Yes, NRIs are allowed to purchase residential and commercial properties in India. However, there are certain restrictions on agricultural land, plantation property, and farmhouse purchases.
There are no specific restrictions on the number of properties an NRI can purchase in India. However, the purchased properties should comply with local laws and regulations.
NRIs can fund property purchases through funds remitted to India via normal banking channels or using funds in their Non-Resident External (NRE) or Non-Resident Ordinary (NRO) accounts in India.
Many times, when NRIs purchase properties, developers demand a PoA in their favour. You may choose not to give this PoA but it would lead to delays since all documents would have to be mailed to your foreign address. Giving a specific PoA would be a better option.
Yes, NRIs are eligible to avail home loans from Indian financial institutions to buy property. Many banks offer home loan schemes tailored for NRIs.
Violations of NRI property purchase regulations can result in penalties, fines, or even confiscation of the property. It's important for NRIs to adhere to all legal requirements.
NRIs are subject to the same tax rules as residents when it comes to property transactions. They need to pay stamp duty, registration charges, and applicable capital gains tax. Tax implications may vary depending on the property type and duration of ownership.
NRIs can repatriate the sale proceeds of up to two residential properties without any restrictions. However, the repatriation is subject to certain conditions and documentation.
No, NRIs do not need to be physically present in India for property transactions. They can appoint a representative through a Power of Attorney to carry out the necessary procedures on their behalf.
Commonly required documents include passport, visa, PAN card, proof of overseas address, Power of Attorney (if applicable), and other documents as required by the seller or the local authorities.
Acquiring immovable property in India by persons resident outside India is regulated in terms of Section 6(3) (i) of the Foreign Exchange Management Act (FEMA), 1999 as well as by the regulations contained in Notification issued by RBI viz Notification No FEMA. 21/2000-RB dated May 3, 2000, as amended from time to time. The persons resident outside India are categorized as Non- Resident Indians (NRIs) or a foreign national of Indian Origin (PIO) or a foreign national of non-Indian origin. A person resident in India who is not a citizen of India is also covered by the relevant Notifications.
Statutorily, under the provisions of Section 6(5) of FEMA 1999, a person resident outside India can hold, own, transfer or invest in Indian currency, security or any immovable property situated in India if such currency, security or property was acquired, held or owned by such person when he was a resident in India or inherited from a person who was a resident in India.
The regulations under the Notification No FEMA 21 dated May 3, 2000 permit a NRI or a PIO to acquire immovable property in India other than agricultural land or, plantation property or farm house. Further, foreign companies who have been permitted to open an office in India are also allowed to acquire any immovable property in India, which is necessary for or incidental to carrying on such activity. This stipulation is not available to entities which are permitted to open liaison offices in India.
The relevant regulations covering the transactions in immovable property have been notified vide RBI Notification No. FEMA 21/2000-RB dated May 3, 2000 and this basic notification has been subsequently amended by the notifications detailed below:
Notification No.FEMA 64/2002-RB dated June 29, 2002
Notification No.FEMA 65/2002-RB dated June 29, 2002
Notification No.FEMA 93/2003-RB dated June 9, 2003 and
Notification No. FEMA 146/2006-RB dated February 10 2006 (available with A.P.(DIR Series) Circular No. 5 dated 16.8.2006 on website) All the above notifications are available on RBI website: www.fema.rbi.org.in
The restrictions on acquiring immovable property in India by a person resident outside India would not apply where the immovable property is proposed to be acquired by way of a lease for a period not exceeding 5 years or where a person is deemed to be resident in India. In order to be deemed to be a person resident in India, from FEMA angle, the person would need to comply with the criterion for residency as defined in Section 2(v) of FEMA 1999. However, citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan cannot acquire or transfer immovable property in India, (other than on lease, not exceeding five years) without prior permission of the Reserve Bank.
NRIs/PIO are allowed to repatriate an amount up to USD one million, per financial year (April-March), out of the balances held in the NRO account subject to tax compliance. This amount includes sale proceeds of assets acquired by way of inheritance or settlement.
While the statutory and regulatory provisions are indicated above, we have been receiving several queries fromindividuals on operational procedures regarding acquisition, holding and transferring of immovable property in India and repatriating / remitting the proceeds arising from sale of such property. In order to clarify these issues, we have attempted a set of FAQs on various issues relating to acquisition and transfer of immovable property in India by a person resident outside India and a person resident in Indiawho is not a citizen of India.
In case there are other issues to be resolved, a reference may be made to the Chief General Manager-in-Charge,
Foreign Exchange Department,
Foreign Investment Division,
Reserve Bank of India,
Central Office,
Mumbai- 400 001.
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