Non-Resident Indians are: Indian citizens who stay abroad for employment or carrying on business or vocation outside India or for any other purpose in the circumstances indicating an indefinite period of stay abroad
Person of Indian Origin (PIO): A foreign citizen is considered to be a PIO if:
(i) foreign citizen is considered to be a PIO if:
(ii) the person held an Indian Passport at any time or the person or person's father or paternal grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955. However, this does not apply to citizens of Pakistan, Bangladesh, Afghanistan, Bhutan, Sri Lanka or Nepal.
A) What type of property can NRIs buy in India?
NRIs can buy any type of property in India except an agricultural or plantation property. However, they sure can inherit such land.
B) What are the documents required for buying a property?
(i) Pan Card (Permanent Account Number)
(ii) OCI/PIO card (in case of OCI/PIO), Passport (in case of NRI)
C) Do I need to take consent from the RBI prior to purchasing a property in India?
No, an NRI does not require consent to buy any immovable property other than agricultural/plantation property.
D) How can an NRI fund property purchase in India?
An NRI can simply fund his property purchase in India with the foreign currency brought to the country through legitimate banking channels. Another way is to hold an NRE or NRO account in India and make a payment by writing a cheque through that account. The foreign funds in NRIs FCNR account can also be used to make a property purchase in India.
E) Can NRIs get a home loan in India?
Yes. NRIs and PIOscan gets easy home loans in India. Some lenders also ensure hassle-free paperwork. But the country’s legislative restrictions are there, so you should consult an expert before going for a home loan in India. There are some Income Tax benefits on you avail a loan.
F) What are the guidelines for NRI/PIOs to obtain loans for purchasing residential/commercial property in India?
(i) The quantum of loans, margin money and the period of repayment shall be at par with those applicable to housing finance provided to a person residing in India.
(ii) The loan amount shall not be credited to Non-resident External (NRE)/Foreign Currency Non-resident (FCNR)/Non-resident non-repatriable (NRNR) account of the borrower.
(iii) The loan shall be fully secured by equitable mortgage by deposit of title deal of the property proposed to be acquired, and if necessary, also be a lien on the borrower’s other assets in India.
(iv) The instalment of loan, interest and other charges, if any, shall be paid by the borrower by remittances from outside India through normal banking channels or out of funds in his Non-resident External (NRE)/Foreign Currency Non-resident (FCNR)/Non-resident Non-repatriable (NRNR)/Non-resident Ordinary (NRO)/non-resident Special Rupee (NRSR) account in India, or out of rental income derived from renting out the property acquired by utilization of the loan or by any relative of the borrower in India by crediting the borrower’s loan account through the bank account of such relative (The word ‘relative’ means ‘relative’ as defined in section 6 of the Companies Act, 1956.)
(v)The rate of interest on the loan shall conform to the directives issued by competent authority.
G) What is Power of Attorney (POA)?
If the NRI investor cannot come to India in order to get the property registered in his name, he can exercise the Power of Attorney. He can give POA to a relative in India who will sign the papers on his behalf. A POA, issued abroad is to be signed by both the parties in the present of a consulate officer.
H) What about the taxes?
Just owning property in India does not make you liable for tax payment.
Tax is applicable on the income from rent, if the house is let out and the annual value of the house, if it is not the only residential property owned by this person in India.
If you sell the property, short-term or long-term capital gains tax on the profit will be applicable. But if you invest the profit in another property within 6 months of the sale, the tax gets waived off.
I) Can the proceeds from renting or selling the property be remitted to another country?
You can repatriate the rental income after paying the necessary tax applicable to the income generated. There are certain rules governing the repatriation of income generated from the sale of a property in India- The amount to be repatriated does not exceed
(i) the amount paid for acquisition of the immovable property in foreign exchange received through normal banking channels or out of funds held in foreign currency non-resident account or
(ii)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. In case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties. Authorized dealers can allow remittance up to USD 1 million for any purpose, per the calendar year from balances in NRO accounts subject to payment of applicable taxes.
If the property was acquired out of Rupee sources, NRI/PIO may remit an amount up to USD one million, per financial year, out of the balances held in the NRO account (inclusive of sale proceeds of assets acquired by way of inheritance or settlement), for all the bonafide purposes to the satisfaction of the Authorized Dealer bank and subject to tax compliance. The NRI/PIO may use this facility to remit capital gains, where the acquisition of the subject property was made by funds sourced by remittance through normal banking channels/by debit to NRE/FCNR(B) account.
J) Can I gift my residential/commercial property?
Yes, you can gift the property to a person resident in India or to an NRI or PIO.