NRI Corner

 
Who can purchase immovable property in India ?

Under the general permission available, the following categories can purchase immovable property in India:

  • Non-Resident Indian (NRI)
  • Person of Indian Origin (PIO)

The general permission, however, covers only purchase of residential and commercial property and is not available for purchase of agricultural land / plantation property / farm house in India.

Who is considered a Person of Indian Origin (PIO) for investment in immovable properties in India?

A foreign citizen (other than a citizen of Pakistan, Bangladesh, Afghanistan, Bhutan, Sri Lanka or Nepal) is deemed to be of Indian origin if

  • He held an Indian passport at any time
  • He or his father or paternal grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (Act No. 57 of 1955)
Who is considered an NRI for investment in immovable properties in India?

If you are of Indian Origin and hold an Indian Passport, then you are entitled to buy property in India. If you are an overseas passport holder like a US Passport or a British Passport Holder, then you need to have a PIO Card. This can be applied for at the Indian Embassy or Consulate in your country where you are residing or you could enquire with them for further details. It is sufficient if you have your father's or mother's passport or birth certificate or any other proof of their being an Indian Citizen. It is essential to carry that proof with you.

What is an OCB?

Overseas Corporate Bodies (OCBs) are bodies predominantly owned by individuals of Indian nationality or origin residing outside India and include overseas companies, partnership firms, societies and other corporate bodies which are owned, directly or indirectly, to the extent of at least 60% by individuals of Indian nationality or origin resident outside India as also overseas trusts in which at least 60% of the beneficial interest is irrevocable held by such persons. Such ownership interest should be actually held by them and not in the capacity as nominees. The various facilities granted to NRIs are also available with certain exceptions to OCBs as long as the ownership/beneficial interest held in them by NRIs continue to be at least 60%.

Are any documents required to be filed with the Reserve Bank after the purchase?

No. An NRI / PIO who has purchased residential / commercial property under general permission, is not required to file any documents/reports with the Reserve Bank.

How many residential / commercial properties can NRI / PIO purchase under the general permission?

There are no restrictions on the number of residential / commercial properties that can be purchased.

Can a foreign national of non-Indian origin be a second holder to immovable property purchased by NRI / PIO?

No.

Can a foreign national of non-Indian origin resident outside India purchase immovable property in India?

No. A foreign national of non-Indian origin, resident outside India cannot purchase any immovable property in India unless such property is acquired by way of inheritance from a person who was resident in India. However, he / she can acquire or transfer immovable property in India, on lease, not exceeding five years. In such cases, there is no requirement of taking any permission of /or reporting to the Reserve Bank.

Can a foreign national who is a person resident in India purchase immovable property in India?

Yes, a foreign national who is a ‘person resident in India’ can purchase immovable property in India, but the person concerned would have to obtain the approvals and fulfil the requirements, if any, prescribed by other authorities, such as, the State Government concerned, etc. However, a foreign national resident in India who is a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan would require prior approval of the Reserve Bank.

Can the branch / liaison office of a foreign company purchase immovable property in India?

A foreign company which has established a Branch Office or other place of business in India, in accordance with the Foreign Exchange Management (Establishment in India of Branch or Office or other Place of Business) Regulations, 2000, can acquire any immovable property in India, which is necessary for or incidental to carrying on such activity. The payment for acquiring such a property should be made by way of foreign inward remittance through the proper banking channels. A declaration in form IPI should be filed with the Reserve Bank within ninety days from the date of acquiring the property. Such a property can also be mortgaged with an Authorised Dealer as a security for the purpose of borrowings. On winding up of the business, the sale proceeds of such property can be repatriated only with the prior approval of the Reserve Bank. Further, acquisition of immovable property by entities incorporated in Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan and who have set up Branch Offices in India and would require prior approval of the Reserve Bank.

However, if the foreign company has established a Liaison Office in India, it cannot acquire immovable property. In such cases, Liaison Offices can acquire property by way of lease not exceeding 5 years.

Can an NRI/ PIO/foreign national sell his residential / commercial property?

(a) NRI can sell property in India to

  • a person resident in India; or
  • an NRI; or 
  • a PIO.

(b) PIO can sell property in India to

  • a person resident in India; or
  • an NRI; or
  • a PIO – with the prior approval of the Reserve Bank

(c) Foreign national of non-Indian origin including a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan can sell property in India with prior approval of the Reserve Bank to

  • a person resident in India
  • an NRI 
  • a PIO

Can a non-resident gift his residential / commercial property?

Yes.

(a) NRI / PIO may gift residential / commercial property to –

  • person resident in India or
  • an NRI or 
  • PIO.

(b) A foreign national of non-Indian origin requires the prior approval of the Reserve Bank for gifting the residential / commercial property.

Can residential / commercial property be mortgaged by NRI/ PIO?

i) NRI / PIO can mortgage a residential / commercial property to:

  • an Authorised Dealer / the housing finance institution in India without the approval of Reserve Bank
  • a bank abroad, with the prior approval of the Reserve Bank.

ii) A foreign national of non-Indian origin can mortgage a residential / commercial property only with prior approval of the Reserve Bank.

iii) A foreign company which has established a Branch Office or other place of business in accordance with FERA/FEMA regulations has general permission to mortgage the property with an Authorised Dealer in India.

How can an NRI / PIO make payment for purchase of residential / commercial property in India?

Payment can be made by NRI / PIO out of:

  • funds remitted to India through normal banking channels or
  • funds held in NRE / FCNR (B) / NRO account maintained in India

No payment can be made either by traveller’s cheque or by foreign currency notes or by other mode except those specifically mentioned above.

Can NRI / PIO avail of loan from an authorised dealer for acquiring flat / house in India for his own residential use against the security of funds held in his NRE Fixed Deposit account / FCNR (B) account? How the loan can be repaid?

Yes

Such loans can be repaid in the following manner:

  • by way of inward remittance through normal banking channel or 
  • by debit to the NRE / FCNR (B) / NRO account of the NRI/ PIO or 
  • out of rental income from such property
  • by the borrower's close relatives through their account in India by crediting the borrower's loan account.

Can NRI / PIO, avail of housing loan in Rupees from an Authorised Dealer or a Housing Finance Institution in India approved by the National Housing Bank for purchase of residential accommodation or for the purpose of repairs / renovation / improvement of residential accommodation ? How can such loan be repaid?

Ans. Yes, NRI/PIO can avail of housing loan in Rupees from an Authorised Dealer or a Housing Finance Institution. Such a loan can be repaid (a) by way of inward remittance through normal banking channel or (b) by debit to the NRE / FCNR (B) / NRO account of the NRI / PIO or (c) out of rental income from such property; or (d) by the borrower's close relatives through their account in India by crediting the borrower's loan account.

 Can NRI/PIO avail of housing loan in Rupees from his employer in India?

Yes


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