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NRI FAQ - Property In India - Buy,Sell,Rent
Q : Under the extant foreign exchange regulations to whom is general permission available for purchase of immovable property in India ?
Q : Who can buy property in India other than resident Indian?A : General Permission is available to purchase only a residential / commercial property in India to a person resident outside India who is a citizen of India (NRI) or who is a person of Indian origin (PIO).Q : Who is a Person of Indian Origin (PIO)Q : Who is NRI?A : For the purpose of acquisition and transfer of immovable property in India, a PIO means an individual (not being a citizen of Pakistan or Bangaladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan), who (i) at any time, held Indian passport, or (ii) who or either of whose father or grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955).Q : Is NRI / PIO who has purchased residential / commercial property under general permission required filing any documents with Reserve Bank of India?A : NRI / PIO who has purchased residential / commercial property under general permission is not required to file any documents with the Reserve Bank.Q : Does Reserve Bank determine the residential status of a person for the purpose of acquisition of immovable property in India ?A : Under FEMA residential status is determined by operation of law. The onus is on an individual to prove his / her residential status if question by any other authority.Q : What is meant by a person resident in India ?A : From FEMA angle, a person resident in India means a person residing in India for more than one hundred and eighty-two days during the course of the preceding financial year (April-March) and who has come to or stays in India either for taking up employment, carrying on business or vocation in India or for any other purpose, that would indicate his intention to stay in India for an uncertain period. In other words, to be treated as `a person resident in India' under FEMA a person has not only to satisfy the condition of the period of stay (being more than 182 days during the course of the preceding financial year) but has also to comply with the condition of the purpose / intention of stay.Q : Where are the terms a `person resident in India' and a `person resident outside India' defined?A : Section 2 (v) and Section 2 (w) of the FEMA, 1999 defines `person resident in India' and a `person resident outside India' respectively.Q : Is a person resident in India governed by the provisions of Foreign Exchange Management (Acquisition and transfer of immovable property in India) Regulations, 2000 ?A : A person resident in India who is a citizen of Pakistan or Bangaladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan is governed by the provisions of Foreign Exchange Management (Acquisition and transfer of immovable property in India) Regulations, 2000.Q : Is there any restriction on the number of residential / commercial properties that NRI / PIO can purchase under the general permission available?A : There is no restriction on the number of residential / commercial properties that NRI / PIO can purchase under the general permission available.Q : Can NRI or PIO buy property in India jointly with foreign citizen?A : No. a foreign national of non-Indian origin resident outside India cannot acquire any immovable property in India by way of purchase.Q : Can NRI or PIO buy property in india jointly with other indian citizen / PIO?A : YesQ : Can a foreign national of non-Indian origin acquire residential property on a lease in India?A : Yes. A Foreign National of non-Indian origin including a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan may acquire only residential accommodation on lease, not exceeding five years for which he / she does not require prior permission of Reserve Bank of India.Q : Can a person resident outside India (i.e,. a NRI or a PIO or a foreign national of non-Indian origin) acquire agricultural land / plantation property / farm house in India by way of purchase ?A : A person resident outside India cannot acquire by way of purchase agricultural land / plantation property / farm house in India.Q : Can NRI / PIO acquire residential / commercial property by way of gift under the general permission available ?A : Yes. Under the general permission available NRI / PIO may acquire residential / commercial property by way of gift from a person resident in India or a NRI or a PIO.Q : Can a foreign national of non-Indian origin resident outside India acquire residential / commercial property in India by way of gift ?A : Under section 2(ze) of the Foreign Exchange Management Act, 1999 `transfer' includes among others, `gift'. Therefore, a foreign national of non-Indian origin resident outside India cannot acquire residential / commercial property in India by way of gift. .Q : Can a person resident outside India (i.e. a NRI or a PIO , or a foreign national of non-Indian origin) acquire agricultural land / plantation property / farm house in India by way of gift ?A : A person resident outside India cannot acquire agricultural land / plantation property / farm house in India by way of gift.Q : Can a person resident outside India (i.e. NRI or PIO or foreign national of non-Indian origin) hold any immovable property in India acquired by way of inheritance from a person resident in India?A : 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.Q : Can a person resident outside India (i.e. NRI or PIO or foreign national of non-Indian origin) hold any immovable property in India acquired by way of inheritance from a person resident outside India?A : With the specific approval of Reserve Bank a person resident outside India may hold any immovable property in India acquired by way of inheritance from a person resident