Who is an NRI?
Non-Resident Indian (NRI) is a citizen of India, who stays abroad for employment/carrying on business or vocation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad, is a non-resident. Non-resident foreign citizens of Indian Origin are treated at par with Non-Resident Indians (NRIs).
Who is a PIO?
Person of Indian Origin (PIO) (not being a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan), who (a) at any time, held an Indian passport, or (b) who or either of whose father or whose grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955).
Who is an OCI?
(a) Any person of full age and capacity:
Who is a citizen of another country, but was a citizen of India at the time of, or at any time after, the commencement of the constitution, or
Who is a citizen of another country, but was eligible to become a citizen of India at the time of the commencement of the constitution, or
Who is a citizen of another country, but belongs to a territory that became part of India after the 15th Day of August, 1947.
Who is a child of such a citizen, or (b) A person, who is minor child of a person mentioned in clause
Provided that no person, who is or had been a citizen of Pakistan, Bangladesh shall be eligible for registration as an Overseas Citizen of India.
Who can purchase immovable property in India?
Under the general permission granted by RBI, the following categories can freely purchase immovable property in India:
(a) Non-Resident Indian (NRI)- that is a citizen of India residing outside India
(b) Person of Indian Origin (PIO)- that is an individual (not being a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan), who
at any time, held Indian passport or
who or either of whose father or whose grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955).
The general permission, however, covers only purchase of residential and commercial property and not for purchase of agricultural land/plantation property/farm house in India. OCI can purchase immovable property in India except agricultural land/plantation property/farmhouse.
Is permission required from RBI to acquire/ purchase immovable property in India?
No. General Permission is available to purchase only a residential/commercial property in India to a person resident outside India who is a citizen of India (NRI) and who is a Person of Indian Origin (PIO).
What is the manner and formalities required towards the payments to be done under general permission guidelines?
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 accounts maintained with banks in India. They are required to file a declaration in form IPI 7 with the Central Office of Reserve Bank at Mumbai within a period of 90 days from the date of purchase of immovable property or final payment of purchase consideration along with a certified copy of the document evidencing the transactions and bank certificate regarding the consideration paid.
Can such property be sold without permission of Reserve Bank?
Yes, Reserve Bank has granted general permission for sale of such property. However, whether the property is purchased by another foreign citizen of Indian Origin, funds towards the purchase consideration should either be remitted to India or paid out of balance in NRE / FCNR accounts.
Can sales proceeds of such property be remitted out of India?
With respect to residential properties purchased on or after 26th May 1993, Reserve Bank considers applications for repatriation of sale proceeds up to the consideration amount remitted in foreign exchange for the acquisition of the property for two such properties. The balance amount of sale proceeds if any or sale proceeds in respect of properties purchased prior to 26th May 1993 will have to be credited to the ordinary non-resident rupee account of the owner of the property.
What is the procedure for seeking repatriation and conditions required towards the sale proceeds?
Applications for necessary permission for remittance of sale proceeds should be made in form IPI 8 to the Central Office of Reserve Bank at Jaipur within 90 days of the sale of the property. Applications for repatriation of sale proceeds will be considered, provided the sale takes place after three years from the date of final purchase deed from the date of payment of final instalment of consideration amount, whichever is later.
Can a foreign citizen of Indian origin acquire or dispose of such property by way of gift to relatives/ registered charitable trust/ organizations in India or abroad?
Yes. Reserve Bank has granted general permission to a foreign citizen of Indian Origin to acquire or dispose of properties up to two houses by way of gift from or to a relative who may be an Indian Citizen or a person of Indian origin whether resident in India or not, subject to compliance with applicable tax laws.
Can the properties be given on rent if not required for immediate use?
Yes. Reserve Bank has granted general permission for letting out any immovable property in India. The rental income or proceeds of any investment of such income are eligible for repatriation.
Is there any restriction on the number of properties NRIs can buy in India?
There is no restriction on the number of residential or commercial properties an NRI can own in India. However, the law restricts NRIs from purchasing any kind of agricultural land/ plantation property/ farm house in India.
Can NRIs acquire commercial properties in India?
Yes, under the general permission granted by the Reserve Bank, property other than agricultural land/farm house/plantation property can be acquired by NRIs provided the purchase consideration is met either out of inward remittances in foreign exchange through normal banking channels or out of funds from the purchaser's NRE/FCNR accounts maintained with banks in India and a declaration is submitted to the Central Office of Reserve Bank in form IPI 7 within a period of 90 days from the date of purchase of the property/final payment of purchase consideration.
What is the Tax treatment for income generated from property selling or renting for NRI/PIO/OCI?
The mere acquisition of property does not attract income tax. However, any income accruing from the ownership of it, in the form of rent (if it is let out)/annual value of the house (if is not let out and it is not the only residential property owned by that person in India) and/or capital gains (short term or long term) arising on the sale of this house or part thereof is taxable in the hands of the owner.
Does Capital Gains Tax (CGT) apply to NRI / PIO / OCI?
