Joint Holders In Resident Bank A/cs. On Former or Survivor Basis Close Relatives cannot operate A/cs. during lifetime of Resident Holder PRAVIN P. SHAH & CO. 59

60 Foreign Invst. in RE Foreign Investment FDI in Co. Real Estate Projects NRI NRI Non-NRI PRAVIN P. SHAH & CO. 60

61 Imm. Property PRAVIN P. SHAH & CO. 61

62 Buying of Imm. Property - NRIs Which type of IPs can be purchased? Any IP? Number of IPs? How can Payment be made? Inward remittances from abroad NRE/NRO/FCNR Can it be out of Travellers Cheque/Notes? PRAVIN P. SHAH & CO. 62

63 Buying of Imm. Property - PIOs Which type of IPs can be purchased? Any IP? Number of IPs? How can Payment be made? Can it be out of Travellers Cheque/Notes? PRAVIN P. SHAH & CO. 63

64 Buying of Imm. Property Reporting to RBI? Foll. Citizens cannot without RBI Approval: Pakistan / Bangladesh / Sri Lanka / China / Afghanistan / Iran / Nepal / Bhutan Buy or Transfer IP However, can take on lease for max. 5 years PRAVIN P. SHAH & CO. 64

65 Inheritance of IP NRI can inherit any type of IP in India PIOs Can INHERIT any IP from a PROI who had acquired it as per applicable Exchange Control Law Can acquire any IP except Agr Land / Plantation / Farm House by way of GIFT from a PRII / NRI / PIO PRAVIN P. SHAH & CO. 65

66 Renting of IP NRI/PIO can rent out their property Full repatriation of Rent allowed? Even if IP purchased out of NRO A/c? Can NRI carry out any business ~ Warehousing? PRAVIN P. SHAH & CO. 66

67 Transfer of IP by NRI/PIO TYPE OF IP & TRANSFER BY TO SELL / GIFT any IP SELL / GIFT any IP except Agr. Land / Farm Houses / Plantations SELL any IP except Agr. Land / Farm Houses / Plantations GIFT any Res / Comm l IP SELL / GIFT of Agr. Land / Farm Houses / Plantations NRI NRI PIO PIO PIO PRAVIN P. SHAH & CO. 67

68 Selling of IP by NRI/PIO Repatriation of Proceeds Auto. Route if: IP was acquired as per provisions of law Repatriation Less than Cost Price paid from Inward Remittance / NRE / FCNR Gains credited to NRO A/c. For Residential Property = For Comm l = Gains have to be credited to NRO A/c. Q. Can Gains be repatriated?? PRAVIN P. SHAH & CO. 68

69 Acquisition by Non-NRIs Non-NRIs cannot acquire IP FEMA v FERA Citizenship relevant? Q. Position of Foreign nationals resident in India? Can they buy IP or do they need RBI Approvals? E.g.: Mr. Smith who is MD of Excel Auto Ltd and staying in India for 3 years wants to buy a home in Gujarat? E.g.: Mr. Chang is on a 6-months Tourist visa wants to buy a villa in Goa? PRAVIN P. SHAH & CO. 69

70 Foreign Cos. Foreign Cos. Cannot acquire IP in India If ForCo opens a Branch / Project Office It can acquire property for its own activity It must file a Form with RBI Requires RBI permission for selling such a property PRAVIN P. SHAH & CO. 70

71 RBI Permission If Permission required apply to: Chief General Manager Exchange Control Dept Reserve Bank of India Mumbai No format has been prescribed Give full details and reasons for application PRAVIN P. SHAH & CO. 71

72 Commission to Agents Flats sold to NRIs Agents can be appointed Commission US$ 25,000 or 5% of Inward remittance Higher Limit per Transaction Can be paid to Agent or Agent can deduct commission and remit net amount to Builder Q. if NRI purchases out of NRO A/c.? PRAVIN P. SHAH & CO. 72

73 Foreign Consultants Foreign Consultancy Services for Indian RE project Architect / Interior Designer / Lawyers Limit US $1 million / project PRAVIN P. SHAH & CO. 73

74 FDI in Real Estate PRAVIN P. SHAH & CO. 74

75 FDI & Instruments PRAVIN P. SHAH & CO. 75

76 Key Types of Foreign Invst. Invst by PROI in Capital of an Indian Co. Foreign Investment Purchase by PROI of Shs. Of Indian Co. Primary - FDI Secondary Direct Downstream Portfolio Off-Market Repatriable FIIs Non-repatriable NRIs / PIOs PRAVIN P. SHAH & CO. 76

