Presented here, are some general rules and overview regarding purchase of property in India by an NRI. We strongly suggest that at the time of purchase, NRIs should get the correct prevalent rules from the right source.
NRIs can purchase several types of property in India, although certain types need special permission from RBI. It is imperative that NRIs who want to buy property in India, need to be aware of the provisions related to buying /ownership of immovable property, under the Foreign Exchange Management Act (FEMA). Persons of Indian Origin (PIOs) and NRIs are always treated on par with regard to investing in real estate.
An NRI can buy residential or commercial properties in India as per the RBI’s general permission. In these cases, special permission or intimation is not required. There are also no restrictions in the number of properties an NRI can buy in India. The income tax laws also favour NRIs. When an NRI is unable to come to India, he/she can give a Power of Attorney to another person who can execute the deal on his/her behalf.
However, purchase of agricultural land, plantation property and farmhouses in India by NRIs is not allowed by the RBI. But, for purchase of a farmhouse, special permission from RBI is required, and will be considered in a case-to-case basis. NRIs can also buy property jointly with another NRI. But, any person who is not authorised to invest in property in India, or a resident Indian, cannot become a joint holder, no matter what his/her contribution is in the purchase.
If a person who already owns a property in India becomes an NRI, he can continue holding the property in his name in India. Also, if an NRI owned agricultural land, farmhouse, or plantation land before becoming an NRI, he can continue to hold such properties. He can also let out the property in India if he wished. He can remit the rent received from such properties after appropriate tax as per Indian tax laws have been paid on such rent.
An immovable property in India can be gifted or sold by an NRI to a person residing in India. Gifting or transfer of any property to another NRI is also allowed, as long as it is not a farmhouse, plantation property or agricultural property.