NRI Properties Targets By Land mafia in Delhi

The “land mafia” in the national capital seems to be turning its attention to non resident Indians (NRIs) whose absence is usually long enough to grab their land and sell it illegally at whopping prices. Four cases of unauthorised occupation of land, known here as land grabbing, that the police are investigating show how rich NRIs, mostly settled in the US and Britain, are falling easy prey to such gangs. “The land mafia has formed a complex web including government and bank officials to keep a tab on people who rarely visit their properties back home,” a senior police official said. The mafia not only sells such land with forged documents but also puts the NRIs in trouble by obtaining bank loans against their property.Statistics available with the police show that at least 14 cases of grabbing and selling of land owned by NRIs, mostly in upmarket areas of south Delhi, have been registered in the past three years. Explaining the modus operandi, an official said the culprits keep in touch with the contacts of NRIs in order to know about their visits and the duration of their stay in Delhi. They also study the status of their properties. “Through these contacts, the mafia finds the person in whose name the initial conveyance deed, a legal document signed and delivered to effect a transfer of property and to show the legal right to possess it, has been executed by the NRI or the caretaker of the property here. After that the person is lured by the mafia with hefty amounts.” In most cases, the person is a property dealer who resides only a little distance away from the property. This person is first lured into the mafia loop, the police say. “As the original conveyance deed doesn’t bear the photograph of the actual owner or NRI, the newcomer in the mafia group executes a general power of attorney (GPA) in favour of a property dealer of the mafia. They also spend hefty amounts in paying stamp duty,” the official said. After completing the paper work, the mafia creates confidence in a prospective buyer, showing him the rosy picture that this particular property is available for a throwaway price. Sometimes the buyer is told that the owner needs money for his medical expenses or foreign trips. “It has also been noticed that such properties are mortgaged with banks for big loans. Banks are also sluggish in getting a case registered, as they report the matter after a gap of more than four or five years. Such attitude on the part of bank officials adversely affects the prospects of a case and apprehending the accused.” Source: gulftimes

NRI Queries Related to Tax Rules

Q1) What kind of tax rules have been advised for NRIs?

Ans: Tax rules for NRIs related to property transactions can be enlisted as follows:

• Purchase of Property- No taxes are needed while purchasing a property.
• Sale of Property - Certain taxes are payable while selling a property.
• Renting Property - PAN card is necessary at the time of letting a property on rent.
  

Q2) Under what circumstances an NRI is liable to pay taxes in India?

Ans: NRI is liable to pay taxes under the following circumstances:

• Income received in India, irrespective of whether income is accrued in or outside India.
• Income deemed to be received in India, irrespective of whether income is accrued in or outside India.
• Income accruing in India, irrespective of whether received in or outside India.
• Income deemed to accrue in India, irrespective of whether received in or outside India.
  

Q3) Which categories of NRI income are taxable in India?

Ans: The following categories of NRI income fall under the taxable regime:

1. Double taxation
2. Fees for technical services and royalties
3. Income from property in India.
4. Income arising as a result of profits of businesses in India.
   

Q4) What is estate duty for NRIs?
Ans: NRIs are not liable to pay estate duty in India.

Q5) Is NRI obliged to pay for gift tax in India for gift to spouse?
Ans: No.

Q6) To save on taxes, how much do I need to invest? Can I avoid tax completely?

A) You can invest upto Rs.100, 000 annually in various government schemes such as PPF, NSC, pension plan and insurance and medical premiums. You cannot evade tax completely, you can only minimize it.

Q7) The Form 16 issued by my ex-employer before I left for employment overseas erroneously carries my wrong PAN number. Even if the company issues a new Form 16 to me, the wrong PAN number quoted by the company on the TDS could create problems for me?

A) Once you have informed your ex-employer of the error, the onus for revising the returns lies on them.

Q8) Is there a time limit for getting an IT refund?
A) Generally, refunds are issued within a year. You can inform your Income tax officer in case of a delay beyond 12 months.

