With a view to provide greater flexibility, the Reserve Bank of India ("RBI") has vide its circular dated 16th November 2006 amended the Foreign Exchange Management (Remittance of Assets) Regulations, 2000 ("Regulation") by dispensing with the lock in period for remittance of sale proceeds of immovable property of Non-Resident Indians ("NRIs") or Persons of Indian Origin ("PIOs") from their Non-Resident Ordinary ("NRO") accounts in India.
Previously, NRIs and PIOs were allowed to remit a sum of up to USD one million per calendar year for any bonafide purpose out of the balances in their NRO accounts, subject to a lock-in period of 10 years. The balance in the NRO account includes sale proceeds of immovable property acquired by the NRI out of his/her resources in India, or sale proceeds of property received by way of inheritance or gift.
As per the amended Regulation, the RBI has lifted the 10 year compulsory lock-in period for remittance of sale proceeds of immovable property and NRIs and PIOs are, now allowed to remit out of balances in their NRO accounts including sale proceeds of immovable property provided the amount does not exceed the overall ceiling of USD one million per financial year.
All other terms and conditions of the Regulation remain unaltered.
The said amendment is expected to offer an exit option to NRIs/PIOs enabling them to repatriate money earned through the sale of immovable property in India without any time restrictions.
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