| NRI |
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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 |
| Status |
RBI Permit for
investment |
Source of Funds
|
Permission for
repatriation of Funds Abroad |
Housing
Loans |
| Indian Citizen Resident |
Not required |
Own funds, loans etc. |
Required
See note |
Available |
| Indian Citizen Non
Resident |
Not required |
Own funds, loans,
NRE/FCNR/ NRO account or remitted from abroad |
Required |
Available |
| Person of Indian Origin |
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 |
|
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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