Q9) How do I file my income tax returns from overseas?
A) From 2007 onwards, online payment of taxes is possible for all categories of taxpayers, including NRI taxpayers.

Q10) What is the process for filing online returns?

A) Firstly, prepare the income tax return in the electronic format (XML) which is accepted by the Income Tax Department. You can download the service from www.incometaxindiaefiling.gov.in or use online software which calculates your tax and creates an XML format. After the XML format is ready, upload your return on the above mentioned site again.

Q11) While filling up the ITR Form, does one need to fill up all the credit entries – there is hardly enough space.

A) Yes, it is mandatory to fill up all credit entries – you can add an annexure based on the same format with all the data included.

Q12) If I have paid up my housing loan by March 2007, how do I minimize my tax?

A) Invest in NSC, ELSS schemes, pension plans and other tax-free schemes which
promise returns, upto a maximum of Rs.100,000

Q) Which form is used for declaring short term capital gains?

A) Form ITR 2. The same form is used by NRIs for filing returns on rentals received on property in India

More Queries

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Q:-I am an US citizen originally an Indian. I have all my investments abroad. I plan to spend a major part of my time (more than six months) in India with my children. In such a case, will my status change to that of a Resident? I will not be in India for business or employment but only for leisure. Also, I have no income arising from India. Even so, will I have to declare my global income to Indian tax authorities?

A : The Residential status is decided by the person’s number of days stay in India and not by your status (PIO etc.) or the extent of investments abroad or whether you are in India for employment or otherwise. As per law, the global income of a Resident becomes taxable in India. So, yes, you will as per law, have to disclose and pay tax on your global income. However, in case you are being taxed in the US also, you can definitely take shelter under the Double Tax Avoidance Agreement between US and India.

Q:-I’m an NRI/OCI in Australia and planning to take a loan in Australia to buy a property in India. I would like to know if I can get a tax concession in India on the rental income from that property against the interest I’ll be paying towards the loan in Australia?

A : No. The loan will have to be taken from a housing finance company in India for purchase of house in India.

Q : 1. Being an NRI can I link a Demat account to a NRO account for trading in stocks?
2. If my earnings through trading in stocks is more than Rs. 1 lakh, do I have to file tax return in India?
3. I am also given to understand that tax will be deducted at source for the interest earned in NRO accounts, does it mean that I need file tax returns in India?
4. Is there a way I can file tax returns on-line?
5. Due to my NRI status (with no Indian income) I will not be filing tax returns. If say after a year I earn rent income or profit from stock trades and if I have to file tax returns, does it matter that there is a gap in tax filing?

--- Kumar

A : 1 Yes, you can link your NRO account to the demat account for the purpose of trading in stocks.
2. Yes, if your earning is more than Rs. 1.10 lakh, you have to file tax return.
3. If your Indian income is more than Rs. 1.10 lakh you have to mandatorily file a tax return, regardless of the amount of tax deducted at source. You get credit for the tax deducted from your final tax liability. If your Indian income is less than Rs. 1.10 lakh, you need not file a tax return unless you wish to claim refund of any extra TDS.
4. At this particular juncture, on-line filing is not possible but it should see day light within a couple of years.
5. If the income chargeable to tax is less than the tax threshold, there is no need to file the returns. The gap would not matter as legally a person with income below the tax threshold of Rs. 1.10 lakh isn’t liable to file a tax return.

Q: Can a NRI invest in KVP, POMIS or other postal investments on non-repatriable basis. How do the post office track whether the investment made is from NRI money or otherwise (since most of the transaction is done on cash. Even if cheque is required it is quite easily possible from a local account to issue a cheque). Although national savings website shows NRI are not allowed to invest in P.O small savings, some agents are encouraging NRIs to deposit cash or cheque from local accounts for postal investments? Could you please guide us with a correct detail of this investment?

