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NRI Corner

Who is an NRI?

As per India’s Foreign Exchange Management Act (FEMA) 1999, an NRI or Non-Resident Indian is a citizen of India, or a foreign national of Indian-origin, living outside India for employment, business or any other vocation, which would indicate his intention to stay outside India for an indefinite period. An Indian would also be termed as an NRI if his stay in India is less than 182 days during the previous financial year (April-March)

Who is a Person of Indian Origin (PIO)?

A PIO is an individual (not a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan) who has at any time held an Indian passport. Or, one whose either/both parent/s or grandparents were citizens of India, according to the Indian Constitution or the Citizenship Act, 1955.

Do NRIs require consent of the Reserve Bank of India (RBI) to buy immovable property in India?

No, NRIs don’t require consent from the RBI to buy an immovable property in India, provided the property is residential or commercial in nature

Is there any limit on the number of housing properties that an NRI can buy?

No. There is no limit placed on the number of residential properties an NRI can buy in India.

What is meant by a person resident in India?

As per India’s Foreign Exchange Management Act (FEMA) 1999, a person resident in India is a person residing in India for more than 182 days during the previous financial year (April-March) and who has come to, or stays in India either for employment, business or for any other vocation.

Can an NRI or a PIO or a foreign national of non-Indian origin acquire agricultural land/plantation property/farm house in India?

No. A person resident outside India cannot acquire by way of purchase agricultural land/plantation property/farm house in India.

Can NRI or PIO buy property in India jointly with foreign citizen?

No, an NRI or a PIO cannot buy a property in India jointly with a foreign citizen

Can an NRI or PIO buy property in India jointly with other Indian citizens / Persons of Indian Origin?

Yes.

Can a foreign national of non-Indian origin acquire residential property on a lease in India?

Yes. A Foreign National of non-Indian origin, including a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan, can acquire residential properties on lease in India. Provided the lease does not exceed five years, he/she does not require any prior permission from the RBI.

Can an NRI/PIO acquire residential/commercial property by way of gift under the general permission available?

Yes. Under the general RBI guidelines, NRI/PIO may acquire residential/commercial property by way of gift from a person resident in India or an NRI or a PIO.

Can a person resident outside India hold any immovable property in India acquired by way of inheritance from a person resident in India?

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.

Can an NRI or a PIO or a foreign national of non-Indian origin hold any immovable property in India acquired through inheritance from a person resident outside India?

With specific approval from the RBI, a resident outside India may hold an immovable property in India acquired through inheritance from a person resident outside India, provided the owner had acquired such property in accordance with the regulations of the foreign exchange law in force at the time of acquisition, or in accordance with FEMA guidelines.

What should the mode of payment for purchase of residential/commercial property in India by an NRI/PIO be?

Under the general permissions available, an NRI/PIO may purchase residential/commercial property in India out of funds remitted to India through normal banking channels, or through funds held in his NRE/FCNR (B)/NRO account. No amount for the purchase can be paid outside of India.

Can a home/land be sold by an NRI or Person of Indian Origin without the permission of the Reserve Bank of India?

Yes, the RBI has granted general permission for sale of property. However, where another foreign citizen of Indian origin purchases the property, funds towards the purchase consideration should either be remitted to India, or paid out of balances in non-resident accounts maintained with banks in India

Can proceeds of the sale of such properties be remitted out of India?

– In case of residential properties, the repatriation of sale-proceeds is restricted to not more than two properties, and only if the property was purchased from funds held in an NRE Account

– Additionally, the amount repatriated out of India should not exceed the amount paid for acquisition of the immovable property in the foreign exchange received through normal banking channels, or from the funds held in FCNR or NRE Account

What kinds of property can an NRI avail home loans for?

A house which is either ready to move in, under construction or bought from another owner, an NRI is eligible to apply for home loans

– For construction of a property on a plot of land by self

– To purchase a plot allotted by a society/development authority

– To renovate or improve upon an existing property in India

What is the eligibility criteria for obtaining NRI Home Loans?

The eligibility is calculated in the same way as it is done for resident Indians with special emphasis on:

– Qualifications – Graduate (minimum)

– Current job-profile and work experience

– Chances of continuing working abroad for the duration of the loan’s tenure

– Chances of servicing the loan with an extended tenure, in case the applicant needs to return to India

What is the repayment period for the home loan for NRIs?

– Home loan offered to NRIs do not exceed 5 years in major cases. However, some financial institutions offer loans for a term of 7 years as well

– The repayment for the loan is done through EMIs which usually begin after the entire loan is disbursed

– In cases which involve part disbursement, you need to pay simple interest, at the interest rate applicable on the amount disbursed

What is the mode of payment for NRI home loans?

– The housing loan needs to be paid upfront for the entire tenure of the loan, by way of direct remittances from abroad through normal banking channels, or from other financial accounts as may be permitted by RBI

– Generally, payments are done through NRO, NRE, NRNR and FCNR accounts. These allowed accounts may change as per RBI regulations

What are the documents required for obtaining NRI Home Loans?

NRIs are required to submit a few additional documents for home loans. These include:

– A copy of the passport

– A copy of their works contract or the labour card

– A Power of Attorney (POA) as the borrower is not based in India

Are there any tax benefits for Non-Resident Indians buying properties?

No tax benefits are available for NRI’s, unless you file your returns, and subsequently become eligible to avail them.

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