Overseas Citizens of India (OCI) card holders may sell Indian property, but this is subject to regulation under the Foreign Exchange Management Act (FEMA). OCI holders are free to sell commercial and residential property, but sales of agricultural land, plantation property, and farmhouses are restricted and may only be sold to Indian citizens. Tax payments and repatriation regulations need to be adhered to in foreign remittance.
Important Rules for Property Sale in India:
1. FEMA Rules
- Every sale of property by an OCI cardholder in India is governed by the Foreign Exchange Management Act (FEMA).
- FEMA regulates how the sale proceeds may be used and repatriated to a foreign bank account.
2. Eligible Buyers
- OCI cardholders are eligible to sell residential and commercial properties to:
- Indian nationals
- Other OCI cardholders
- Non-Resident Indians (NRIs)
3. Restricted Sales of Property
- Farmhouses, plantation properties, and agricultural land may not be sold to another OCI or NRI.
- These properties could only be sold to Indian citizens according to Indian property regulations.
4. Capital Gains Tax Liability
- OCI cardholders who are selling property in India have the liability to pay Capital Gains Tax based on how long they have held the property:
- Short-Term Capital Gains (STCG): If they have held the property for less than 2 years, the gains are taxed at the individual's relevant income tax rate.
- Long-Term Capital Gains (LTCG): If the holding period is above 2 years, the profits are taxed at 20% with indexation advantage.
5. Power of Attorney for Selling Property
- OCI cardholders can either sell their property on their own or through Power of Attorney (PoA).
- If the vendor is overseas, they can also appoint a person of trust in India to settle the sale.
- Sale documents need to be signed, notarized, and mailed to India for processing.
6. Repatriation of Funds
- The sale proceeds may be repatriated abroad by the OCI card holder subject to RBI guidelines.
- As much as USD 1 million during one financial year may be repatriated properly documented.
7. Legal Documentation
- Valid sale deed, property title, and tax clearance certificates should be in hand to effectuate the sale.
- Advisory opinion of an attorney would keep one abidant by the Indian law relating to the properties.
