Property has been an invaluable asset since time immemorial. Purchasing a property is one of the best options for investment anywhere across the globe. Indian laws and policies are very supportive of NRIs investing in India. With continuous amendments and recommendations being done in the Land Acquisition Act, revisions in the Real Estate Regulatory bill, and relaxation of FDI rules, NRIs have a greater scope of investing and reaping higher benefits in the Indian property market.
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Non-Resident Indians (NRIs) are Indian citizens who reside outside of India to work, conduct business, engage in a profession there, or who do so under circumstances that indicate they intend to do so for an ambiguous length of time. Indian-origin non-resident foreign nationals are treated as Non-Resident Indians (NRIs).
A person of Indian Origin (PIO) is defined as an individual who is not a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, or Bhutan and who (a) at any time held an Indian passport or (b) whose father or grandfather was an Indian citizen under the Indian Constitution or the Citizenship Act of 1955. (57 of 1955).
Any person of full age and capacity:
Who is a citizen of another country, but was a citizen of India at the time of, or at any time after, the commencement of the constitution, or Who is a citizen of another country, but was eligible to become a citizen of India at the time of the commencement of the constitution, or Who is a citizen of another country, but belongs to a territory that became part of India after the 15th Day of August 1947. Who is (A) A child of such a citizen, or (B) A person, who is a minor child of a person mentioned in clause provided that no person, who is or had been a citizen of Pakistan, Bangladesh shall be eligible for registration as an Overseas Citizen of India.
The following groups are free to buy real estate in India under the broad permission provided by the RBI:
(a) Non-Resident Indians (NRIs) are Indian citizens who reside outside of India.
() Persons of Indian Origin (PIOs) are those who have held Indian passports at any time or whose father or grandfather was an Indian citizen under the terms of the Indian Constitution or the Citizenship Act of 1955, and who are not citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, or Bhutan (57 of 1955). Persons of Indian origin (PIOs) are those who have held Indian passports at any time or whose father or grandfather was an Indian citizen under the terms of the Indian Constitution or the Citizenship Act of 1955, and who are not citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, or Bhutan (57 of 1955). The general permission, however, does not apply to the purchase of farmland, plantation property, farmhouse, or agricultural land but only to residential or commercial real estate in India. Except for agricultural land, plantation property, and farmhouses, OCI can buy immovable property in India.
No. However, a person who lives outside of India but is a citizen of India (NRI) and a Person of Indian Origin (PIO) may only purchase a residential or commercial property in India with general permission.
The purchase consideration should be covered by either of the immovable property or the final payment of the purchase consideration, they must file a declaration in form IPI 7 with the Central Office of the Reserve Bank in Mumbai, along with a certified copy of the document providing necessary proofs of the transactions and a bank certificate regarding the consideration paid.
Yes, the Reserve Bank has given broad approval for the sale of such property. The funds for the purchase consideration should, however, either be remitted to India or paid out of the balance in NRE / FCNR accounts, regardless of whether the property is bought by another foreign citizen of Indian origin.
For residential properties acquired on or after May 26, 1993, the Reserve Bank will consider requests for the repatriation of sale proceeds up to the amount paid in foreign currency for the purchase of two such properties. The remaining amount of the sale proceeds, if any, or the sale proceeds for any properties purchased before May 26, 1993, must be credited to the owner of the property's regular non-resident rupee account.
Within 90 days of the sale of the property, applications for the necessary authorization for the remittance of sale proceeds should be submitted in form IPI 8 to the Central Office of the Reserve Bank in Mumbai. Applications for the return of sale proceeds will be taken into consideration if they are submitted after three years have passed since the final purchase deed or three years from the date that the final installment of consideration was paid, whichever comes first.
Yes. Subject to following all applicable tax laws, the Reserve Bank has given general permission to a foreign citizen of Indian origin to acquire or dispose of real estate 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.
Yes. The Reserve Bank of India has given all immovable property in India general permission to be rented out. The renter's income and any investment returns from it are eligible for repatriation.
The number of residential or commercial properties an NRI can own in India is unrestricted. However, the law prohibits NRIs from purchasing any type of farmhouse, plantation property, or agricultural land in India.
Yes, under the general permission provided by the Reserve Bank, property other than agricultural land, farmhouses, and plantation properties may be purchased by NRIs provided the purchase consideration is satisfied either out of inward remittances in foreign exchange through standard banking channels or out of funds from the purchaser's NRE/FCNR accounts held with Indian banks, and a declaration is submitted to the Central Office of the Reserve Bank in form IPI 7 within 90 days.
Property purchases alone do not trigger income tax. However, any income derived from owning it, whether in the form of rent (if it is rented out) or the annual value of the home (if it is not rented out and is not the only residential property owned by that person in India), as well as any short or long-term capital gains from the sale of the home or a portion of it, is taxable in the owner's hands.
Yes. In the hands of non-residents, both long and short-term capital gains are subject to taxation.
According to the Double Tax Avoidance Agreement (DTAA) with the majority of nations, capital gains from the sale of immovable property will be taxed in the nation where the property is located. Therefore, if an NRI owns immovable property in India, the capital gains from the sale of the property will be subject to Indian taxation. Similarly, the majority of tax treaties require India to tax the leasing of the immovable property there.