Exclusive to The Gulf Today
As a US citizen, can I own property in India? If I return to India, will I be taxed in India and the US? Please clarify. Samuel, Dubai
Yes, as a Person of Indian Origin (PIO), you are eligible to buy property other than agricultural land, farmhouse and plantation property. On your return to India, you will be a resident but not ordinarily resident for 2 years during which your foreign exchange will not be taxable in India. After that your global income will be taxable in India. If you are taxed in both the countries, India as well as USA, the Double Taxation Avoidance Agreement between them will protect you.
I have been working in the Gulf for the past 10 years and acquiring Canadian citizenship. As a PIO, can I acquire immovable property in India by way of gift? R S Dinesh, Abu Dhabi
Foreign nationals who are resident outside India cannot acquire any immovable property by way of a gift. However, PIOs of Indian origin are permitted to acquire immovable property by way of gift, even if they are not resident in India. Citizens of India, resident outside India, are also permitted to acquire immovable property by way of gift.
A PIO can be the done for a property other than any agricultural/plantation/farmhouse property only if the donor is either a person resident in India, or an Indian citizen not resident in India or a PIO.
I have paid partly through banking sources and the balance through NRO account while investing in apartment in India. What is the quantum of investment I can repatriate after sale of the unit? Arvind Kumar, Sharjah
You can repatriate upto two residential units if the property was acquired out of foreign exchange sources i.e. remitted through normal banking channels or by debit to your NRE/FCNR (B) account. The amount to be repatriated should not exceed the amount paid for the property in foreign exchange received through normal banking channel or by debit to NRE account. Repatriation of sale proceeds of your apartment purchased out of foreign exchange is restricted to not more than two such properties. Capital gains, if any, may be credited to the NRO account from where you may repatriate an amount up to $1 million, per financial year. In case if the property was acquired out of rupee income, you may remit up to an amount of US$1 million, per financial year, out of the balances held in the NRO account for all the bona fide purposes to the satisfaction of the authorised dealer bank and subject to tax compliance. This is inclusive of assets acquired by way of inheritance or family settlement.
Global funds happy
Global Private Equity (PE) investors are still bullish on the Indian property market. Funds invested over $14 billion in the Indian real estate market since 2006 of which only $3 billion has exited in the last two years. It is the execution risk that they would be worried about, according to Alistair Hughes, chief executive officer, Asia Pacific, Jones Lang LaSalle.
India ranked 20th among the top 20 real estate investment markets globally with investment volume of $ 3466 million recorded in 2012, according to Cushman & Wakefield in its latest report International Investment Atlas.
As per the report, majority of the investment in India were through institutional sales (67%) while remaining were through private equity (PE) investments (33%). The market witnessed institutional sales (excluding apartments) of Rs 128 billion, concentrated in commercial development sites and office segment including stand-alone and pre-leased office buildings. While investments in institutional sales saw a decline of 37 % over last year, private equity investment in real estate in India increased by 7% in 2012 and was noted at Rs62 billion.
A majority of the Private Equity in Real Estate (PERE) investments were noted in ready income generating / operational office assets at Rs32.3 billion, an increase of 34% over 2011.
Under construction residential projects continued to witness the highest number (25) of PERE deals valued at Rs28.5 billion in 2012.
The author is a business analyst
covering Indian property markets