FAQ's

Who is a NRI or a PIO?

A Non Resident Indian (NRI) is a person of Indian origin but not residing in India.

Under the Income Tax Act to be assessed as a "resident", an individual should fulfill either of the two conditions:

  • He should have been present in India in the previous year for at least 182 days. This period of 182 days need not be continuous.
  • He should have been in India for at least 365 days in the preceding four years and he stayed in India for not less than 60 days in the previous year in consideration.

All those persons who are not 'residents' are called 'Non ¬Residents'.

For the purpose of transfer of immovable property a Person of Indian Origin (PIO) origin' means an individual (not being a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan) who fulfils any of the conditions given below:

  • He has held an Indian passport or;
  • He or either of his parents or any of his grand-parents was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955); or
  • The person is a spouse of an Indian citizen or a person referred to in sub-clause (a) or (b).

Rules relating to NRI / PIO investment in real estate have been considerably liberalized and simplified. Foreign citizens of Indian origin (PIOs) have been permitted to invest without the need to obtain approval from the Reserve Bank of India. With the passage of FEMA, the power to effect repatriation proceeds has been decentralized and delegated to authorize foreign exchange dealers. What is more, even the rental income can be repatriated now. It makes sense for NRIs now to earmark a portion of their investment portfolio in real estate and earn competitive return on investment.

In exercise of the powers conferred by clause (i) of sub-section (3) of Section 6, subsection

What are the types of Property can a NRI/PIO purchase in India?

There are no restrictions on the numbers of Residential/Commercial Properties (other than agricultural land/farm house/plantation) that can be purchased.

Does NRI/PIO require permission of The Reserve Bank to acquire residential/ commercial property in India?

No. All Indian citizens are entitled to buy property in India, irrespective of their residential status.

How should the purchase of residential immovable property be paid for by NRI/ PIO under the general permission?

The purchase consideration should be met either out of inward remittance in foreign exchange through normal banking channels, or out of funds from NRE/FCNR(B)/NRO accounts maintained with banks in India.

Can NRI/ PIO's acquire or dispose residential property by way of gift?

Yes, NRIs and PIOs can freely acquire immovable property in India by way of gift either from

  • person resident in India
  • NRI
  • PIO

However the property can only be commercial or residential.

Again NRIs and PIOs may gift residential/ commercial property to

  • person resident in India
  • NRI
  • PIO
  • Foreign national of non Indian origin - with approval of RBI
Can NRI/PIO sell their purchased property without the permission of Reserve Bank?

Yes. Reserve Bank of India has granted general permission for sale of such property to the following categories:

  • To a NRI
  • To a PIO (If the seller is a PIO, then a prior approval is required from RBI)
  • To a person Resident of India
Can the sale proceeds of such property (if and when sold) be remitted/repatriated out of India?

Yes the sale proceeds can be remitted/repatriated out of India In the event property acquired out of foreign exchange source i.e. remittance through normal banking channels/ debit to NRE/ FCNR(B) accounts, the amounts to be repatriated should not exceed the amount paid for such property from such source. However, repatriation of sale proceeds purchased out of foreign exchange is restricted to not more that two residential properties, in a block of one year, with a facility of crediting the Capital gain to the NRO account. Again in the event the property was acquired out of Rupee source, an amount not exceeding USD one million, per financial year, subject to tax compliance, out of balance held in NRO account, may be remitted / repatriated

Can the properties (residential/commercial) be given on rent if not required for immediate use?

Yes. The Reserve Bank has granted general permission for letting out any immovable property in India.

Non-resident Indians are staying abroad can the property be purchased through the agent or through the Power of Attorney?

The non-resident Indians who are staying abroad may enter into an agreement through their relatives and/or by executing the Power of Attorney in their favor as it is not possible for them to be present for completing the formalities of purchase (negotiating with the builder or Developer, drafting and signing of agreements, taking possession, etc.)

These formalities can be completed through some known person who can be given the Power of Attorney for this purpose. Power of Attorney should be executed on the stamp paper before the proper authorities in foreign countries. Power of Attorney cannot be drafted on the stamp paper bought in India.

Non-resident Indians are staying abroad can the property be purchased through the agent or through the Power of Attorney?

The non-resident Indians who are staying abroad may enter into an agreement through their relatives and/or by executing the Power of Attorney in their favor as it is not possible for them to be present for completing the formalities of purchase (negotiating with the builder or Developer, drafting and signing of agreements, taking possession, etc.)

These formalities can be completed through some known person who can be given the Power of Attorney for this purpose. Power of Attorney should be executed on the stamp paper before the proper authorities in foreign countries. Power of Attorney cannot be drafted on the stamp paper bought in India.

Are there any formalities to be completed by foreign nationals of Indian origin for purchasing residential immovable property in India?

They are required to file a declaration in form IPI 7 with the Central Office of Reserve Bank at Bombay within a period of 90 days from the date of purchase of immovable property.

What is meant by Carpet Area, Built-up Area and Super Built-up Area?

Carpet Area: It refers to the area of the apartment, excluding the area of the walls.

Built-up Area: It comprises the apartment area as well as the area of the walls.

Super Built-up Area: This term is used only when referring to multi-dwelling units. It includes the apartment area, the area of the walls and the area under common spaces like lobby, staircase, elevators, etc.

What is meant by Stamp Duty?

Stamp Duty refers to charges in the form of taxes levied by the State Government

What is meant by a Freehold Property?

A Freehold Property refers to any plot or flat, where there is a sole proprietary ownership with no conditions under the land laws, and there is no lessor - lessee involved.

What documents need to be verified before making any purchase of a property?

The following documents must be properly verified by an advocate before buying a property:

  • Approved Layout Plan
  • Approved Building Plan
  • Title Ownership Documents
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