28 May 2019
Rules for NRIs Investment in Indian Real Estate
Transfer of funds from an entity outside India to an India entity under FEMA :
a) Money can be transferred under FEMA if the buyer and seller have a SOW in place and goods / services have changed hands. The seller ( the Indian entity) can raise invoices for the goods/service provided (cost + profit) on the foreign entity.
b) Alternatively, they can bring in the money by way of advance against services but there are conditions attached to this as outlined below: -
FEMA mandate exporters and importers to settle down their transactions within certain time line. Settlement Beyond prescribed time line could attract severe consequences to importer/exporter.
Realization and Repatriation of Export Proceeds
The amount representing the full export value of the goods exported shall be received through an Authorized Dealer Bank (AD Bank).
Time limit for Advance Receipt
- Where an exporter receives advance payment (with or without interest), from a buyer outside India, the exporter shall be under an obligation to ensure that the shipment of goods is made within one year from the date of receipt of advance payment.
- Provided that in the event of the exporter’s inability to make the shipment, partly or fully, within one year from the date of receipt of advance payment, no remittance towards refund of unutilized portion of advance payment or towards payment of interest, shall be made after the expiry of the said period of one year, without the prior approval of the Reserve Bank.
- Upon AD Bank satisfaction, company can receive long term export advance up to a maximum tenor of 10 years to be utilized for execution of long term supply contracts for export of goods subject to the conditions as provided in the act.
Time limit for Normal export of goods / software / services
- It is obligatory on the part of the exporter to realize and repatriate the full value of goods / software / services to India within nine months from the date of export. Re-import into India within period specified for realization of export shall be deemed to be realization of full export value of such goods.
- AD Bank may consider request for refund of export proceeds of goods exported from India and being re-imported into India on account of poor quality.