Definition of an NRI
An Indian Citizen who stays abroad for
employment/ carrying on business or vacation
outside India or stays abroad under
circumstances indicating an intention for an
uncertain duration of stay abroad is a
non-resident. (Persons posted in U.N.
organizations and officials deputed abroad by
Central/ State Government and Public Sector
Undertakings on temporary assignments are also
treated as non-resident) Non-resident foreign
citizens of Indian Origin are treated on par
with non-resident Indian citizens.
For Investment in immovable properties:
A
foreign citizen (other than a citizen of
Pakistan, Bangladesh, Afghanistan, Bhutan, Sri
lanka or Nepal), is deemed to be of Indian
origin if,
- (i) he held an Indian
passport at any time, OR
- (ii) he or his father or paternal
grand-father was a citizen of India by virtue of
the Constitution of India or the Citizenship
Act, 1955 ( 57 of 1955)
FAQs
Q) Do non-resident
Indian citizens require permission of Reserve
Bank to acquire residential/commercial properly
in India?
A) No.
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Q) Do foreign
citizens of Indian origin require permission of
Reserve Bank to purchase immovable property in
India for their residential use?
A)
Yes. However, Reserve Bank has granted general
permission to foreign citizens of Indian origin,
whether resident in India or abroad, to purchase
immovable property in India for their bona fide
residential purpose. They are, therefore, not
required to obtain separate permission of
Reserve Bank.
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Q) In what manner
the purchase consideration for the residential
immovable property should be paid by foreign
citizens of Indian origin under the general
permission?
A) The purchase
consideration should be met either out of inward
remittances in foreign exchange through normal
banking channels or out of funds from NTE/FCNR
accounts maintained with banks in India.
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Q) What are the
formalities required to be completed by foreign
citizens of Indian origin for purchasing
residential immovable property in India under
the general permission.?
A) They are
required to file a declaration in form IPI 7
with the Central Office of Reserve Bank at
Mumbai within a period of 90 days from the date
of purchase of immovable property or final
payment of purchase consideration along with a
certified copy of the document evidencing the
transaction and bank certificate regarding the
consideration paid.
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Q) Can such
property be sold without the permission of
Reserve Bank?
A) Yes. Reserve Bank
has granted general permission for sale of such
property. However, where the property is
purchased by another foreign citizen of Indian
origin, funds towards the purchase consideration
should either be remitted to India or paid out
of balances in NRE/FCNR accounts.
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Q) Can sale
proceeds of such property if and when sold be
remitted out of India?
A) In respect
of residential properties purchased on or after
26th May,1993, Reserve Bank considers
applications for repatriation of sale proceeds
up to the consideration amount remitted in
foreign exchange for the acquisition of the
property for two such properties. The balance
amount of sale proceeds if any or sale proceeds
in respect of properties purchased prior to 26th
May, 1993, will have to be credited to the
ordinary non-resident rupee account of the owner
of the property.
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Q) Are any
conditions required to be fulfilled if
repatriation of sale proceeds is
desired?
A) Applications for
repatriation of sale proceeds are considered
provided the sale takes place after three years
from the date of final purchase deed or from the
date of payment of final installment of
consideration amount, whichever is later.
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Q) What is the
procedure for seeking such
repatriation?
A) Applications for
necessary permission for remittance of sale
proceeds should be made in form IPI 8 to the
Central Office of Reserve Bank at Mumbai within
90 days of the sale of the property.
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Q) Can foreign
citizens of Indian origin acquire or dispose of
residential property by way of gift?
A) Yes. Reserve Bank has granted
general permission to foreign citizens of Indian
origin to acquire or dispose of properties up to
two houses by way of gift from or to a relative
who may be an Indian citizen or a person of
Indian origin whether resident in India or
not,provided gift tax has been paid.
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Q) Can foreign
citizens of Indian origin acquire commercial
properties in India?
A) Yes. Under
the general permission granted by Reserve Bank
properties other than agricultural land/farm
house/plantation property can be acquired by
foreign citizens of Indian origin provided the
purchase consideration is met either out of
inward remittances in foreign exchange through
normal banking channels or out of funds from the
purchasers' NRE/FCNR accounts maintained with
banks in India and a declaration is 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.
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Q) Can they
dispose of such properties?
A) Yes.
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Q) Can sale
proceeds of such property be remitted out of
India?
