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HomeNRI Zone - FAQ's
 
NRI Zone - FAQ's
 
Acquisition of property
Over a period of time we have seen that a significant number of Non Resident Indians or Persons of Indian origin are buying properties in India. The investment is both for them to come back and also some form of speculation as India as market is giving good returns.
The Indian government now has recognised the demands of the NRI and People of Indian Origin to own property in India. The new act FEMA (the Foreign Exchange Management Act) is very different from the regulation act (FERA) and has made a tremendous difference in acquisition of property, sale of property and even repatriation of money from sale of such property. Overall things have improved for NRIs and it is a great time to be here.
No approvals are required. The government of India has granted general permission for an NRI to buy property in India except for agricultural land/plantation property or farmhouse.
No taxes are required to be paid to buy property in India. PAN card is required if the person has rented this property out and he wants to repatriate that money.
The purchase consideration should be met either out of inward remittances in foreign exchange through normal banking channels or out of funds from NRE/FCNR(B) /NRO account maintained with banks in India.

However, no payment can be made outside India and by Traveller’s Cheque or foreign currency notes.
  • Buyer's bank account name
  • Buyer’s account number
  • Buyer’s bankers name, branch address, city & country
  • Swift code
  • Purpose of remittance
There are no restrictions on the number of residential properties that may be bought by an NRI.
Some of the factors to consider while purchasing a flat are:
  • Locality i.e. transport, schools, hospitals, market, business district, entertainment centres, hotels, restaurants, pollution levels
  • Quoted area of the flat i.e. Carpet, Built Up Area and super Built Up Area
  • Car parking space
  • Quality of construction
  • Reputation of the builder or seller
  • Sufficient water and electric supply, other utilities
  • Cost components : price, stamp duty, registration charges, transfer fees, monthly outgoings and society charges, costs of utilities
  • Potential for resale or renting out of the property
  • Any other distinguishing features or advantages of the property
  • Market Trends about prevalent rates of property in the vicinity and last known transactions
  • Ask for photocopies of the all deeds of title related to the property to be purchased. Examine the deeds to establish the ownership of the property by seller, preferably through an advocate. Ascertain the survey number, village and registration district of the property as these details are required for registration of the sale. Previous encumbrances and loans, if any on the property must be cleared before completion of purchase of the property. The title of the Vendor to the property must be clear and marketable.
  • Check for approved layout plan and approved building plan with number of floors
  • Clearance from Municipality, Electricity, Water, Pollution, Lift authorities
  • Check the building bye-laws in that area to verify any issue with setback, side setback, height, etc
  • Confirm transfer fees, stamp duty and registration charges to be paid on purchase of the property as well as outgoings to be paid for the property i.e. property tax, water and electricity charges, society charges, maintenance charges
The area of an apartment or building, not inclusive of the area of the walls is known as carpet area. This is the area that is actually used and in which a carpet can be laid. When the area of the walls including the balcony is calculated along with the carpet area, it is known as built-up area. The built-up area along with the area under common spaces like lobby, lifts, stairs, garden and swimming pool is called super built-up area.
Sale of property
An NRI can sell residential/commercial property in India to a person resident in India, an NRI or a PIO. However, a PIO can sell residential/commercial property in India only to a resident of India & NRIHe would need prior approval of the RBI for sale of residential/commercial property in India to a PIO.
If an NRI is selling his/her property in India, depending on time or the amount of time he/she has held the property, the sale proceeds would be subjected to capital gains tax.
