RBI/2004-05/4
Master Circular No. / 4 /2004-05

July 1, 2004

To,

All Authorised Dealers in Foreign Exchange

Madam/Sir,

Master Circular- Remittance facilities for Non-Resident Indians/ Persons of Indian Origin/Foreign Nationals

Remittance facilities for Non-Residents/Persons of Indian Origin/Foreign Nationals are being governed by sub-section (1) and (2) of section 6 of the Foreign Exchange Management Act, 1999 read with FEMA Notification No.13/2000-RB and FEMA Notification No. 21/2000-RB both dated May 3, 2000 as amended from time to time.

2. This Master Circular consolidates the existing instructions on the subject of 'Remittance facilities for Non-Resident Indians/Persons of Indian Origin/ Foreign Nationals' at one place. The list of underlying circulars/notifications is set out at Annex.

3.. As recommended by the Committee on Procedures and Performance Audit on Public Services (CPPAPS) (Chairman : Shri S. S. Tarapore) set up by the Reserve Bank, this Master Circular is being issued with a sunset clause of one year. This circular will stand withdrawn on July 1, 2005 and be replaced by an updated Master Circular on the subject.

Yours faithfully,

Grace Koshie
Chief General Manager

List of circulars which have been consolidated in this Master Circular on

Remittance facilities for Non-Resident Indians/Persons of Indian Origin/Foreign Nationals

The guidelines for transfer of assets outside India by a person whether resident in India or not are given in the Notifications No. FEMA 13/2000-RB and FEMA 21/2000-RB both dated May 3, 2000 and the amendments issued thereto from time to time.

According to the above Notifications, remittance of capital assets in India held by a person whether resident in or outside India would require approval of the Reserve Bank except to the extent provided in the Act or Rules or Regulations made under the Act.

2.1 A Non-Resident Indian (NRI) or a Person of Indian Origin (PIO) may remit an amount upto USD one million, per calendar year, out of the balances held in his Non-Resident (Ordinary) Rupee (NRO) account/sale proceeds of assets (inclusive of assets acquired by way of inheritance), for all bonafide purposes, to the satisfaction of the authorized dealer, on production of an undertaking by the remitter and certificate by a Chartered Accountant in the formats prescribed by the Central Board of Direct Taxes vide their Circular No.10/2002 dated October 9, 2002.

2.2 NRI/PIO may remit sale proceeds of immovable property purchased by him out of Rupee funds or as a person resident in India as indicated in para 2.1 above, provided such a property was held by him for a period not less than ten years. If such a property is sold after being held for less than ten years, remittance can be made, if the sale proceeds were held for the balance period in NRO account (Savings/Term Deposit) or in any other eligible investment, provided such investment is traced to the sale proceeds of the immovable property to the satisfaction of the authorized dealer.

2.3 In respect of remittance of sale proceeds of assets acquired by way of inheritance or legacy for which there is no lock-in period, NRI/PIO may submit documentary evidence in support of inheritance or legacy of assets, an undertaking by the remitter and certificate by a Chartered Accountant in the formats prescribed by the Central Board of Direct Taxes vide their Circular No.10/2002 dated October 9, 2002.

2.4 The remittance facility in respect of sale proceeds of immovable property is not available to a citizen of Pakistan, Bangladesh, Sri Lanka, China, Afghanistan, Iran, Nepal and Bhutan.

3. Repatriation of sale proceeds of residential property purchased by NRIs/PIO out of foreign exchange

3.1 There is no lock-in period for sale of residential property purchased by NRI/PIO out of foreign exchange. However, repatriation of sale proceeds of residential property purchased by NRI/PIO out of foreign exchange is restricted to not more than two such properties.

3.2 Authorized dealers may permit repatriation of amounts representing the refund of application/earnest money/purchase consideration made by the house building agencies/seller on account of non-allotment of flat/plot/cancellation of bookings/deals for purchase of residential/ commercial property, together with interest, if any (net of income tax payable thereon), provided the original payment was made out of NRE/FCNR account of the account holder, or remittance from outside India through normal banking channels and the authorized dealer is satisfied about the genuineness of the transaction. Such funds may also be credited to the NRE/FCNR account of the NRIs/PIO, if they so desire.

3.3 Authorized dealers may allow repatriation of sale proceeds of residential accommodation purchased by NRIs/PIO out of funds raised by them by way of loans from the authorized dealers/housing finance institutions to the extent of such loan/s repaid by them out of foreign inward remittances received through normal banking channel or by debit to their NRE/FCNR accounts.

4.2 NRIs/PIO have the option to credit the current income to their Non-Resident (External) Rupee account, provided the authorized dealer is satisfied that the credit represents current income of the non-resident account holder and income tax thereon has been deducted/provided for.

5.3 All other facilities available to NRIs under FEMA are equally applicable to the students.

5.4 Educational and other loans availed of by them as residents in India will continue to be available as per FEMA regulations.

6. Income- tax clearance

The remittances will be allowed to be made by the authorized dealers on production of an undertaking by the remitter and a Certificate from a Chartered Accountant in the formats prescribed by the Central Board of Direct Taxes, Ministry of Finance, Government of India in their Circular No.10/2002 dated October 9, 2002. [cf. Our AP(DIR Series) Circular No.56 dated November 26,2002].

Authorized dealers have been permitted to issue International Credit Cards to NRIs/PIO, without prior approval of RBI. Such transactions may be settled by inward remittance or out of balances held in the cardholder’s FCNR/NRE/Non-Resident (Ordinary) Rupee accounts.