77 Relevant Regulations Consolidated FDI Policy DIPP, Ministry of Commerce AP Dir Circulars RBI s changes from time to time FEMA Regulations Mode of Investments + Reporting PRAVIN P. SHAH & CO. 77

78 Relevant Regulators Part of Commerce Ministry DIPP Formulates FDI Policy FIPB Cases requiring Govt. Approval Part of Finance Ministry RBI Nodal Regulatory Authority PRAVIN P. SHAH & CO. 78

79 Repatriable FDI Repatriable: Principal + Profits / Gains + Current Income (Dividend / Interest) can be sent back abroad NRIs living in Nepal & Bhutan: Consideration must be by way of inward remittance in free foreign exchange through Banks PRAVIN P. SHAH & CO. 79

80 FDI Prohibited FDI in following Sectors is Banned: Chit Fund / Nidhi Agricultural / Plantation (except certain areas) Real Estate business / Trading in TDRs Lottery / Gambling/ Betting / Casinos Atomic Energy Manufacturing of Tobacco & related products Sectors not yet opened to Private Sectors PRAVIN P. SHAH & CO. 80

81 Types of FDI Foreign Direct Investment Automatic Approval No Permission MoF/FIPB Inflows up to Rs.1200 cr. CCEA Inflows above Rs cr. PRAVIN P. SHAH & CO. 81

82 Instruments Foreign Direct Investment Equity Hybrid Warrants Voting Non-Voting CCDs CCPS PRAVIN P. SHAH & CO. 82

83 FDI in Real Estate General Prohibitions Real Estate Business Construction of Farm House Trading in Transferable Development Rights (TDRs) Real Estate Business : Buying and selling of immovable properties Assignment of Development Agreements? PRAVIN P. SHAH & CO. 83

84 FDI in Real Estate Guidelines 100% FDI allowed under Automatic Route subject to conditions in Construction & Development Projects Projects Permitted Housing Commercial Premises Resorts Educational Institutions Recreational Facilities City & Regional Level Infrastructure Townships PRAVIN P. SHAH & CO. 84

85 Conditions Minimum Area Serviced Housing Plots 10 hectares/25 acres Built-up area: 50,000 sq. mtrs. or 5,38,200 s.ft. Combination Project Any one of above 2 conditions What is built-up area? What is included and what is excluded in it? PRAVIN P. SHAH & CO. 85

86 Conditions Investment Minimum Capitalisation In case of WOS US $10M In case of JV US $ 5M FDI in a JV in 99:1 between Foreign & Indian Partner What should be the min. capital? Securities Premium included in Min. Cap? Whether Preference Shares included? PRAVIN P. SHAH & CO. 86

87 Conditions Funds to be brought within 6 months of commencement of business What is Commencement of Business? Would it be date when Co. buys land as its SIT Would it be date of approval by Local Authority? PRAVIN P. SHAH & CO. 87

88 Conditions Original Investment locked-in for 3 years Entire Invst. or only what is brought in initially? If Invst. in Tranches? Is Invst. In excess of Min. Cap. also locked-in? 50% project must be developed in 5 years from date of obtaining all statutory clearances PRAVIN P. SHAH & CO. 88

89 Conditions Lock-in of Initial Investment Can Foreign Investor sell to another NR within 3 years? No outflow /remittance from Co. Is lock-in on Investor or on Investment? PRAVIN P. SHAH & CO. 89

90 Exemptions Foll. 4 Conditions: Minimum Area Minimum Capitalisation Lock-in for 3 years 50% Project Completion in 5 years Not Applicable for 5 RE Projects: Hotels & tourism sector Hospitals SEZs / IT Parks Old Age Homes Education Sector PRAVIN P. SHAH & CO. 90

91 FDI in Real Estate Issues Whether Agricultural Land can be acquired for developing serviced housing plots? If FDI & non-fdi compliant projects, can Co. get FDI? Can FDI be made in a Co. engaged in leasing of real estate? What if property is constructed and then leased? PRAVIN P. SHAH & CO. 91

92 Investment by NRIs and PIOs Prohibited Investments Investment in Agricultural Property, Plantations & Farm Houses Trading in Real Estate and TDRs Conditions of Press Note No. 2/2005? Can invest in smaller size projects also PRAVIN P. SHAH & CO. 92