--- Surindar

A : This is on account of systemic inefficiencies. As per law, NRIs are not allowed to invest in postal schemes. However, if one invests cash, it is difficult to find out. Secondly NRIs aren’t allowed to have local accounts. They should convert the same to NRO accounts. However, several NRIs do not do this and continue to operate local accounts. The long and the short of the matter is that if being an NRI you do invest in Postal instruments, you are breaking the law. If it comes to the notice of the authorities, not only will the money be given back to you without any interest, you will also be liable to prosecution.

Q: I will like to know better of the following two options.. Liquid/Debt fund VS NRE Fixed deposits. NRE FD - current interest rates is around 5.7%, interest is non-taxable. Lock-in period of minimum 1 year. On the other hand, liquid/debt fund- Finance minister has recently increased the dividend distribution tax. What, in your opinion, will give higher/better returns?

A : Yes, post the distribution tax, yields on both the NRE as well as liquid schemes will be the same. However, if you invest in a short-term debt scheme, which is distinct from a liquid scheme the problem will be overcome. Also, MFs are coming out with liquid-plus schemes now which technically do not suffer the distribution tax. Look out for the same.

Q : I have paid 50% advance for an apartment in Mumbai city from funds in my NRE account. The balance I would like to pay by sale of another flat I own in the outskirts of the city which I had bought way back in 1998 when I was an Indian resident.
Now, under this situation:
Can I deposit the proceeds on sale in NRE A/c?
Would there by any tax on capital gain?
Can I request the buyer of my second property to directly pay the builder of the first property on my behalf?

--- Pritam

A : 1. The answer to your first question is in the negative. Funds from NRE are repatriable and no non-repatriable money can be credited to the NRE account. You may credit the sale proceeds to your NRO account.
2. Since you are purchasing another flat, you may not have to pay capital gains tax depending upon the capital gains earned and the cost of the new flat.
3. You certainly can. However, it is advisable to pay through your own account to avoid any subsequent requirements of any proofs.

Q : Hi, I am a US Citizen. I have NRE as well as NRO account. I have following questions:
01) I am being taxed on interest earned on my NRO account. It is not very significant but can I still file a return and see if I am eligible to receive refund? This is the only form of income that I have in India. Also I assume I will have to have a PAN card for filling a return, correct? Can a US citizen have a PAN card?

A : 1. The interest on NRO is fully taxable at the rates applicable to Residents. But there is no income threshold under which TDS is not chargeable. However, TDS is applicable @30.9% the only practical recourse open is to claim refund by filing tax returns.
2. Yes, it is necessary to have a PAN for filing returns.
3. You are a person of Indian origin. Even if you were a rank foreigner, you could have applied for PAN.

Source:http://sify.com/finance

South Indian Bank Targets More NRI Money

The Thrissur-based South Indian Bank is tapping other foreign exchange houses for boosting its foreign currency inflows.

About 30 per cent of its NRI customers are from West Asia, and the bank caters to them through the Haadi Express Exchange exclusively through its staff in Dubai and Sharjah.

“The bank is offering the fastest and the cheapest money transfer facility. Money is transferred within 30 minutes to the customer’s account and the customer will get a message on his mobile about the exchange remittance to his account, if he opts for mobile service,” bank chairman VA Joseph told Business Standard.

Joseph was in Mysore for the inauguration of the Jayalakshmipuram branch and an onsite ATM, and the opening of the renovated premises of its Mysore main branch on the Devaraj Urs Road. He said, “We will further improve our competitive service in the next 2-3 years with more tie-ups for money transfer.”

As against the Rs 20,000 crore business last year, he said the bank was aiming for Rs 25,000 crore business this year. The net NPA was less than 1 per cent last year. It has been planned to bring this down to below half per cent. Established in 1929 with a capital of Rs 22,000 and now having 478 branches spread across 23 states, South Indian Bank has proposed to extend its branch network to 500 by opening 22 branches this year.

