INFORMATION FOR NRIs ON BUYING PROPERTY IN INDIA
A Non Resident Indian (NRI) is a person of Indian origin but not residing in India.
Under the Income Tax Act to be assessed as a "resident", an individual should fulfill either of the two conditions:
Under the Income Tax Act to be assessed as a "resident", an individual should fulfill either of the two conditions:
- He should have been present in India in the previous year for at least 182 days. This period of 182 days need not be continuous.
- He should have been in India for at least 365 days in the preceding four years and he stayed in India for not less than 60 days in the previous year in consideration.
All those persons who are not 'residents' are called 'Non Residents'.
For the purpose of transfer of immovable property a Person of Indian Origin (PIO) origin' 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 fulfils any of the conditions given below:
-He has held an Indian passport or;
-He or either of his parents or any of his grand-parents was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955); or
-The person is a spouse of an Indian citizen or a person referred to in sub-clause (a) or (b).
Rules relating to NRI / PIO investment in real estate have been considerably liberalized and simplified. Foreign citizens of Indian origin (PIOs) have been permitted to invest without the need to obtain approval from the Reserve Bank of India. With the passage of FEMA, the power to effect repatriation proceeds has been decentralized and delegated to authorized foreign exchange dealers. What is more, even the rental income can be repatriated now. It makes sense for NRIs now to earmark a portion of their investment portfolio in real estate and earn competitive return on investment.
In exercise of the powers conferred by clause (i) of sub-section (3) of Section 6, subsection.
Overseas Corporate Body (OCB)
Overseas corporate body means
- Companies, partnership firms, societies and other corporate bodies
- 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 irrevocably held by such persons.
The various facilities granted to NRIs are also available, with certain exceptions, to OCBs so long as the ownership/beneficial interest held in them by persons of Indian nationality/origin resident outside India continues to be at or above the level of 60%.
Foreign Direct Investment In Real Estate
FDI provides for 100% foreign participation by NRI/OCB's in housing and real estate development sector in following areas:
- Development of serviced plots and construction of residential premises
- Construction of residential and business premises including business centres and offices
- Development of townships
- City and urban infrastructure facilities
- Manufacture of building material
- Participatory ventures in all of the above
- Investment in housing finance institutions
Acquisition of property in india by an NRI:
A person resident outside India who is a citizen of India may
-acquire any immovable property in India other than agricultural/plantation/farm house.
Transfer of property in india by an NRI:
A person resident outside India who is a citizen of India may -
- Transfer any immovable property in India to a person resident in India.
- Transfer any immovable property other than agricultural or plantation property or farmhouse to a person resident outside India who is a citizen of India or to a person of Indian origin resident outside India.
Acquisition of Property in India by a person of Indian Origin
A person of Indian origin resident outside India may -
- Acquire any immovable property other than agricultural land/farm house/ plantation property in India by purchase, from out of
- Funds received in India by way of inward remittance from any place outside India or
- Funds held in any non-resident account maintained in accordance with the provisions of the Act and the regulations made by the Reserve Bank under the Act.
- Acquire any immovable property in India other than agricultural land / farm house /plantation property by way of gift from a person resident in India or from a person resident outside India who is a citizen of India or from a person of Indian origin resident outside India
- Acquire any immovable property in India by way of inheritance from a person resident outside India who had acquired such property in accordance with the provisions of the foreign exchange law in force at the time of acquisition by him or the provisions of these Regulations or from a person resident in India
- It is necessary for a PIO to purchase property through NRE or NRO accounts.
Transfer of Property in India By a person of Indian Origin
A person of Indian origin resident outside India may -
- Transfer any immovable property in India other than agricultural land/farm house/plantation property, by way of sale to a person resident in India
- Transfer agricultural land/farm house/ plantation property in India, by way of gift or sale to a person resident in India who is a citizen of India
- Transfer residential or commercial property in India by way of gift to a person resident in India or to a person resident outside India who is a citizen of India or to a person of Indian Origin resident outside India.
- Transfer an immovable property being agricultural land or plantation property or farmhouse in India by way of a gift or sale to a person resident in India without any permission from the RBI provided that the purchaser is a resident as well as a citizen of India.
Acquisition of Immovable Property for carrying on a Permitted Activity:-
A person resident outside India who has established in India in accordance with the Foreign Exchange Management (Establishment in India of Branch or Office or other Place of Business) Regulations, 2000, a branch, office or other place of business for carrying on in India any activity, excluding a liaison office, may -
- Acquire any immovable property in India, which is necessary for or incidental to carrying on such activity; Provided that
- all applicable laws, rules, regulations or directions for the time being in force are duly complied with; and
- the person files with the Reserve Bank a declaration in the form IPI annexed to these regulations, not later than ninety days from the date of such acquisition
- Transfer by way of mortgage to an authorised dealer as a security for any borrowing, the immovable property acquired in pursuance of clause (a).
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