outside India, provided the bequeathor had acquired such property in accordance with the provisions of foreign exchange law in force at the time of acquisition or under FEMA regulations.Q : Under general permission available to whom can NRI transfer by way of sale his residential / commercial property ?A : NRI can transfer by way of sale residential / commercial property in India to a person resident in India or to a NRI or a PIO.Q : Under the general permission available to whom can a PIO transfer his residential / commercial property by way of sale ?A : PIO can transfer by way of sale residential / commercial property in India only to a person resident in India.Q : Can a PIO transfer by way of sale his residential / commercial property to a NIR or a PIO ?A : No. He would need to seek Reserve Bank prior approval for transfer by way of sale residential / commercial property in India to a NRI or a PIO.Q : Under the general permission available to whom can NRI / PIO transfer by way of sale his agricultural land / plantation property / farm house in India?A : Under the general permission available NRI / PIO may transfer by way of sale his agricultural land / plantation / farm house in India to a person resident in India who is a citizen of India.Q : Under the general permission available what is the mode of payment for purchase of residential / commercial property in India by NRI / PIO ?A : Under the general permission available NRI / PIO may purchase residential / commercial property in India out of funds remitted to India through normal banking channel or funds held in his NRE / FCNR (B) / NRO account. No consideration shall be paid outside India.Q : Can refund of application / earnest money / purchase consideration made by the house building agencies / seller on account of non-allotment of flat / plot / cancellation of bookings / deals for purchase of residential / commercial property together with interest, if any (net of income tax payable thereon) be credited to NRE account?A : Yes, provided original payment was made by way of inward remittance or by debit to NRE / FCNR (B) account. For this purpose no permission of ReserveQ : Can NRI / PIO for the purpose of acquisition of flat / house in India for his own residential use avail of loan from an authorized dealer against the security of funds held in his NRE Fixed Deposit account / FCNR (B) account?A : Yes, subject to certain terms and conditions (Please refer to Schedules 1 and Schedules 2 to Notification No.FEMA 5/2000-RBI dated May 3, 2000).The NRI Home Loan is available to Non-Resident Indians and for the purposes of home loans, all HFCs go by the definition of NRI as given by RBI i.e., an Indian citizen who holds a valid Indian passport and who stays abroad for employment / carrying on business or vocation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad.Q : For what kinds of property is a NRI eligible for Home loans?A : A home loan is sanctioned to the NRIs for any of the following housing finance schemes:- To purchase a house either ready-built, under construction or from a second owner.
- For self-construction of a property on a plot of land.
- To finance the purchase of a plot of land allotted by a society / development authority.
- For renovation or improvement of an existing property in India.
Q : What is the eligibility for obtaining NRI Home Loans?A : Your eligibility is calculated in the same way as it is calculated for resident Indians. More emphasis is laid on the following criteria in the appraisal of a NRI case:- Qualifications - the NRI applicant has to be graduate
- Current job profile & Past experience
- Probability of continuing abroad for the loan tenure
- Probability of servicing the loan with an extended tenure in case you have to return to India.
Q : What is the repayment period for a NRI Home Loan?A : The housing finance offered to NRIs normally do not exceed 5 years. However, some HFCs offer loans for a term of 7 years. The repayment for the loan is by way of EMIs. The EMIs begin only after the entire loan is disbursed. In case of a part disbursement, you pay simple interest at the rate applicable on the loan amount that is disbursed to you.Q : How is the mode of payment for NRI home loans?A : The loan towards the house has to be paid upfront for the entire tenure of the loan by way of direct remittances from abroad through normal banking channels or from such accounts as may be permitted by RBI from time to time. As of today, the payments are done through NRO, NRE, NRNR and FCNR accounts. These accounts change on the basis of RBI permissions to each HFC.Q : What are the Tax Benefits applicable to Non-Resident Indians?A : No tax benefits are available for NRI customers unless you file returns and thereby become eligible to avail of the tax benefits as mentioned under Home Loans.Q : What are the documents required for obtaining NRI Home Loans?A : NRIs are required to submit additional documents than is normally required for a resident Indian.- A copy of the passport
- A copy of the works contract (also sometimes referred to as the contract card/labor card)
- The power of attorney (POA). The POA is required because the borrower is not based in India and in such a scenario; the HFC would need a representative 'in lieu of' the NRI to deal with as required. Although not mandatory, the POA is usually drawn on the NRI's parents, wife or children
