As per India's Foreign Exchange Management Act (FEMA) 1999, an NRI or Non-Resident Indian is a citizen of India, or a foreign national of Indian-origin, living outside India for employment, business or any other vocation, which would indicate his intention to stay outside India for an indefinite period. An Indian would also be termed as an NRI if his stay in India is less than 182 days during the previous financial year (April-March).
PIO or Person of Indian Origin means an individual (excluding citizens of Pakistan, Bangladesh, Sri Lanka, China, Afghanistan, Iran, Nepal or Bhutan), who at any time held an Indian passport, or who himself/herself or either of his/her parents, or either or any of his/her grandparents were a citizen of India according to the Indian Constitution.
As per India's Foreign Exchange Management Act (FEMA) 1999, a person resident in India is a person residing in India for more than 182 days during the previous financial year (April-March) and who has come to, or stays in India either for employment, business or for any other vocation.
No, NRIs do not require any consent from any regulatory body to buy residential or commercial properties in India. However, NRIs cannot buy agricultural/ plantation land in India.
There is no limit to the number of properties that NRIs can purchase in India.
Yes, an NRI can buy a property in India in partnership with an Indian citizen/ NRI/ PIO. However, they cannot buy a property in partnership with any foreign citizen.
The housing loan needs to be paid upfront for the entire tenure of the loan, by way of direct remittances from abroad through normal banking channels, or from other financial accounts as may be permitted by RBI.
Generally, payments are done through NRO, NRE, NRNR and FCNR accounts. These allowed accounts may change as per RBI regulations.
According to the Income Tax Act, if any buyer (Indian resident or NRI) owns more than one property, then only one will be assumed as self-occupied. On other properties, income tax will be levied on the rental income (actual or deemed). Hence, if an NRI owns more than one global property, then income tax will be levied on the Indian property, on the rental income of the Indian property (irrespective of whether the property is rented out or not.)
An NRI has to pay capital gain tax on the profit made by selling a property. If a property is held for 3 years or less following the actual possession, then short-term capital gain tax is paid. The gain will be included in the total income & normal slab rates will be applied. However, if the property is held for more than 3 years, then long-term tax rates will be applicable. This will include 20% tax rates plus applicable cess.
No tax benefits are available for NRI's, unless you file your returns, and subsequently become eligible to avail them.
In case of residential properties, the repatriation of sale-proceeds is restricted to not more than two properties, and only if the property was purchased from funds held in an NRE Account
Additionally, the amount repatriated out of India should not exceed the amount paid for acquisition of the immovable property in the foreign exchange received through normal banking channels, or from the funds held in FCNR or NRE Account
In case the property is being acquired through rupee sources, an NRI/PIO is permitted to remit an amount up to USD one million/ financial year out of the balances held in the NRO account.
Just like Indian residents, NRIs can avail home loans. The eligibility depends on similar parameters such as qualification, current job profile, chances of continuing abroad during the loan period, etc.
NRIs are required to submit a few additional documents for home loans. These include:
- A copy of the passport
- A copy of their works contract or the labour card
- A Power of Attorney (POA) as the borrower is not based in India
NRIs/ PIOs can purchase a property through funds remitted through normal banking channels or through his/ her NRE/ FCNR (B)/ NRO account. No amount for the purchase can be paid outside of India.
Home loan offered to NRIs do not exceed 5 years in major cases. However, some financial institutions offer loans for a term of 7 years as well.
The repayment for the loan is done through EMIs which usually begin after the entire loan is disbursed.
In cases which involve part disbursement, you need to pay simple interest, at the interest rate applicable on the amount disbursed.
The eligibility is calculated in the same way as it is done for resident Indians with special emphasis on:
- Qualifications - Graduate (minimum)
- Current job-profile and work experience
- Chances of continuing working abroad for the duration of the loan’s tenure
- Chances of servicing the loan with an extended tenure, in case the applicant needs to return to India
- A house which is either ready to move in, under construction or bought from another owner, an NRI is eligible to apply for home loans
- For construction of a property on a plot of land by self
- To purchase a plot allotted by a society/development authority
- To renovate or improve upon an existing property in India
Yes, the RBI has granted general permission for sale of property. However, where another foreign citizen of Indian origin purchases the property, funds towards the purchase consideration should either be remitted to India, or paid out of balances in non-resident accounts maintained with banks in India.
Yes. Under the general RBI guidelines, NRI/PIO may acquire residential/commercial property by way of gift from a person resident in India or an NRI or a PIO.
With specific approval from the RBI, a resident outside India may hold an immovable property in India acquired through inheritance from a person resident outside India, provided the owner had acquired such property in accordance with the regulations of the foreign exchange law in force at the time of acquisition, or in accordance with FEMA guidelines.
No. A person resident outside India cannot acquire by way of purchase agricultural land/plantation property/farm house in India.
Yes. A person resident outside India can hold immovable property acquired by way of inheritance from a person resident in India, as per the provisions of Section 6(5) of the Foreign Exchange Management Act, 1999.
Yes. A Foreign National of non-Indian origin, including a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan, can acquire residential properties on lease in India. Provided the lease does not exceed five years, he/she does not require any prior permission from the RBI.
