Can a NRI / PIO acquire immovable property in India?

As per Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations 2000, general permission is available to NRI and PIO to freely purchase immovable property in India.

The general permission, however, covers purchase of residential and commercial property but does not include purchase of agricultural land / plantation property / farm house in India.

Further, there are no restrictions on the number of residential / commercial properties that can be purchased by the NRI / PIO in India

 

What is the mode of payment by NRI / PIO for purchase of immovable property?

Payment for purchase of immovable property in India could be made by NRI / PIO either by way of inward remittance to India through normal banking channel or through funds held in Non-Resident (External) Rupee account [‘NRE account’] / Non-Resident Ordinary Rupee account [‘NRO account’].

Further, no payment can be made by NRI / PIO either by traveller’s cheque or by foreign currency notes or any other mode for the purchase of immovable property in India.

 

Can a NRI / PIO take a loan to acquire immovable property?

NRI / PIO can avail of housing loan in rupees from an Authorized Dealer or housing finance institution in India approved by National Housing Bank (‘NHB’) for acquisition of a residential accommodation in India. However, this is subject to certain conditions specified below:

1. The quantum of loans, margin money and the period of repayment shall be at par with those applicable to housing finance provided to a person resident in India;

2. The loan amount shall not be credited to NRE / FCNR account of the borrower;

3. The loan should be fully secured by equitable mortgage of the property;

4. Such a loan shall be repaid either by way of inward remittance through normal banking channel or by debit to his NRE / FCNR (B) / NRO account or out of rental income from such property or by the borrower's close relatives, as defined in section 6 of the Companies Act, 1956, through their account in India by crediting the borrower's loan account; and

5. The rate of interest on the loan should conform to the directives issued by the RBI or the NHB.\

NRI / PIO would be required to take prior RBI approval for taking loan from other sources for acquisition of residential property in India or for acquisition of commercial property.

 

Can a NRI transfer immovable property in India by way of sale / gift?

General permission is given to NRI to transfer the immovable property in India by way of sale or gift either to a person resident in India or to NRI or to PIO.

A PIO can transfer the immovable property in India by way of gift, under general permission, to a person resident in India or to NRI or to PIO.

However, in connection with transfer of immovable property by way of sale, a PIO can transfer any immovable property in India, under general permission, by way of sale only to a person resident in India.

Disclaimer:

The conclusions reached and views expressed above are matters of opinion. Our opinion is based on our understanding of the law and regulations prevailing as on date of publishing and our past experience with the tax and/or regulatory authorities. However, there can be no assurance that the tax authorities or regulators may not take a position contrary to our views. 

Legal opinion should be obtained by investors prior to investing and Vankvani’s Builders shall not be responsible for loss caused to any party on the basis of its opinion as stated above.