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Is there a limit on money transfers from India to UAE?

Ashish Mehta/Dubai
Filed on November 24, 2019 | Last updated on November 27, 2019 at 07.23 am
India, UAE, Money transfer, RBI

(Photo: Alamy)

Know the law in the UAE.

I have availed loans in the UAE and intend to repay them by selling off my property in India. Can I transfer the proceeds from the sale of a property in India to the UAE? Are there any restrictions imposed by the government of India on the amount of funds transferred to the UAE? Do I have to take permission from the Reserve Bank of India and the Central Bank of UAE for the transfer of funds from India to the UAE?

Answer

Pursuant to your queries, it is assumed that you are a Non-Resident Indian (NRI) currently residing in the UAE and the property which you intend to sell is located in India. Therefore, the provisions of the Foreign Exchange Management Act of 1999 (the 'FEMA'), the regulations of the Foreign Exchange Management (acquisition and transfer of immovable property in India) Regulations of 2000 read with Master Circular No. 4/2013-14 (the 'acquisition and transfer regulations') and the Foreign Exchange Management (remittance of assets) Regulations of 2016 (the 'remittance of assets regulations') issued by the Reserve Bank of India (the 'RBI') are applicable.

As your residency status in India is that of a Non-Resident Indian (NRI), it may be noted that you may through your Non-Resident Ordinary (NRO) bank account remit up to $1,000,000 out of India the sale proceeds of the property acquired by way of inheritance/legacy. This is in accordance with Regulation 3.2 (i) of the Remittance of Assets Regulations, which states: "Authorised dealers may allow NRIs/ Person of Indian Origin (PIO), on submission of documentary evidence, to remit up to $1,000,000, per financial year:

(i) out of balances in their NRO accounts/ sale proceeds of assets/ assets acquired in India by way of inheritance/ legacy.

Where the remittance is to be made from the balances held in the NRO account, the authorised dealer should obtain an undertaking from the account holder stating that (the said remittance is sought to be made out of the remitter's balances held in the account arising from his/ her legitimate receivables in India and not by borrowing from any other person or a transfer from any other NRO account and if such is found to be the case, the account holder will render himself/ herself liable for penal action under FEMA)." It may, therefore, be noted that the sales proceeds up to $1,000,000 may only be remitted from India if the property was acquired by way of inheritance/legacy.

For the property which is acquired by way of purchase, an NRI may repatriate the sale proceeds provided the conditions mentioned under Regulation 5 (A) (b) of the Acquisition and Transfer Regulations are met. The conditions being:

"(i) the immovable property was acquired by the seller in accordance with the provisions of the foreign exchange law in force at the time of acquisition by him or the provisions of these regulations;

(ii) the amount to be repatriated does not exceed:

-the amount paid for acquisition of the immovable property in foreign exchange received through normal banking channels, or
-the amount paid out of funds held in foreign currency Non-Resident Account, or
-the foreign currency equivalent (as on the date of payment) of the amount paid where such payment was made from the funds held in Non-Resident External account for acquisition of the property; and
(iii) in the case of residential property, the repatriation of sale proceeds is restricted to maximum two such properties."

Further, the prior permission of the RBI is necessary for remittance in excess of $1,000,000 per financial year for the properties acquired by inheritance/legacy.

This is in accordance with Regulation 4.1 (a) (ii) of the Remittance of Assets Regulations, which states: "Prior approval of the Reserve Bank is necessary for remittance of assets where: a) Remittance is in excess of $1,000,000 per financial year (ii) by NRIs/ PIOs out of the balances held in NRO accounts/ sale proceeds of assets/ the assets acquired by way of inheritance/ legacy." However, it may be pertinent to note that if the property was acquired by an NRI by way of purchase and not by way of inheritance/legacy, the NRI or his successor shall not, except with the prior permission of the RBI, repatriate outside India the sale proceeds of any immovable property.

This is in accordance with Regulation 5 (A) (a) of the Acquisition and Transfer Regulations, which states: "A person referred to in sub-section (5) of Section 6 of the FEMA, or his successor shall not, except with the prior permission of the Reserve Bank, repatriate outside India the sale proceeds of any immovable property referred to in that sub-section."

No prior permission is required by the Central Bank of the UAE to receive funds from India. You may consult a chartered accountant or a legal practitioner and the bank with which you hold an NRO account in India.

Know the law

If a property is acquired by an NRI by way of purchase and not by way of inheritance/legacy, the NRI or his successor shall not, except with the prior permission of the RBI, repatriate outside India the sale proceeds of any immovable property

Ashish Mehta is the founder and Managing Partner of Ashish Mehta & Associates. He is qualified to practise law in Dubai, the United Kingdom and India. Full details of his firm on: www.amalawyers.com. Readers may e-mail their questions to: news@khaleejtimes.com or send them to Legal View, Khaleej Times, PO Box 11243, Dubai.


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