A) Yes. Repatriation of
original investment in respect of properties
purchased by foreign citizens of Indian origin
on or after 26th May 1993 will be allowed to be
remitted up to the consideration amount
originally remitted from abroad provided the
property is sold after a period of three years
from the date of the final purchase deed or from
the date of payment of final installment of
consideration amount, whichever is later.
Applications for the purpose are required to be
made to the Central Office of Reserve Bank
within 90 days of the sale of property in form
IPI 8.
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Q) Can the
properties (residential/commercial) be given on
rent if not required for immediate
use?
A) Yes. Reserve Bank has
granted general permission for letting out of
any immovable property in India. The rental
income or proceeds of any investment of such
income has to be credited to NRO account.
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Q) Can NRIs
obtain loans for acquisition of a house/flat for
residential purpose from financial institutions
providing housing finance?
A)
Reserve Bank has granted general permission to
certain financial institutions providing housing
finance e.g. HDFC,LIC Housing Finance Ltd.,etc.
to grant housing loans to non-resident Indian
nationals for acquisition of houses/flats for
self-occupation subject to certain conditions.
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Q) Can authorized
dealer grant loans to NRIs for acquisition of a
flat/house for residential purposes?
A) Authorized dealers have been
granted permission to grant loans up to
non-resident Indian nationals for acquisition of
house/flat for self-occupation on their return
to India subject to certain conditions.
Repayment of the loan should be made within a
period not exceeding 15 years out of inward
remittance through banking channels or out of
funds held in the investments' NRE/FCNR
accounts.
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Q) Can Indian
companies grant loans to their NRI
staff?
A) Reserve Bank permits
Indian firms/companies to grant housing loans to
their employees deputed abroad and holding
Indian passport subject to certain conditions.
Source: Reserve Bank of India
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Q) What are the
options available for obtaining guarantors while
applying for a HDFC/LIC loan?
A) One
will need a guarantor for a loan mainly for
collateral security. The guarantor will have to
demonstrate appropriate net worth to cover for
the loan. Usually one can have a guarantor in
any city where the loan issuer has a branch.
Talk to loan issuers they will work something
out for NRIs and foreign banks.
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Q) While
purchasing real estate most developers demand a
Power of Attorney in their favor, is there a way
to avoid it?
A) One can choose not
to grant the Power of Attorney (POA) to the
developers. However this will mandate the
mailing of all documents to your foreign
residence and associated time delays. A good
compromise is to grant the POA to the builder
only for specific necessary items.
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Regulations/Directions
issued by Reserve Bank of India
Q: Where can one find
regulations/directions issued by Reserve Bank
for acquisition and transfer of immovable
property in India by a person resident outside
India?
A: Regulations regarding acquisition and
transfer of immovable property in India by a
person resident outside India have been notified
vide RBI Notification No. FEMA 21/2000-RB dated
May 3, 2000 as amended vide Notification No.
FEMA 64/2002-RB dated June 29, 2002 and
Notification No. FEMA 65/2002-RB dated June 29,
2002 and relevant directions issued in the form
of A.P. (DIR Series) Circulars. These are
available on RBI website: http://www.fema.rbi.org.in/
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Acquisition of immovable
property in India by way of purchase by a person
resident outside India
Q: Under the extant foreign exchange
regulations to whom is general permission
available for purchase immovable property in
India?
A: General Permission is available to
purchase only a residential/commercial property
in India to a person resident outside India who
is a citizen of India (NRI) and who is a Person
of Indian Origin (PIO).
Q: Who is a Person of Indian Origin
(PIO)?
A: For the purpose of acquisition and
transfer of immovable property in India, a PIO
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 (i) at any time, held Indian
passport; or (ii) who or either of whose father
or grandfather was a citizen of India by virtue
of the Constitution of India or the Citizenship
Act, 1955 (57 of 1955).
Q: Is NRI/PIO who has purchased
residential/commercial property under general
permission required to file any documents with
Reserve Bank of India?
A: NRI/PIO who has purchased
residential/commercial property under general
permission is not required to file any documents
with the Reserve Bank.
Q: Is there any restriction on number
of residential/commercial property that NRI/PIO
can purchase under the general permission
available?
A: There is no restriction on number of
residential/commercial property that NRI/PIO can
purchase under the general permission available.
Q: Can a name of a foreign national
of non-Indian origin be added as a second holder
to a residential/commercial property purchased
by NRI/PIO?
A: No.
Q: Can a foreign national of
non-Indian origin resident outside India acquire
any immovable property in India by way of
purchase?
