According to the Foreign Exchange Management Act (FEMA) of 1999, an Indian Citizen who stays abroad for employment/business or whose stay in India is less than 182 days in the previous financial year.
PIO is a person of Indian origin whose predecessors were born in India; s/he does not have Indian citizenship but has an Indian ancestry.Person of Indian Origin means a foreign citizen (except a national from Pakistan, Afghanistan, Bangladesh, China, Iran, Bhutan, Sri Lanka and/or Nepal) who:
- 1. has had Indian Passport at any time
- 2. S/he, parents or grandparents were Indian citizens and resided in India as defined by the Government of India Act 1935.
- 3. is a spouse of an Indian citizen or a PIO
An NRI can buy any number of residential or commercial properties in India except Plantations, agricultural Land and farmhouses. According to the RBI guide lines, an NRI/PIO can also acquire a residential property as a gift from an Indian, NRI/PIO. S/he can also inherit a residential property from a person who is a resident of India as per the Provisions of Section 6(5) of the FEMA, 1999.
As per FEMA and RBI guidelines the NRI’s or PIO’s are not required take any special permission or file a document to purchase an immovable residential in India.
An NRI/PIO can buy any number of residential/commercial properties. There is no restriction on the number of properties, however, plantations, agricultural Land and farmhouses are restricted to an NRI/PIO.
An NRI can sell his or her property in India to an Indian resident/ NRI / PIO.
Under general permission a PIO can sell his or her residential property in India to an Indian citizen only.
Yes. An NRI/PIO can transfer their residential property in India by way of a gift to an Indian resident/NRI/PIO.
Under the guideline of RBI and FEMA, an NRI/PIO may purchase a residential property in India by funds remitted to India through normal banking channels or funds held in his/her NRE/FCNR (B)NRO accounts. The payment has to be made in Indian currency through any of the above mentioned ways.
RBI has given directives and general permission to the banks, financial institutions and authorised dealers to provide loans to the NRI/PIO for acquiring a residential property for personal use but subject to certain conditions. The purpose of the loan, margin money and the quantum of loan will be at par with those applicable to housing loans to residents. Repayment of loan should be made within a period of 15 years out of inward remittances or out of funds held in the investors' NRE/FCNR/NRO accounts. The repayment tenure has been increased to 25 years in current times due to the increase in Interest rates.
An NRI needs to submit the following documents:
- 1. A copy of passport and visa.
- 2. A copy of the appointment letter and contract.
- 3. A copy of the labour card/identity card (translated in English duly countersigned by the consulate) if employed in the Middle East.
- 4. Salary certificate (in English) specifying name, date of joining, designation and salary details.
- 5. Bank statements for the last six months-both domestic (NRE/NRO/FCNR) and international Contract slip with income details in case employed in the merchant navy.
- 6. Copy of local income tax returns filed in the country of residence.
- 7. Loan eligibility can be enhanced by taking a joint loan with relatives. However, for credit reasons banks allow only a select list of relatives to be joint owners of the property.
Reserve Bank of India has given permission to the NRI’s to let out any immovable property in India on rent. The rental income or proceeds of any investment of such income are eligible for repatriation.
NRI/PIO may repatriate up to US $ 1 million per financial year (April-March) from their NRO account which would also include the sale proceeds of immovable property. There is no lock in period for sale of immovable property and repatriation of sale proceeds outside India.
Yes. An NRI can avail home loan to buy commercial or residential property in India.
RBI has directed nationalized/private Banks and NBFC to provide Home Loan to the NRI’s.
There are various points that an NRI should remember while investing in a property:
- 1. It is important to check the RERA registration of the seller/developer.
- 2. Check project approvals and they can be verified from the corporation or the sanctioning authority.
- 3. Ownership document should be confirmed from the concerned department.
- 4. Sale deed, No Objection Certificate (NOC) from builder/developer, NOC from banks, Building Plan approvals, completion certificate should be checked and verified.
An NRI has to pay tax in the country from where the income is being generated but the tax is not payable on the entire rental income however there are some deductions an NRI can avail.
- 1. Standard deduction at the rate of 30% on the taxable value.
- 2. Taxes are to be paid to the municipal authority with respect to the concerned rented property.