Q : Can NRI avail of housing loan in rupees from his employer in India ?A : Yes, subject to certain terms and conditions (Please refer to Regulation 8A of Notification No.FEMA 4/2000-RB dated May 3, 2000 and A.P. (DIR Series) Circular No.27 dated October 10, 2003).Q : Can NRI / PIO transfer by way of mortgage his residential / commercial property to an authorised dealer / housing finance institution in India ?A : Yes.Q : Can NRI / PIO transfer by way of mortgage his residential / commercial property in India to a party abroad ?A : He should seek prior approval of RBI.Repatriation of sale proceeds of residential / commercial property purchased by NRI / PIOQ : Can NRI / PIO repatriate the sale proceeds of residential / commercial property in India acquired by way of inward remittance through normal banking channel or by debit to NRE / FCNR (B) account ? If so, what is the quantum ?A : NRI / PIO may repatriate the sale proceeds of residential / commercial property in India acquired by way of inward remittance through normal banking channel or by debit to NRE /FCNR (B) account. The amount to be repatriated should not exceed the amount paid for acquisition of residential / commercial property (a) in foreign exchange received through normal banking channel or by debit to FCNR (B) account or (b) the foreign currency equivalent, as on the date of payment, of the amount paid by debit to NRE account.From out of balances in NRO A/c. he may remit upto USD one million per calendar year, eligible balances including the sale proceeds of immovable property if such property has been sold after being held for 10 years. If such a property was held for less than 10 years, remittance can be made if the sale proceeds were held for the balance period in NRO A/c. (Savings / Term Deposit) or any other eligible investment, provided, such investment is traced to the sale proceeds of the immovable property. (For details please refer Reg.4(3) of FEMA 13 dated May 3, 2000 as amended)Q : The rupee loan availed by NRI for purchase of residential accommodation was repaid either by inward remittance or by debit to NRE / FCNR (B) account can the sale proceeds of such property be repatriated ?A : Yes. Repayment of loan in foreign exchange is treated as equivalent to the foreign exchange received for purchase of residential accommodation.Q : Is there any lock in period for sale of residential / commercial property purchased out of inward remittance / debit to NRE / FCNR (B) account ?A : No lock in period is applicable for sale of such property.Q : Is there any restriction on number of residential properties in respect of which sale proceeds can be repatriated by NRI / PIO ?A : Yes. Repatriation of sale proceeds is restricted to not more than two residential properties.Q : Into which account the sale proceeds of residential / commercial property received by way of gift by NRI / PIO can be credited ?A : The sale proceeds of residential / commercial property received by way of gift by NRI / PIO should be credited to NRO account only.Q : Can sale proceeds of any immovable property inherited by NRI / PIO from a person resident in India be remitted abroad ?A : Yes. Amount not exceeding USD one million, per calendar year subject to production of documentary evidence in support of inheritance and Tax clearance certificate / no objection certificate from the Income Tax authority to the authorised dealer for remittances. However, if a PIO is a citizen of Pakistan or Bangaladesh or Sri Lanka or Afghanistan or China or Iran he should seek prior approval of Reserve Bank with documentary evidence in support of inheritance and tax clearance / no objection certificate from the Income Tax authority. This remittance facility is not available to a citizen of Nepal or Bhutan. (Please refer to Regulation 4(3) to Notification No.FEMA 13/RB-2000 dated May 3, 2000).Q : Can sale proceeds of any immovable property in India inherited, by a person resident outside India (i.e. NRI or PIO or foreign national of non-Indian origin resident outside India), from a person resident outside India be repatriated by him or his successor ?A : He needs to seek prior approval of Reserve Bank with documentary evidence in support of inheritance and tax clearance / no objection certificate from the Income Tax authority.Q : Can NRI / PIO rent out the residential / commercial property purchased out of foreign exchange / rupee funds, if not required for immediate use ?A : Yes. Rent received, being current income may be credited to NRO / NRE account or remitted abroad.Q : Can PIO who had acquired immovable property viz., residential / commercial property / agricultural land / plantation property / farm house in India while he was a person resident in India continue to hold or transfer such immovable property ? In which account the sale proceeds may be credited ?A : Yes, under the provisions of Section 6 (5) of the Foreign Exchange Management Act, 1999 PIO who had acquired immovable property in India while he was a person resident in India may continue to hold such property. Under the general permission available he may transfer by way of sale or gift agricultural land / plantation property / farm house in India to a person resident in India who is a citizen of India and may transfer by way of sale or gift residential / commercial property in India to a person resident in India or to a NRI / PIO. However, if a PIO is a citizen of Pakistan or Bangaladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan he should seek prior approval of Reserve Bank for transfer of such immovable property in India. The sale proceeds may be credited to NRO account.Q : Can the sale proceeds of the immovable property referred to in Q.Nos.46 and 47 credited to NRO account of NRI / PIO, be remitted abroad ?A : Yes, provided the immovable property was held for a period not less than ten years.Q : What if such an immovable property was held for less than ten years ?A : If such a property acquired out of rupee funds is sold after being held for less than ten years, remittance can be made, if the sale proceeds were held for the balance period in NRO account (Savings / Term Deposit) or in any other eligible investment, provided such investment is traced to the sale proceeds of the immovable property.