A: No. Under section 2 (ze) of the Foreign
Exchange Management Act, 1999 ‘transfer'
includes among others, ‘purchase'. Therefore, a
foreign national of non-Indian origin resident
outside India cannot acquire any immovable
property in India by way of purchase.
Q: Can a foreign national of
non-Indian origin acquire residential property
on a lease in India?
A: Yes. A 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 may acquire only
residential accommodation on lease, not
exceeding five years for which he/she does not
require prior permission of Reserve Bank of
India.
Q: Can a person resident outside
India (i.e. a NRI or a PIO or a foreign national
of non-Indian origin) acquire agricultural
land/plantation property/farm house in India by
way of purchase?
A: No. A person resident outside India cannot
acquire by way of purchase agricultural
land/plantation property/farm house in India.
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Acquisition of immovable
property in India by way of gift by a person
resident outside India
Q: Can NRI/PIO acquire
residential/commercial property by way of gift
under the general permission available?
A: Yes. Under general permission available
NRI/PIO may acquire residential/commercial
property by way of gift from a person resident
in India or a NRI or a PIO.
Q: Can a foreign national of
non-Indian origin resident outside India acquire
residential/commercial in India by way of gift?
A: No. Under section 2 (ze) of the Foreign
Exchange Management Act, 1999 ‘transfer'
includes among others, ‘gift'. Therefore, a
foreign national of non-Indian origin resident
outside India cannot acquire
residential/commercial property in India by way
of gift.
Q: Can a person resident outside
India (i.e. a NRI or a PIO or a foreign national
of non-Indian origin) acquire agricultural
land/plantation property/farm house in India by
way of gift?
A: No. A person resident outside India cannot
acquire agricultural land/plantation
property/farm house in India by way of gift.
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Acquisition of immovable
property in India by way of inheritance by a
person resident outside India
Q: Can a person resident outside
India (i.e. NRI or PIO or foreign national of
non-Indian origin) hold any immovable property
in India acquired by way of inheritance from a
person resident in India?
A: Yes. A person resident outside India can
hold immovable property acquired by way of
inheritance from a person resident in India as
per the provisions of Section 6(5) of the
Foreign Exchange Management Act, 1999.
Q: Can a person resident outside
India (i.e. NRI or PIO or foreign national of
non-Indian origin) hold any immovable property
in India acquired by way of inheritance from a
person resident outside India?
A: With the specific approval of Reserve Bank
a person resident outside India may hold any
immovable property in India acquired by way of
inheritance from a person resident outside
India, provided the bequeath or had acquired
such property in accordance with the provisions
of foreign exchange law in force at the time of
acquisition or under FEMA regulations.
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Transfer of immovable
property in India by way of sale by a person
resident outside India
Q: Under general permission available
to whom can NRI transfer by way of sale his
residential/commercial property?
A: NRI can transfer by way of sale
residential/commercial property in India to a
person resident in India or to a NRI or a PIO.
Q: Under general permission available
to whom can a PIO transfer his
residential/commercial property by way of sale?
A: PIO can transfer by way of sale
residential/commercial property in India only to
a person resident in India.
Q: Can a PIO transfer by way of sale
his residential/commercial property to a NRI or
a PIO?
A: No. He would need to seek Reserve Bank
prior approval for transfer by way of sale
residential/commercial property in India to a
NRI or a PIO.
Q: Can a foreign national of
non-Indian origin whether resident in India or
outside India transfer by way of sale
residential/property in India acquired with the
specific permission of Reserve Bank to a person
resident in India or outside India?
A: No. A foreign national of non-Indian
origin whether resident in India or outside
India would need to seek prior approval of
Reserve Bank for transfer by way of sale
residential/property in India acquired with the
specific permission of Reserve Bank to a person
resident in India or outside India.
Q: Under general permission available
to whom can NRI/PIO transfer by way of sale his
agricultural land/plantation property/farm house
in India?
A: Under the general permission available
NRI/PIO may transfer by way of sale his
agricultural land/plantation property/farm house
in India to a person resident in India who is a
citizen of India.
Q: Can a foreign national of
non-Indian origin resident outside India
transfer by way of sale agricultural
land/plantation property/farm house acquired by
him in India?
A: A foreign national of non-Indian origin
resident outside India would need to seek prior
approval of Reserve Bank for transfer, by way of
sale, agricultural land/plantation property/farm
house acquired in India.
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