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Purchase Or Transfer Of Immovable Property By NRI/PIO In India

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Indian citizens who migrate to some other country for an uncertain duration are known as NRIs. Today lots of people are migrating to other countries for different reasons like education, employment etc. Although they make a complete setup in the country they stay but many of them want to have property in their native country i.e India.

Real Estate investment in India attracts lots of NRIs and Foreign National Individuals because of the favorable guidelines and procedures and the support offered by the government of India. The purchase of property by NRIs are governed by FEMA (The Foreign Exchange Management Act).

A person not resident in India is classified into two categories namely NRI and PIO. An NRI, stands for Non- Resident Indian (NRI). PIO on the other hand identifies a foreign national (person) of Indian origin. A person resident in India, but not an Indian citizen is also covered by relevant provisions and notifications. Lets have a look to some common question comes from NRIs regarding purchase of property in India.

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As per foreign exchange regulation, who all are allowed to purchase immovable property (real estate) in India?

NRIs (Non-resident Indians) or PIOs (Person Of Indian Origin) are allowed to purchase residential or commercial properties in India.

Can a foreign national who is a ‘person resident in India’ purchase immovable property (real estate) in India?

Foreign nationals are allowed to purchase property in India after:-

  • Taking permission from the RBI
  • Obtaining residency status (i.e. the foreign national has stayed in India for more than 182 days in a calendar year).

Is NRI or PIO required to file any documents with the RBI for there purchase of property in India?

NRI/PIO purchasing any residential or commercial property under general permission in India do not require to file any documents with the RBI.

Is there any restriction on the number of properties that an NRI or PIO can purchase in India?

There is no restriction on the number of residential or commercial property an NRI or PIO can purchase under general permission.

What kind of property is not allowed to be purchased in India by NRIs/PIOs or a foreign national of non-Indian ?

Agricultural land, plantation property or farmhouse are not allowed to be purchased by NRIs/PIOs or a foreign national of non-Indian. If they wish to purchase agricultural property then they need to seek special permission from RBI.

Can an NRI sell his immovable property (real estate) without any specific approval?

An NRI can sell his residential or commercial property in India to an Indian resident or to an NRI or a PIO.

Can a PIO sell his residential or commercial property without any prior approval?

A PIO can sell his residential or commercial property in India only to an Indian resident without any approval. For transfer to any other person prior approval from the RBI is required.

What are the payment mode available to NRIs or PIOs for the purchase of residential or commercial property in India ?

Under general permission, an NRI or PIO may purchase residential or commercial property in India out of :-

  • Funds remitted to India through the normal banking channel
  • Funds held in his NRE/FCNR (B)/ NRO account.

Can an NRI or a PIO allowed to take a housing loan in INR from an authorized dealer or an approved housing finance institution in India for the purchase of residential property or for repairs / renovation / improvement of residential property?

NRIs/ PIOs are allowed to take loan under certain terms and conditions. The amount of loan can be repaid either by the NRI/PIO or by borrower’s relative. The amount of loan can be repaid  through rental income of such property or from remittance through normal banking channel or by debit to their NRE/FCNR (B)/NRO account.

Can an NRI/PIO mortgage their residential or commercial property in India to a party abroad?

No, an NRI/PIO needs a prior approval from RBI before making any such transaction.

Can an NRI/PIO mortgage their residential or commercial property in India to an authorised dealer or housing finance institution in India?

Yes

Can a person who had bought property (real estate) when he was a resident, continue to hold such property even after becoming an NRI/PIO?
Yes. He can keep the hold on his residential/commercial property/farm house in India without the approval of RBI.

Can an NRI/PIO allowed to rent out there residential/commercial property purchased out of foreign funds?

An NRI/PIO are allowed to rent out there property without the approval of RBI. Rend received can either be credited to the NRE/NRO account or remitted abroad.

If income such as rental income, pension, interest, etc. is being remitted abroad, NRIs and PIOs need appropriate certification by a qualified chartered accountant, certifying that the amount proposed to be remitted is eligible for being remitted and applicable taxes on it have been paid for.

Can an NRI/PIO make payment in foreign currency for the purchase of property (real estate) in India?

RBI have specified modes of payment for NRIs/PIOs to purchase property in India which do not allow them to make payment in foreign currency or by travelers cheques or any other mode except those specified by the RBI.

Can an NRI/PIO acquire agricultural land /plantation property / farm house property in India by way of gift?

Agricultural land/plantation property/farm house in India cannot be acquired by way of gift by an NRI/PIO. He can only acquire residential/ commercial property by way of gifts either from a person resident in India or an NRI/PIO.

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Can an NRI/PIO acquire agricultural land /plantation property / farm house property in India by way of inheritance?

NRIs and PIOs can acquire any type property in India including agricultural land/plantation property/farmhouse by way of inheritance. But the person from whom the property is inherited (who could be a person resident in India or person resident outside India) should have acquired such property in accordance with the provisions of foreign exchange law in force or FEMA regulations.
A citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan is not permitted to acquire / transfer any immoveable property in India (except by way of lease for less than five years) without prior permission from RBI.

Can an NRI/PIO sell or gifts his property (real estate)?

An NRI/PIO can sell or gift his residential/commercial property in India to any person. However, an NRI/PIO can sell agricultural land/plantation property/farm house only to a person resident in India, who is a citizen of India.

Is an NRI/PIO eligible to repatriate outside India the sale proceeds of property (real estate)?

On the sale of property other than agricultural land / farm house / plantation property in India by a NRI / PIO, the Authorised Dealer may allow repatriation of the sale proceeds outside India, provided the following conditions are satisfied:

  • The property was acquired by the seller according to the provision of the foreign exchange law in force at the time of acquisition by him or the provisions of these Regulations
  • The amount to be repatriated does not exceed:
    • the amount paid for acquisition of the property in foreign exchange received through normal banking channels, or
    • the amount paid out of funds held in Foreign Currency Non-Resident Account,  or
    • the foreign currency equivalent (as on the date of payment) of the amount paid where such payment was made from the funds held in Non-Resident External account for acquisition of the property; and
  • In the case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties.

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