Here’s a list of FAQ’s on Can NRI invest in Property in India? It’s a question that bothers every NRI. Also with this article, you can DOWNLOAD – NRI Property Guide to help you make the RIGHT decision.
Who is an NRI?
A Non-Resident Indian (NRI) is a citizen of India, who stays overseas for employment/carrying on business or vocation or stays abroad under circumstances indicating an intention of staying abroad for an uncertain duration. Details
Who is a PIO?
A person of Indian Origin (PIO) (not being a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan) is one, who at any time held an Indian passport or one, whose father or grandfather was a citizen of India. Details
Who is an OCI?
Any person of full age and capacity, who is not or had been a citizen of Pakistan and Bangladesh shall be eligible for registration as an Overseas Citizen of India, if;
- he/she is a citizen of another country, but was a citizen of India at the time of, or at any time after, the commencement of the constitution.
- he/she is a citizen of another country, but was eligible to become a citizen of India at the time of the commencement of the constitution.
- he/she is a citizen of another country, but belongs to a territory that became a part of India after the 15th Day of August, 1947.
- who is a child of such a citizen.
A person, who is a minor child of a person mentioned in the above clauses is also an OCI. Details
Can NRI Invest in Property
First- Should NRI Invest in Property in India?
Yes, why not? Like a resident, NRI/PIO/OCI also own India and should own real estate. Reason to buy or sell off property can be personal – like Investment for future, Leaving Inheritance or providing a place for family members. If the reason is pure investments one must not go by stories of greed. A decent return above inflation is meaningful to assume. Rest depends on quality, location & development fo surrounding. The realistic returns that NRI can look are:
Who is eligible to buy immovable property in India?
Any Person of Indian Origin (PIO), an individual not being a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan, can buy immovable properties in India if
- he/she, at any time, held Indian passport or
- whose father or whose grandfather was a citizen of India.
What are the documents required by NRI to buy a property in India?
The documents required are
(a) Pan card (Permanent account number)
(b) OCI/PIO card (In case of OCI/PIO)
(c) Passport (In case of NRI)
(d) Passport size photographs
(e) Address proof
Can NRI Invest in Property in Joint with a Resident?
Yes, One can buy a joint property. 2 NRIs in Joint or 1 NRI + 1 Resident Indian Is possible.
Can NRI Invest in Property by availing Home Loan? Can this be Joint?
Yes, NRIs can avail Home Loan/ Mortgage Loan. It can be joint with a resident. Up to 80% of the property value can be loaned.
Can NRI Invest in Property or real estate through Foreign Currency?
No, all transaction to be done in Indian Currency with proper Banking Channels.
What are the kind of properties an NRI/PIO cannot buy?
An NRI/PIO cannot usually buy agricultural land/plantation property/farmhouses in India. Proposals to buy such land have to be specifically approved by RBI, in consultation with the Government of India.
The only way they can acquire an agricultural land is by inheritance.
Can NRI buy land in India or a Plot?
Yes. It should not be agricultural in usage.
Are there any limits to the number of properties to be bought by NRIs?
No, NRI can buy any number of properties. But an NRI/PIO can repatriate sales proceed of only 2 two properties. Hence in case you wish to settle out of Indian later on, it is advisable to restrict the number to 2.
How can an NRI make the transaction while buying a property?
While making the payment for purchasing a property, funds can be remitted to India from abroad through regular banking channels or through the balance in the NRE, NRO or FCNR account.
Can an NRI sell residential or commercial property in India?
An NRI can sell residential or commercial property in India to any resident Indian, an NRI or Person of Indian origin (PIO).
However, agricultural, plantation land or a farmhouse can be sold only to a person who is resident in and citizen of India.
How is income tax applicable in the case of properties owned in India?
If you are an NRI and have only one global property which is in India, then you are not liable to pay any income tax.
However, if you own a property abroad and property in India, then whether or not you rent out the property in India, you would have to pay income tax on deemed rental income on the property.
How is capital gains tax applicable in the case of an NRI?
The profit on sale of a property is part of capital gains. Hence, Capital Gains Tax (CGT) –both short term and long term is payable on the part of an NRI as and when he/she sells off the house or part of it.
How does Double Taxation Avoidance Agreement work in case of NRIs?
In case of sale of immovable property, the Double Tax Avoidance Agreement (DTAA) with most countries state that capital gains will be taxed in the country where the immovable property is situated.
Is rental income from property repatriable?
Rental income from the property is repatriable as per the norms of RBI. Rental income is subject to an income tax deduction and certification from a chartered accountant. The tenant has to deduct TDS and deposit. He should have a TAN number for records.
NRI/PIO can remit rental income from India to NRE account when certain documents are in place.
The documents include a request letter, Form A2, FEMA declaration, original copies of 15 CA and CB duly signed by the remitter and CA, rent agreement and proof of rent amount remitted to NRE account, proof of tax payment, etc.
Can NRI repatriate rental income freely?
Yes, rental income can be repatriated freely. No RBI permission is required.
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