NRI Corner
A Non-Resident Indian (NRI) is an Indian citizen who resides abroad for employment, business, or other vocations, or who stays abroad under circumstances indicating an intention to live overseas for an uncertain period. This includes individuals posted in U.N. organizations and officials sent abroad by the Central/State Governments and Public Sector undertakings on temporary assignments. Additionally, foreign citizens of Indian origin are also considered NRIs and are treated on par with non-resident Indian citizens.
The Overseas Citizenship of India (OCI) is an immigration status that allows foreign citizens of Indian origin to live and work in the Republic of India indefinitely.
A Person of Indian Origin (PIO) is an individual who meets one of the following criteria:
Held an Indian passport at any time.
Is a person whose father or paternal grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955.
*Note: Citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, and Bhutan are not considered PIOs.
Yes, NRIs can buy real estate properties in India, except for agricultural land, farmhouses, and plantations. Under the general permission granted by the Reserve Bank of India (RBI), NRIs can purchase property if the purchase consideration is met through:
Inward remittances in foreign exchange via normal banking channels.
Funds from the purchaser’s NRE/FCNR accounts maintained with banks in India.
A declaration must be submitted to the Central Office of the Reserve Bank in Form IPI 7 within 90 days from the date of purchase or final payment of the purchase consideration.
Yes
Yes. NRI/PIOs can freely rent out immovable property, whether purchase through application of forex or otherwise, without seeking any permission from the RBI. The rental income being a current account transaction is repatriable outside India, only if property tax paid or provided for.
Yes, under the general permission granted by the Reserve Bank, property other than agricultural land/farm house/plantation can be acquired by NRIs provided the purchase consideration is met either out of inward remittances in foreign exchange through normal banking channels or out of funds from the purchaser’s NRE/FCNR accounts maintained with banks in India. A declaration is then submitted to the Central Office of Reserve Bank in form IPI 7 within a period of 90 days from the date of purchase of the property/final payment of purchase consideration.
Yes, the Reserve Bank has granted general permission to NRIs to acquire or dispose of NRI India Properties by way of gift from or to a relative who may be an Indian citizen or a person of Indian origin (PIO) whether resident in India or not.
Yes, the Reserve Bank of India (RBI) has granted general permission to Non-Resident Indians (NRIs) and foreign citizens of Indian origin, whether residing in India or abroad, to purchase immovable property in India for bona fide residential purposes. Therefore, they do not need to obtain specific permission from the Reserve Bank to make such purchases.
Yes, NRIs can obtain housing loans for acquiring a house or flat for residential purposes from financial institutions such as HDFC, LIC Housing Finance Ltd., and other authorized dealers. The Reserve Bank of India has granted general permission to these institutions to provide housing loans to NRI nationals under certain conditions:
Purpose of the Loan: The loan must be for the acquisition of a house or flat for self-occupation.
Loan Criteria: The criteria regarding the purpose of the loan, margin money, and the quantum of the loan will be the same as those applicable to resident Indians.
Repayment Period: The repayment of the loan should be made within a period not exceeding 15 years.
Repayment Methods: Repayment should be done through inward remittance via banking channels or from funds held in the borrower's NRE/FCNR/NRO accounts.
The acquisition of property itself does not attract income tax. However, any income generated from owning the property is taxable. This includes:
Rental Income: If the property is rented out, the rental income is taxable.
Annual Value: If the property is not let out and it is not the only residential property owned by the person in India, the annual value of the house is taxable.
Capital Gains: Any capital gains arising from the sale of the property, whether short-term or long-term, are also taxable.
Yes, capital gains tax applies to Non-Resident Indians (NRIs), Persons of Indian Origin (PIOs), and Overseas Citizens of India (OCIs). Both long-term and short-term capital gains are taxable in their hands.
An NRI/PIO cannot usually buy the following types of properties in India:
1. Agricultural Land
2. Plantation Property
3. Farmhouses
Proposals to buy such land must be specifically approved by the Reserve Bank of India (RBI), in consultation with the Government of India. The only exception is acquiring agricultural land through inheritance.