NRI's :: FAQ's

Q.1
Do non-resident Indian citizens require permission of Reserve Bank to acquire residential/commercial property in India?
Ans.
No.
Q.2
Is It true that foreign citizens of Indian origin require permission of Reserve Bank to purchase immovable property in India for their residential use?
Ans.
Yes. However, Reserve Bank has granted general permission to foreign citizens of Indian origin, whether resident in India or abroad, to purchase immovable property in India for their bona fide residential purpose. They are, therefore, not required to obtain separate permission of Reserve Bank
Q.3
How should the purchase consideration for the residential immovable property be paid by foreign citizens of Indian origin under the general permission?
Ans.
The purchase consideration should be met either out of inward remittances in foreign exchange through normal banking channels or out of funds from NTE/FCNR accounts maintained with banks in India.
Q.4
While purchasingresidential immovable property in India under the general permission, what are the formalities to be completed by a foreign citizen of Indian origin and whether they are allowed to sell it further without the permission of Reserve Bank?.
Ans.
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 transaction and bank certificate regarding the consideration paid. Yes, Reserve Bank has granted general permission for sale of such property. However, where 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 balances in NRE/FCNR accounts.
Q.5
Can sale proceeds of such property if and when sold be remitted out of India?
Ans.
In respect of 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.
Q.6
What are the conditions to be fulfilled if repatriation of sale proceeds is desired? What is the procedure for seeking such repatriation?
Ans.
Applications for repatriation of sale proceeds are considered provided the sale takes place after three years from the date of final purchase deed or from the date of payment of final installment of consideration amount, whichever is later. 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
Q.7
Can foreign citizens of Indian origin acquire or dispose of residential property by way of gift ?
Ans.
Yes. Reserve Bank has granted general permission to foreign citizens 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, provided gift tax has been paid.
Q.8
Are they allowed to acquire and dispose of commercial properties in India? Can sale proceeds of such property be remitted out of India?
Ans.
Yes, They can dispose of such property. Repatriation of original investment in respect of properties purchased by foreign citizens of Indian origin on or after 26th May 1993 will be allowed to be remitted up to the consideration amount originally remitted from abroad provided the property is sold after a period of three years from the date of the final purchase deed or from the date of payment of final installment of consideration amount, whichever is later. Applications for the purpose are required to be made to the Central Office of Reserve Bank within 90 days of the sale of property info.
Q.9
Can the properties (residential/commercial) be given on rent if not required for immediate use?
Ans.
Yes. Reserve Bank has granted general permission for letting out of any immovable property in India. The rental income or proceeds of any investment of such income has to be credited to NRO account.
Q.10
Can NRIs obtain loans for acquisition of a house/flat for residential purpose from financial institutions providing housing finance? Are there any authorized housing loan dealers, which can grant loan to NRIs acquisition of a flat/house for residential purposes?
Ans.
Reserve Bank has granted general permission to certain financial institutions providing housing finance e.g. HDFC,LIC Housing Finance Ltd.,etc. to grant housing loans to non-resident Indian nationals for acquisition of houses/flats for self-occupation subject to certain conditions. Authorized housing loan dealers have been granted permission to grant loans up to non-resident Indian nationals for acquisition of house/flat for self-occupation on their return to India subject to certain conditions. Repayment of the loan should be made within a period not exceeding 15 years out of inward remittance through banking channels or out of funds held in the investments' NRE/FCNR accounts.
Q.11
What are the options available for obtaining guarantors while applying for a HDFC/LIC loan?
Ans.
One will need a guarantor for a loan mainly for collateral security. The guarantor will have to demonstrate appropriate net worth to cover for the loan. Usually one can have a guarantor in any city where the loan issuer has a branch. Talk to loan issuers they will work something out for NRIs and foreign banks.
Q.12
Is there any way to avoid Power of Attorney demanded by the developers in their favor at the time of purchase?
Ans.
One can choose not to grant the Power of Attorney (POA) to the developers. However this will mandate the mailing of all documents to your foreign residence and associated time delays. A good compromise is to grant the POA to the builder only for specific necessary items.
Q.13
Can a PIO transfer by way of sale his residential/commercial property to NRI or a PIO?
Ans.
No. He would need to seek Reserve Bank prior approval for transfer by way of sale residential/commercial property in India to a NRI or a PIO But he can sell it to a person who is resident of India.
Q.14
Is NRI/PIO who has purchased residential/commercial property under general permission required to file any documents with Reserve Bank of India? Are there any restrictions on the number of such property that he can purchase under general permission available?
Ans.
NRI/PIO who has purchased residential/commercial property under general permission is not required to file any documents with the Reserve Bank. There is no restriction on number of residential/commercial property that NRI/PIO can purchase under the general permission available.
Q.15
Can a foreign national of non-Indian origin resident outside India acquire any immovable property in India by way of purchase? Can they have the property on lease?
Ans.
No. Under section 2 (ze) of the Foreign Exchange Management Act, 1999 ‘transfer' includes among others, ‘purchase'. Therefore, a foreign national of non-Indian origin resident outside India cannot acquire any immovable property in India by way of purchase but any foreign National of non-Indian origin including a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan may acquire only residential accommodation on lease, not exceeding five years for which he/she does not require prior permission of Reserve Bank of India.
Q.16
Can a person resident outside India (i.e. a NRI or a PIO or a foreign national of non-Indian origin) acquire agricultural land/plantation property/farm house in India by way of purchase?
Ans.
No. A person resident outside India cannot acquire by way of purchase agricultural land/plantation property/farm house in India.
Q.17
Under general permission available to whom can NRI transfer by way of sale his residential/commercial property?
Ans.
NRI can transfer by way of sale residential/commercial property in India to a person resident in India or to a NRI or a PIO.
Q.18
Can a PIO transfers by way of sale his residential/commercial property to a NRI or a PIO?
Ans.
No. He would need to seek Reserve Bank prior approval for transfer by way of sale residential/commercial property in India to a NRI or a PIO.