Buying a property undeniably ranks as one of the greatest Indian dreams. So it does not matter which part of the world you live in; a home in India is simply a must. And the Indian laws, over the years, have made this a fairly easy job. The Reserve Bank of India governs such transactions and they fall under the purview of the Foreign Exchange Management Act (FEMA).
An Indian abroad is popularly known as Non-Resident Indian (NRI). NRI is legally defined under the Income Tax Act, 1961 and the Foreign Exchange Management Act, 1999 (FEMA) for applicability of respective laws.
Yes, a non-resident Indian can buy either a residential property or a commercial property in India. Further, there is no limit on the number of residential or commercial properties that an NRI can purchase in India.
Exception: An NRI however cannot buy agricultural land, plantation land or a farm house in India. He cannot even acquire such property as a gift.
There is however, no bar on inheriting such property.
No. RBI permission is not required to buy residential or commercial property in India.
If NRI owns only one property globally and that property is in India, he would not have to pay any income tax on it in India.
Payment for the purchase of property can be made either by way of funds remitted to India from abroad through regular banking channels or through the funds in the NRE, NRO or FCNR Account. No consideration can be paid outside India.
Yes, in fact experts recommend that you give a POA (Power of Attorney) to a person resident in India so that he or she may complete formalities such as registration, possession, execution of agreement of sale etc. A POA can be given to execute all contracts, deeds, mortgages, lease, sell and all matters relating to managing the property. However, at any given time, it would be better to give a specific power of attorney to any person, restricted only to a single action such as only purchase or only for lease. The power of attorney should be executed on a stamp paper or as per the requirement of the country where the POA is executed. You must then get the POA attested by any authorized official of the Indian Embassy/Consulate/Trade commissioner in that country.
An NRI can sell his or her plot in India to an Indian resident/ NRI.
Yes, an NRI can get a plot loan just like any resident Indian by any Indian bank or Non-Banking Financial Company (NBFC), subject to certain conditions. The RBI states that the repayment of the loan must be done by utilizing NRE or NRO accounts.
For purchasing a plot in India an NRI has to file a declaration in form IPI7 along with a certified copy of the sale deed which would be an evidence of the transaction and bank certificate regarding the consideration paid. The declaration should be submitted to the Chief General Manager, Exchange Control Department, [Foreign Investment Division (iii)], Reserve Bank of India, Central Office, Mumbai - 400 001.
In case the declaration is signed by the Power of Attorney holder of the declarant, a copy of the valid Power of Attorney duly certified by a competent authority should be submitted with the declaration.
Explanation: Form IPI7- Declaration of immovable property acquired by way of purchase in India under the general permission granted vide Reserve Bank's Notification No. FERA.152/93-RB dated 26th May 1993.
When an NRI/PIO sells an immovable property other than agricultural land / farm house / plantation property, the authorised dealer may allow repatriation of the sale proceeds outside India, provided the following conditions are followed:
(A) Immovable property acquired by way of purchase
(B) Immovable property acquired by way of inheritance/ legacy/ out of Rupee funds A Non-Resident Indian (NRI) / Person of Indian Origin (PIO) may remit an amount, not exceeding US $ 1,000,000 (US Dollar One million only) per financial year out of the balances held in NRO accounts / sale proceeds of assets by way of purchase / the assets in India acquired by him by way of inheritance / legacy/ out of Rupee funds. This is subject to production of documentary evidence in support of acquisition, inheritance or legacy of assets by the remitter, and a tax clearance / no objection certificate from the Income Tax Authority for the remittance. Remittances exceeding US $ 1,000,000 (US Dollar One million only) in any financial year requires prior permission of the Reserve Bank.
In cases of deed of settlement made by either of his parents or a close relative (as defined in Section 6 of the Companies Act, 1956) and the settlement taking effect on the death of the settler, the original deed of settlement and a tax clearance / No objection certificate from the Income-Tax Authority should be produced for the remittance.
Where the remittance as above is made in more than one instalment, the remittance of all such instalments shall be made through the same Authorised Dealer.
Source of Information: The information represented herein is with accordance to the RBI rules and regulations listed in the RBI website and with consultation of Legal Experts.
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