The new branches proposed to come up are: four in Bangalore, three each in Hyderabad and Chennai, two in Mysore at Banni Mantap and Kuvempunagar, and other centres in the country. “We are opening two branches in Mysore because the city is expected to have a great growth, as Bangalore is getting crowded.

It will be like what Pune is to Mumbai,” he said. South Indian Bank has as many as 270 branches in its home state, Kerala, and 93 branches in the neighbouring Tamil Nadu.

Exclusive Industrial Parks For NRI Investors in Kerala

The Kerala government unveiled an action plan on 13 June to convert the state into a favoured investment destination by promoting public-private partnership in infrastructure development and offering to set up exclusive industrial parks for NRI investors.

While the policy speaks about setting up product-specific special economic zones, industries minister Elamaram Kareem told reporters that in a state like Kerala, large quantum of land like 30,000 acres could not be set apart for SEZs.

However, the LDF government was of the view that since the Centre had come out with such a scheme, Kerala alone should not keep away from that policy. “We should also get the benefits of the scheme,” he said.

The SEZs coming up for electronic parks require only 350 acres of land, while product-specific SEZs would need 25-350 acres, he pointed out. Six applications from private entrepreneurs for setting up SEZs were now awaiting clearance.

The state government expected an investment of Rs10,000 crore in new-generation industries in the near future, he said. To capitalise on the potential in food processing, it was proposed to develop mega zones in select districts and create umbrella brands for the state’s agro-products.
To avoid confrontation for getting land for expansion of industries, developers would be allowed a ‘call option’ on buying adjacent land in future by remitting an annual premium to the government for a fixed period of years, Kareem said.

While acquiring land for industrial purpose, landowners would get the market value and, as far as possible, farm land would not be used for industry, he added.

The traditional industrial sector would be protected along with setting up of three industrial corridors for development of new generation industries like IT, ITeS, biotechnology, hitech electronic, food processing and textiles.

Source: Livemint

First Click For NRI Investors

When an NRI wants to invest in India, what is his first step? Look for opportunities in India through different government bodies promised as 'a one-stop shop'. As if all the existing bodies to attract investment were not enough, the ministry for overseas Indians launched a new one last week - the Overseas Indian Facilitation Centre (OIFC).

Exploring on the Net, the NRI will come up with many different sites of the Indian government crying for foreign investment in India, especially from NRIs. Frustrated by India's red tape, NRIs want 'a single window' to handle all their queries and hold their hand until they get the approvals.NRIs have been promised and provided 'a single window' to invest in India time and again.

Much before the Internet and since the days of forms that were filled up by hand, the one stop point of contact for NRI investors has always existed in one form or the other.All these government-run facilities, as part of different ministries, remained overburdened with red tape and bogged by infinite delays. Over time, they morphed into new ones promising to be better - and faster - than before.

This has happened at both the central and state government levels. Every new government that takes power in New Delhi or in states wants to boost investment and so investment promotion with foreign tours is the first priority.Just search the web, and an NRI will find dozens of groups all out to assist him to invest in India.

The Indian Investment Centre, a government body with more than three decades of rich experience in investment promotion, is the first contact point and is the single window agency for authentic information or any assistance that may be required for investments, technical collaborations and joint ventures.All its services are free of charge, claims its home page. Of course, it has a special section for NRIs who are offered 'escort services' that include match making, arranging meetings and forwarding applications.

The ministry of commerce and industry is responsible for foreign direct investment (FDI) in India and has a unit to promote investment. The Foreign Investment Promotion Board under the finance ministry approves the investments. The approved projects are listed regularly.Then most state governments have an investment promotion centre as a separate body or a part of one of its ministries. These can also be accessed on the Internet. So what is special about the latest body to tempt NRIs to sink their money in India?

Private sector partnership!This can perhaps be expected to be more efficient as it has the Confederation of Indian Industry (CII) in partnership with the ministry of overseas Indians and is meant for NRIs and not large businesses.The CII organized the Pravasi Bharatiya Divas this year for NRIs and the event showed some improvement in achieving its aims. One of the demands made by NRIs was the creation of a centre where their abilities, qualifications and experience could be harnessed for India's progress instead of merely attracting their funds.Within five months, this demand has been answered with OIFC.