Yes. Reserve Bank has granted general permission for sale of such 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.
The sale proceeds of immovable property in India can be repatriated by NRI/PIO if the property was acquired of foreign exchange source that is through normal banking channels or by way of debit to NRE/FCNR(B)accounts. However, the amount to be repatriated shall not be more that the amount to paid for the property. The balance amount or capital gain if any, may by credited to NRO account from where it can be repatriated upto 1 Million USD per financial year subject to payment of applicable taxes, for bonafide purposes to the satisfaction of Authorised Dealer. Further sales proceeds of immovable property acquired in India to the extent of repatriable funds used for the acquiring the property is upto two residential properties only.
Yes, you can only repatriate the amount that you have spent on acquiring the property.
Rentals
Yes. NRI/PIOs can freely rent out their immovable property, whether purchase through application of forex or otherwise, without seeking any permission from the RBI. The rental income being a current account transaction is repatriable outside India, only if proper tax is paid or provided for.
India is a signatory to the double taxation avoidance agreement with 60 countries. If an NRI is residing in any of these countries then he/she can take advantage and pay the taxes here in India since the property is situated here. He/she can pay the taxes and can take advantage or equivalent tax rebate in the country of residence.
Acting under the authority of law, the Central Government has so far entered into agreements with countries listed below which have become operative with effect from the assessment year mentioned against them.
S.no.
Name of the country Effective from Assessment Year
1.
Australia 1993-94
2.
Austria 1963-64
3.
Bangladesh 1993-94
4.
Belgium 1989-90
1999-2000 (Revised)
5.
Brazil 1994-95
6.
Belarus 1999-2000
7.
Bulgaria 1997-98
8.
Canada 1987-88;
9.
China 1999-2000 (Revised)
1996-97
10.
Cyprus 1994-95
11.
Czechoslovakia 1986-87
2001-2002 (Revised)
12.
Denfnark 1991-92
13.
Finland 1985-86
Amending protocol
2000-2001
14.
France (Revised) 1996-97
15.
F.R.G. (Original) 1958-59
F.R.G. (Protocol) 1984-85
G.D.R. 1985-86
F.R.G (Revised) 1998-99
16.
Greece 1964-65
17.
Hungary 1989-90
18.
Indonesia 1989-90
19.
Israel 1995-96
20.
Italy (Revised) 1997-98
21.
 Japan (Revised) 1991-92
22.
Jordan 2001-2002
23.
Kazakistan 1999-2000
24.
Kenya 1985-86
25.
Libya 1983-84
26.
Malta 1997-98
27.
Malaysia 1973-74
28.
Mauritius 1983-84
29.
Mongolia 1995-96
30.
Namibia 2000-2001
31.
Nepal 1990-91
32.
Netherlands 1990-91
33.
New Zealand 1988-89
Amending notification
1999-2000
Supp. Protocal 2001-2002
34.
Norway 1988-89
35.
Oman 1999-2000
36.
Philippines 1996-97
37.
Poland 1991-92
38.
Qatar 2001-2002
39.
Romania 1989-90
40.
Singapore 1995-96
41.
South Africa 1999-2000
42.
South Korea 1985-86
43.
Spain 1997-98
44.
Sri Lanka 1981-82
45.
Sweden 1990-91 Revised
1999-2000
46.
Switzerland 1996-97
47.
Syria 1983-84
48.
Tanzania 1983-84
49.
Thailand 1988-89
50.
Trinidad & Tobago 2001-2002
51.
Turkmenistan 1999-2000
52.
Turkey 1995-96
53.
U.A.E. 1995-96
54.
U.A.R. 1970-71
55.
U.K. (Revised) 1995-96
56.
U.S.A. 1992-93
57.
Russian Federation 2000-2001
58.
Uzbekistan 1994-95
59.
Vietnam 1997-98
60.
Zambia 1979-80
Loan
First, the quantum of loan, margin money under the repayment period shall be at par with those applicable to those housing finance provided to Person Resident in India.

Second, the loan amount shall not be credited to NRE/FCNR(B)/NRNR of the borrower.

Third, the loan should be fully secured by equitable mortgage of the property purposed to be acquired and if necessary also by lien on borrowers other assets in India.

Fourth, the repayment of loan shall be through:

  • Normal banking channels
  • NRE account
  • NRO account
  • FCNR account
  • NRNR account
  • NRSR account
  • Rental Income of the property acquired
  • Through relatives as defined under Section 6 of Companies Act
Fifth, rate of interest shall be in conformity with Directives issued by RBI or National Housing Bank. However, banks cannot grant fresh loans/renew existing loans in excess of Rs 20 Lacs against NRE and FCNR (B) deposits either to depositors or to third party.
 
 
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