NRIs

A Non Resident Indian (NRI) is an individual who is an Indian Citizen but has migrated to another country permanently or temporarily for the purpose of employment, education, etc. Other terms, commonly used for an NRI are Overseas Indian, Expatriate or Indian Expatriate.

Any person who was born an Indian Citizen but over time has chosen the citizenship of another country is considered a Person of Indian Origin (PIO).

Yes, The Reserve Bank of India has clearly granted permission to all Non Resident Indians (NRIs) & Foreign Citizens of Indian origin (PIOs) to acquire & dispose immovable property in India, be it Residential or Commercial Property. However the RBI has a restriction on the purchase of Agricultural Land/Plantation Property or Farmhouses in India.

Any NRI or PIO interested in the purchase of Agricultural Land/Plantation Property or Farmhouses in India would have to send a formal request for the same to The Chief General Manager, Reserve Bank of India.

No, NRIs and PIOs do not require the permission of the RBI in order to transfer immovable property to any Indian Citizen, NRI or PIO.

Yes, there is no clause by the RBI, which restricts an NRI or PIO to rent the properties acquired by them. The amount received from rentals can also be repatriated back to the country they are residing in, without any restriction.

Yes, the sale proceeds of immovable property can be remitted out of India to the home country of the NRI or PIO, up to the maximum limit of the consideration amount originally remitted from abroad to purchase the property. However, the property has to be sold after a period of three years, from the date of the final purchase deed or from the date of payment of final instalment of consideration amount, whichever is later.

Additionally, the following points also need to be adhered to in this respect:

Authorised dealers can allow remittances up to USD 1 million for any purpose, per calendar year from balances in NRO accounts, subject to payment of applicable taxes. The limit of USD 1 million per year includes sale proceeds of immovable properties acquired by the NRI/PIOs while they were residents in India and held the property for a period of 10 years and above. In case the property is sold after being held for less than 10 years, remittances can be made if the sale proceeds were held for the balance period in an NRO account or in any other eligible instruments.

Yes, NRIs can appoint a Power of Attorney to complete all loan formalities towards the purchase of a property in India, considering the fact that an NRI wouldn't be in India for long periods.

Yes, an NRI can purchase a Property by means of borrowing money from a close relative outside India. However, the sum borrowed should not be in excess of USD 250,000 or its equivalent, subject to the conditions that:

According to the RBI guidelines a Close relative' means relative, as defined in Section 6 of the Companies Act, 1956. A person shall be deemed to be a relative of another if, and only if:

  • They are members of a Hindu undivided family
  • They are husband and wife
  • The one is related to the other in the manner indicated in Schedule IA.

The Reserve Bank of India has not fixed any restrictions on the purchase of Residential/Commercial properties for both Non Resident Indians (NRIs), as well as Foreign Citizens of Indian Origin (PIOs). However, the RBI has a restriction in the purchase of Agricultural Land/Plantation Property or Farmhouses in India.

Yes, The Reserve Bank of India has not applied any restrictions on NRIs or PIOs to acquire or dispose residential/commercial property, by way of gifts to other Indian citizens, NRIs or PIOs, unless the immovable property is an Agricultural Land/ Plantation Property or Farmhouse.

Yes, The RBI has granted permission to financial houses to provide loans to NRIs for the acquisition of house/flats for self-occupation, subject to banking terms and conditions. Although, the repayment of the loan needs to be completed within a 15 year period, through inward remittances or out of the funds held by the investors in their respective NRE/NRO or FCNR Accounts. An NRI or PIO can get a home loan up to 85% of the total consideration value of the property.

There aren’t any tax implications for NRIs for the purchase of properties in India, however, any income earned from rental of a residential property would be taxable under House Property, in the Income Tax Act of 1961. Income earned out of rental of a commercial property would be taxable under Business Income in the Income Tax Act of 1961 & Income earned from the sale of a property is taxable under Capital Gains of the Income Tax Act of 1961.

For further information, you may visit the FAQs section of rbi.org

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