Its website, www.oifc.in, has almost the same information as the other investment promotion sites like India's economic progress. But the section on 'Opportunities in India' is a misnomer. As one goes to it to get a list of potential investment projects, one finds snippets of interesting economic information like 'India has more billionaires than China'! Surely, CII can do much better than this!The centre, through its website and offices, will provide reliable data on investment opportunities free of charge and assist in getting individual projects cleared as a paid value added service.

If the investment opportunities are free, it is hoped that these are listed on its site soon since CII should have a database of these projects both state-wise and sector-wise.The centre will provide 'authentic and real time information', promised Minister for Overseas Indian Affairs Vayalar Ravi. This will include consular and financial services and related advice.

The centre will screen the opportunities available in the country before listing these for NRIs so that they do not fall prey to "fly-by-night operators" and cheats, said Ravi. Thankfully, the centre will be managed by CII and will operate as a non-profit trust.In June, CII is holding a meeting with about 100 NRIs in the US to inform them about this centre in partnership with industry.

India hopes to attract $32 billion investment this year.NRIs remitted $23 billion last year mostly for their family members. Will they invest more after their first click at this new site? Only time will tell.

Govt Draws Plan To Encourage NRI Investments

India has chalked out a plan which involves setting up of a diaspora knowledge network, an investment unit and a research foundation to encourage NRIs to invest and participate in the economic development of the country.

Under the plan, the Government would set up an Indian Diaspora Knowledge Network to share knowledge of Indians living abroad for mutual benefit, an Overseas Indian Investment Unit to encourage NRI investment and Overseas Indian Research Foundation to share the scientific experience of people of Indian origin living abroad, G Gurucharan, joint secretary in the Ministry of Overseas Indian Affairs said.

The Government is committed to harness diaspora knowledge resources, promote individual initiatives and catalyse community action as partners in progress of the country, he told a meeting organised by the Indian Consulate here yesterday.

Gurucharan invited NRIs to participate in large numbers at the forthcoming fourth Pravasi Bharatiya Divas being held in Hyderabad from January 7-9 next year.

The conference would provide a global forum for the people of Indian origin to establish networks for mutually beneficial engagement with India.

He said that knowledge and technology alliance between NRIs, the Government and other institutions would generate intellectual property and would be for mutual benefit.

Satish Mehta, Consul General of India, said Indian Consulate in Toronto would open registration for Overseas Citizens of India here from December 19, and it would go a long way in helping people of Indian origin to have hassle free visit to their homeland.

Source: Hindustantimes

Process Of Investment in India For NRIs

When India looks for investments in various sectors, among others, it turns to the NRIs, the case in point being Resurgent India Bonds. The process of investment into India has progressively been made simpler and in many cases, no permission from the RBI is needed before investing in India.

However, before we discuss the actual process of investment for the NRIs, let us look at some of the issues faced by the NRIs when they invest in India currently. Investing in India is typically a one time event every year when they come to India. Massive mis-selling occurs due to time pressure and the need to close a deal.

The ‘MUST’ list

>>Get a PAN as it’s the most important document required by NRIs.
>>Open an NRE account to maintain repatriability of the funds invested in India.
>>Have a local representative to invest in illiquid assets.
>>Find a financial advisor to get legal and international tax advice.
>>The financial planner should help the NRI develop a long range financial plan for investment of his assets and insurance needs

Process of investing in India

Get a PAN: The most important document or registration required by NRIs is the Permanent Account Number (PAN). This is available to many first generation NRIs as a legacy of their stay and working in India. Getting a NRI PAN card is easy with the private PAN facilitation centres, which issue PAN within a few days.