93 Reporting under FDI Reporting of Inflow IndCo. receiving foreign funds should report to Regional office (RO) of RBI Within 30 days of receipt in Advance Reporting Form File FIRC with AD File KYC on NRI Investor with AD Report would be acknowledged by RO which will allot a Unique ID No. (UIN) PRAVIN P. SHAH & CO. 93

94 Reporting under FDI Reporting of Issue of Shares After issue of Shares file FC-GPR with RBI Signed by MD/Director /CS File with AD CS Certificate Valuation Certificate from CA / Auditor AD would submit to RO Annual Return of Foreign A&L with RBI PRAVIN P. SHAH & CO. 94

95 Loans to NRIs PRAVIN P. SHAH & CO. 95

96 Loans to NRIs- Housing Loans Bank / HFI can grant to NRI/PIO For acquisition / renovation/repairs of Residential HP Quantum of loans, margin money, repayment period shall be at par with Resident loans Loan cannot be credited to NRE/FCNR/NRNR Fully secured by Equitable Mortgage of Property to be purchased / Other assets Source of paying Interest / EMIs: NRE/FCNR/NRO A/c. or out of rental income Rental Income from Renting of Property Relative in India of borrower PRAVIN P. SHAH & CO. 96

97 Change of Status PRAVIN P. SHAH & CO. 97

98 Change of Status: R to NR Shares Existing Bank Accounts New Bank Accounts Loans / Overdrafts availed when he was a Resident Can they be continued? Payment of Interest & repayment of loans? Imm. Prop / Bullion / Movables? Insurance Policies? Directorship / Trustee/Karta PRAVIN P. SHAH & CO. 98

99 Change of Status: NR to R NRI becoming Resident S.6(4) of FEMA Foreign Shares Foreign Property Foreign currency Foreign Bank Accounts? Jewellery/Cars/ Movables abroad? Insurance Policies abroad? Income earned on assets held abroad by NRIs who have returned to India permanently can be retained abroad RBI Clarification PRAVIN P. SHAH & CO. 99

100 Overseas Invst by Indians PRAVIN P. SHAH & CO. 100

101 Liberalised Remittance Scheme LRS of RBI For Resident Individuals Foreign citizens? Minors? US $200,000 equivalent / FY Earlier $50,000 - $100,000 Any permissible Capital or Current A/c Transaction Bank A/c., Invst, Property, Expenses, Overseas Gifts Which Countries are prohibited? PRAVIN P. SHAH & CO. 101

102 Liberalised Remittance Scheme Out of owned funds? Borrow and Invest? Banks can lend for LRS? Setting-up of a Co. under LRS? Application-cum-Declaration Form Income earned on assets held abroad under LRS can be retained abroad and reinvested RBI Clarification PRAVIN P. SHAH & CO. 102

103 Other Investments General Permission for foreign securities : PRII can get a gift from PROI PRII can subscribe to under Cashless ESOP by a foreign Co. PRII can get inheritance from PRII / PROI PRII Employee / Director of Indian Sub. Of Foreign Co. can acquire foreign securities, if: Shares under ESOP are offered on uniform basis Annual Return is filed by Indian Co. with RBI PRAVIN P. SHAH & CO. 103

104 Remittances for Travel Basic Travel Quota for Private Visits $10,000 equivalent / FY / person Other Up to $3,000 in Cash Balance TC/ Forex Card Also for minors For excess RBI approval Can get up to 60 days in Advance Business / Conferences/ Sp. Training / Maintenance of patients for medical treatment / check-up/ attendants $25,000 equivalent / person PRAVIN P. SHAH & CO. 104

105 Remittances for Travel Formalities No endorsement on Passport unless requested Form A-2 to be filled Self-declaration & Air Tickets Surrender unspent forex within 90 days of return for Cash & 180 days for TCs Can retain up to $2,000 of Cash / TC / Card Can retain any amount of coins BTQ Limit N.A. if spent through CC Applicable to DC PRAVIN P. SHAH & CO. 105

106 Other Remittances Medical Treatment Up to $1,00,000 for treatment Excess Estimate from Doctor in India / abroad Self declaration Maintenance - $25,000 Immigration Up to $1,00,000 Self-declaration & A2 PRAVIN P. SHAH & CO. 106

107 Other Remittances Employment abroad Up to $1,00,000 Self-declaration & A2 Study Abroad Students treated as NRIs Up to $1,00,000 or estimate from Foreign Institution whichever is Higher per Academic Year Self-declaration & A2 PRAVIN P. SHAH & CO. 107

108 Thank You!!