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NRI FAQs

A section dedicated to help out all the NRIs who wish to buy a home with us.

Who is considered a Non-Residential Indian (NRI)?

An Indian citizen is considered a non-resident when he/she is staying abroad for employment or is engaged in a business or vocation outside of India or is staying abroad under circumstances that indicate his/her intention for staying abroad for an uncertain duration. (Persons who are posted in U.N. organisations and officials who are deputed abroad by Central or State Governments and Public Sector undertakings on temporary assignments are also treated as non-residentials). Indian origin non-residential foreign citizens are treated as equal as non-resident Indian citizens (NRIs).

Who is a Person of Indian Origin (PIO)?

A Person of Indian Origin is an individual who is not a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan and

  • He/She holds an Indian Passport at any time, or
  • Who/Whose father or paternal grandfather was a citizen of India by the virtue of the Indian Constitution or the Citizenship Act, 1955.

What does OCI stand for?

The Overseas Citizenship of India (OCI) is an immigration status that permits a foreign citizen who has an Indian origin the indefinite right to live and work freely in the Republic of India.

Are NRIs permitted to buy real estate in India?

Yes, NRIs can buy and sell both commercial and residential properties in India.

How many properties NRIs can buy? Is there any restriction on it?

No, there is no restriction on the number of residential and commercial properties an NRI can buy in India. However, NRIs are restricted from owning any kind of agricultural land or plantation property or farmhouse in India by the law.

Can NRIs purchase commercial properties in India?

Yes, the general permission of the Reserve Bank of India grants NRIs permission to purchase commercial property other than agricultural land/plantation property/farmhouse provided that the purchase consideration is met either out of inward remittances in foreign exchange via normal banking channels or from the purchaser’s NRE or FCNR accounts which are maintained with banks in India and a declaration is submitted to the Central Office of Reserve Bank from IPI 7 within 90 days from the date of purchase of the property or from which the final payment of purchase consideration is counted.

Is Reserve Bank’s permission is required for NRIs while buying a property in India?

No, because the Reserve Bank of India has granted permission to foreign citizens to purchase immovable property in India for their bona fide residential purposes, whether the resident is in India or abroad.

Are NRIs/POIs required to complete any formalities while purchasing residential immovable properties in India under the general permissions?

A declaration in form IP7 with the Central Office of Reserve Bank at Mumbai needs to be filed within 90 days from the date of purchase of the immovable residential property or purchase consideration’s final copy accompanied by the documents that prove the transaction and bank certificate for the paid consideration.

What documents are required for buying a property in India?

The following documents are required by NRIs while buying a property in India (non-exhaustive).

  • PAN card (Permanent Account Number)
  • OCI/PIO number (In case of OCI/PIO)
  • Passport (For NRIs)
  • Passport size photographs
  • Address proof

What kind of property can an NRI or POI buy?

Agricultural land/plantation property/farmhouse usually cannot be brought by an NRI/POI in India. RBIs approval in consultation with the Government of India is required for proposals to buy such land. The only way an NRI/POI can acquire an agricultural land is through inheritance.

Can residential properties be acquired or disposed by NRIs by a way of gift?

Yes, NRIs have been granted permission by the Reserve Bank of India to acquire or dispose NRI Indian properties by way of gift to or from a relative who is an Indian citizen or a person of Indian origin (PIO) whether a resident of India or not.

Can loans be acquired by NRIs from financial institutes providing housing finance for acquisition of a house/flat for residential purpose?

Certain financial institutions like HDFC, LIC Housing Finance Ltd., etc. have been granted some general permission from the Reserve Bank and some authorized dealers have also been granted permission to lend housing loans to NRIs for the acquisition of an NRI flat/house for self-occupancy under certain conditions. The criteria like the purpose of the loan, margin money and the quantum loan will be just like the ones applicable for residential Indians. The repayment of the loan is required to be made within 15 years and not exceeding it, out of inward remittance through banking channels or out of funds in the investors’ NRE/FCNR/NRO accounts.

What is the loan sanction process and the required documentation?

NRIs are required to submit different documents than those required by the residential Indians, as they are required to submit additional documents, like the copy of their passport, of their work contract, etc. Also, NRIs have to abide by certain eligibility criteria to get home loans in India.

A vital document required for processing a home loan for an NRI is the power of attorney (POA). Since the borrower is not based in India, POA is important; the Home Finance Company would need a ‘representative’ in lieu of the NRI to deal with if needed. The POA is usually drawn on the NRIs wife/parents/children/close relatives or friends, although it not obligatory.

The documents required by NRIs to obtain home loans are bank specific. The general list is as follows:

  • Passport and Visa
  • The appointment letter and contract copy from the applicant’s company
  • The labour card/identity card (translated in English and countersigned by the consulate), salary certificate (in English) that specifies the name, date of joining, designation and salary details, if the applicant is employed in the Middle East
  • Last six months bank statements

Below is the list of documents for Salaried and Self-Employed NRI applicants. There may be additional specific requirements by the bank.

Salaried NRI Applicants:

  • Copy of valid passport and visa showcasing stamps
  • Copy of a valid visa/work permit and equivalent documents supporting the NRI status
  • Statement from overseas bank account showing the last 3 months salary credits
  • Latest contract copy for the evidence of salary/salary certificate/wage slips

Self-Employed NRI Applicants:

  • Copy of valid passport and visa showcasing stamps
  • A brief business profile of the applicant’s/Trade license or an equivalent document
  • The last 6 months statements of the overseas bank account and NRE/NRO account
  • Computation of income, P&L account and B/Sheet for last 3 years certified by the C.A. / CPA or any other relevant authority as the case may be (or equivalent company accounts)

For the NRI/PIO/OCI what is the tax treatment on the income generated on selling or renting the property?

Income tax is not applicable to the mere acquisition of the property. However, any sort of income generated from the purchase of that property, in the form of rent or annual value of the house, if the residential property is only owned by that person in India, and/or short or long term capital gains arising on the sale of this house or part is therefore taxable in the hands of the owner.

Is Capital Gains Tax (CGP) applicable for NRI/PIO/OCI?

Yes, the long-term and short-term gain is applicable in the hands of the non-resident.

How does the Double Tax Avoidance Agreement (DTAA) work for NRIs?

In most countries, the Double Tax Avoidance Agreement (DTAA) on the capital gain from the sale of immovable property will be taxed in the country where the immovable property is located. So, when an NRI owns immovable property in India, that person is liable to pay the tax that is generated on the capital gained on the sale of that property. Similarly, under most tax treaties letting of immovable property in India would be taxed in India.