Opening a banking relationship: Since all the investing transaction require a banking channel (buying and selling, parking funds, etc), opening a bank account is the next steps. Banks are more than eager for NRI accounts since they tend to maintain higher balances and offer great opportunities for cross selling. Open an NRE account to maintain repatriability of the funds invested in India. Banks allow NRIs to nominate a local representative who has the “mandate” to operate the banking account on their behalf.

Appoint a local representative: Investing in illiquid assets like real estate might require the NRI to appoint someone in India as his local representative. The NRI needs to give a “power of attorney” to the local representative detailing the powers that the representative can exercise on behalf of the NRI.

If the NRI does not want the hassle of writing cheques to his insurance company or to his mutual fund company, he can give his local representative the right to sign, invest and redeem on his behalf.

Identifying a financial advisor: Similar tests apply for the NRI when it comes to choosing a financial advisor. He needs to find someone who can win his trust. He needs to look at the ability of the advisor to service him. The client should not be too large or too small for the advisor.
Look at the ability of the financial advisor to provide legal and international tax advice. This can be important, especially since the NRI might do many transactions “sight-unseen” and across tax-geographies. In case of professionals, if the company has accredited financial advisors, then the professional knows where to go.

Deciding on asset allocation and insurance needs: The financial planner should help the NRI develop a long range financial plan for the investment of his assets as also for the insurance needs of the client. While it may not always be feasible for the advisor in India to research the market dynamics across the portfolio of his client, he should have a basic understanding of the risks on his client’s portfolio. Depending on the long-term needs of the client, the advisor needs to decide his India and Indian rupee allocation.

Understanding of the local laws (including taxes) and customs: There can be many quirks in the local law that the NRI should know. For example, while repatriation of sale proceeds of house property is allowed, it is limited to two such repatriations per individual. Similarly, capital gains bonds are available only up to Rs 50 lakh per person per year.

In case the NRI has made larger capital gains, he will need to pay the tax on that or reinvest in another property. Similarly, an understanding of the local customs can go a long way in helping the NRI set expectations correctly. While there is increasing professionalisation on the real estate development, there are many cases when the projects take much longer to complete.

Source: Economictimes

NRIs May Face 3 Year Pre-IPO Realty Lock-In

The government is planning to plug another potential source of foreign funds for the real estate sector. Non-resident Indians planning to invest in real estate projects ahead of initial public offers could face a three-year lock-in along with foreign institutional investors (FIIs).

The government is planning to introduce a lock-in for pre-IPO FII investors in realty companies in bid to prevent a possible real estate bubble. The restrictions are also aimed at checking sudden flight of capital.

By putting a lock-in period for NRIs, the government could also effectively discourage the promoters' own funds coming into the company through the NRI route. Indian promoters are generally known to use NRIs as fronts to get their own money abroad invested in their companies. A lock-in period might act as a deterrent for promoters bringing such funds through the NRI route.

The government is likely to amend the Foreign Exchange Management Act to make all pre-IPO investments face a three-year lock-in, a government source said. However, the other conditions such as minimum capitalisation and area of development will be limited to foreign direct investments.

Real estate companies which are planning to hit the capital market will have to tweak their plans to meet the proposed norms, expected to be notified shortly. Some real estate companies that have sought permission for making pre-IPO placement to FIIs have been told to wait till the government finalises the foreign investment norms for the real estate sector.

Up to 100% FDI is allowed in realty projects with certain conditions like a three-year lock-in on investments, minimum capitalisation of $5 million and development of at least 10 hectares of land. These conditions are applicable on all foreign investors, including NRIs.

Earlier, there were differences between the Department of Industrial Policy & Promotion and the finance ministry on the treatment of pre-IPO placements. DIPP had favoured treating pre-IPO placement to FIIs as portfolio investment.

However, the Reserve Bank and the finance ministry were of the view that pre-IPO investments by FIIs cannot be treated as portfolio investment and the FDI norms be adhered to. Nearly half of the over $4-billion foreign investments which came in real estate sector in 2006 was through private placements.

Source: Economictimes