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FAQ
on acquisition of residential / commercial premises in India
by Non-Resident Indians ("NRI") & Person of Indian Origin ("PIO")
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1. Who is a NRI under
the provisions of Foreign Exchange Management Act?
Generally, an Indian Citizen who stays abroad for employment/carrying
on business or vocation outside India or stays abroad under
circumstances indicating an intention for an uncertain duration
of stay abroad or a person who is not resident in India for
a period over 182 days is a non-resident Indian. Persons posted
in U.N. organisations and officials deputed abroad by Central/State
Governments and Public Sector undertakings on temporary assignments
are also treated as non-residents. |
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2.
Who is a person of Indian Origin?
Generally, under the provisions of Foreign Exchange Management
Act a person of Indian Origin is an individual (other than
a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan,
China, Iran, Nepal, Bhutan) who
- At any time held an Indian passport, or
- He or his father or his grandfather was a citizen of India
by virtue of the Constitution of India or Citizenship Act,
1955 (57 of 1955).
Non-resident foreign citizens of Indian Origin are treated
on par with non-resident Indian citizens for the purpose of
certain facilities. |
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3. Do NRIs
and PIOs require permission of Reserve Bank to acquire residential/commercial
property in India?
NRIs and POIs do not require permission from RBI to acquire
residential / commercial premises in India (other than agricultural
land/farm house/plantation property). A person resident outside
India acquiring property to carry on business from India has
to file with the Reserve Bank a declaration in Form IPI within
ninety days from the date of acquisition of immovable property.
A citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China,
Iran, Nepal or Bhutan cannot acquire immovable property without
prior permission of Reserve Bank. However, he can take on lease
an immovable property for not more than 5 years. |
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4. Can NRIs
and PIOs sell residential/commercial premises in India without
the permission of Reserve Bank?
A person resident outside India who is a citizen of India is
permitted to sell immovable property in India other than agricultural/plantation/farm
house to a person resident in India or to an NRI or to a PIO
resident outside India. He can also gift residential or commercial
property in India to a person resident in India, NRI or to a
PIO resident outside India.
However, he can gift or sale any agricultural land/farmhouse/plantation
property only to a person resident in India who is a citizen
in India.
A PIO resident outside India is permitted to sell the immovable
property other than agricultural land/farmhouse/plantation property
to a person resident in India. |
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5. Can
the sales proceeds of residential / commercial premises be
remitted out of India?
The repatriation of sale proceeds of immovable property other
than agricultural land / farmhouse / plantation property may
be remitted out of India on fulfilling the following conditions.
- The immovable property was acquired by the seller in accordance
with the provisions of the foreign exchange law in force
at the time of acquisition.
- The amount to be remitted does not exceed (a) the amount
paid in foreign exchange for purchase of the immovable property
received through normal banking channels or out of funds
held in Foreign Currency Non-Resident account or (b) the
foreign currency equivalent as on date of payment made for
acquisition of property out of funds held in Non Resident
External account.
- The remittance of sale proceeds in case of residential
property is restricted only to two properties.
Reserve Bank has further liberalised the provisions regarding
remittance. Accordingly, Authorised Dealers may allow the
repatriation of funds out of balances held by NRIs/PIOs in
the Non-Resident Ordinary Rupee (NRO) Accounts up to US$ 1,00,000
per year, representing sale proceeds of immovable property,
held by them for a period of not less than 10 years subject
to payment of applicable taxes. |
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6. Has
the Reserve Bank of India issued any guidelines for grant
of housing loans to NRIs?
The Reserve Bank of India has issued the following guidelines
for granting housing loans to Non-Resident Indians:
- Own contribution, which is the cost of dwelling unit financed
less the loan amount, can be met from direct remittances
from abroad only through normal banking channels, your Non-Resident
(External) [NR (E)] Account and /or Non-Resident (Ordinary)
[NR (O)] account and /or Non-Resident Special Rupee account
[NRSR] in India.
- Repayment of the loan, comprising of the principal and
interest including all the charges are to be remitted from
abroad only through normal banking channels, your Non-Resident
(External) [NR (E)] Account and /or Non-Resident (Ordinary)
[NR (O)] account and /or Non-Resident Special Rupee account
[NRSR] in India.
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7. Can NRIs
obtain loans for acquisition of a house/flat for residential
purpose from authorised dealers/financial institutions providing
housing finance?
Yes. Repayment of loan should be made within a period not exceeding
15 years out of inward remittances or out of funds held in the
borrower's NRE/FCNR/NRO accounts. |
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8. Can Indian
companies grant loans to their NRI staff?
Reserve Bank permits Indian firms/companies to grant housing
loans to their employees deputed abroad and holding Indian passports
subject to certain conditions. |
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9. Can NRIs
and PIOs give a Power of Attorney in favour of a person of their
choice in India to complete loan formalities on their behalf?
Yes. Normally it is desirable to appoint a Power of Attorney
in India to represent you in dealings in India. The Power of
Attorney should be executed as per drafts provided by the housing
finance company. The Power of Attorney holder should be a trustworthy
person. |
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10. Can
NRIs and PIOs gift residential / commercial premises to relatives
/ registered charitable trusts / organisations in India?
Yes. General permission has been granted by Reserve Bank to
non-resident persons (foreign citizens) of Indian origin to
transfer by way of gift immovable property held by them in India
to relatives and charitable trusts/organisations subject to
the condition that the provisions of any other laws, including
Foreign Contribution (Regulation) Act, 1976 and stamp duty laws,
as applicable, are duly complied with. |
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11. Can
NRIs and PIOs give residential / commercial premises on rent
if not required for immediate use?
Yes. Reserve Bank has granted general permission for letting
out any immovable property in India. The rental income or proceeds
of any investment of such income are eligible for repatriation
subject to payment of taxes and production of a certificate
issued by a chartered accountant with the guidance of an Authorised
Dealer such as a bank for completion of formalities. |
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12. How
should NRIs and PIOs make payment of the consideration for residential
/ commercial property?
The purchase consideration should be met either out of inward
remittances in foreign exchange through normal banking channels
or out of funds from NRE/FCNR/NRO accounts maintained with banks
in India. |
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QUICK REFERENCE |
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| Status |
RBI Permit for investment
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Source of Funds |
Permission for repatriation
of Funds Abroad |
Housing Loans |
| Indian Citizen Resident
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Not required |
Own funds, loans etc.
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Required
See note |
Available |
| Indian Citizen Non Resident
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Not required |
Own funds, loans, NRE/FCNR/
NRO account or remitted from abroad |
Required |
Available |
| Person of Indian Origin
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Not required for residential
premises. For branch office or liaison office file form
no. IPI within 90 days |
Must be from NRE/FCNR/
NRO account or remitted from abroad |
Required |
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| Foreign Citizen |
Required |
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Required |
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Note: For remittance generally one has to approach 'authorised
dealer' e.g. a bank permitted to deal in foreign exchange. |
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Visit RESERVE
BANK OF INDIA website for information
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