Yes. Long-term and short-term capital gains are taxable in the hands of non-residents.
How does Double Taxation Avoidance Agreement work in case of NRIs?
In case of sale of an immovable property, the Double Tax Avoidance Agreement (DTAA) with most countries state that capital gains will be taxed in the country where the immovable property is situated. Hence, if an NRI owns immovable property in India, then he/she will be subject to pay tax in India on the capital gains which arise on the sale of the property. Similarly, letting of immovable property in India would be taxed in India under most tax treaties.
Non-Resident Indian (NRI) is a citizen of India, who stays abroad for employment/carrying on business or vocation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad, is a non-resident. Non-resident foreign citizens of Indian Origin are treated at par with Non-Resident Indians (NRIs).
Person of Indian Origin (PIO) (not being a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan), who (a) at any time, held an Indian passport, or (b) who or either of whose father or whose grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955).
(a) Any person of full age and capacity: Who is a citizen of another country, but was a citizen of India at the time of, or at any time after, the commencement of the constitution, or Who is a citizen of another country, but was eligible to become a citizen of India at the time of the commencement of the constitution, or Who is a citizen of another country, but belongs to a territory that became part of India after the 15th Day of August, 1947. Who is a child of such a citizen, or (b) A person, who is minor child of a person mentioned in clause Provided that no person, who is or had been a citizen of Pakistan, Bangladesh shall be eligible for registration as an Overseas Citizen of India.
Under the general permission granted by RBI, the following categories can freely purchase immovable property in India: (a) Non-Resident Indian (NRI)- that is a citizen of India residing outside India (b) Person of Indian Origin (PIO)- that is an individual (not being a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan), who at any time, held Indian passport or who or either of whose father or whose grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955). The general permission, however, covers only purchase of residential and commercial property and not for purchase of agricultural land/plantation property/farm house in India. OCI can purchase immovable property in India except agricultural land/plantation property/farmhouse.
No. General Permission is available to purchase only a residential/commercial property in India to a person resident outside India who is a citizen of India (NRI) and who is a Person of Indian Origin (PIO).
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 accounts maintained with banks in India. They are required to file a declaration in form IPI 7 with the Central Office of Reserve Bank at Mumbai within a period of 90 days from the date of purchase of immovable property or final payment of purchase consideration along with a certified copy of the document evidencing the transactions and bank certificate regarding the consideration paid.
Yes, Reserve Bank has granted general permission for sale of such property. However, whether the property is purchased by another foreign citizen of Indian Origin, funds towards the purchase consideration should either be remitted to India or paid out of balance in NRE / FCNR accounts.
With respect to residential properties purchased on or after 26th May 1993, Reserve Bank considers applications for repatriation of sale proceeds up to the consideration amount remitted in foreign exchange for the acquisition of the property for two such properties. The balance amount of sale proceeds if any or sale proceeds in respect of properties purchased prior to 26th May 1993 will have to be credited to the ordinary non-resident rupee account of the owner of the property.
Applications for necessary permission for remittance of sale proceeds should be made in form IPI 8 to the Central Office of Reserve Bank at Mumbai within 90 days of the sale of the property. Applications for repatriation of sale proceeds will be considered, provided the sale takes place after three years from the date of final purchase deed from the date of payment of final instalment of consideration amount, whichever is later.
Yes. Reserve Bank has granted general permission to a foreign citizen of Indian Origin to acquire or dispose of properties up to two houses by way of gift from or to a relative who may be an Indian Citizen or a person of Indian origin whether resident in India or not, subject to compliance with applicable tax laws.
Yes. Reserve Bank has granted general permission for letting out any immovable property in India. The rental income or proceeds of any investment of such income are eligible for repatriation.
There is no restriction on the number of residential or commercial properties an NRI can own in India. However, the law restricts NRIs from purchasing any kind of agricultural land/ plantation property/ farm house in India.
Yes, under the general permission granted by the Reserve Bank, property other than agricultural land/farm house/plantation property can be acquired by NRIs provided the purchase consideration is met either out of inward remittances in foreign exchange through normal banking channels or out of funds from the purchaser's NRE/FCNR accounts maintained with banks in India and a declaration is submitted to the Central Office of Reserve Bank in form IPI 7 within a period of 90 days from the date of purchase of the property/final payment of purchase consideration.
The mere acquisition of property does not attract income tax. However, any income accruing from the ownership of it, in the form of rent (if it is let out)/annual value of the house (if is not let out and it is not the only residential property owned by that person in India) and/or capital gains (short term or long term) arising on the sale of this house or part thereof is taxable in the hands of the owner.
Yes. Long-term and short-term capital gains are taxable in the hands of non-residents.
In case of sale of an immovable property, the Double Tax Avoidance Agreement (DTAA) with most countries state that capital gains will be taxed in the country where the immovable property is situated. Hence, if an NRI owns immovable property in India, then he/she will be subject to pay tax in India on the capital gains which arise on the sale of the property. Similarly, letting of immovable property in India would be taxed in India under most tax treaties.