Gamut Of Investment Opportunities

Who is a NRI?

Non-Residential Indian (NRI) is a citizen of India, who stays abroad for employement/carrying any business or vocation outside India or stays abroad under some circumstances which indicates an uncertain period of stay abroad is a non- resident. Non-resident foreign citizens of Indian Origin are treated at par with Non Residential Indian (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

  • 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).
Who is OCI?
  • 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
  • A person, who is minor child of a person mentioned in clause (a)

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.

What are the documents that are required when an OCI buys property in INDIA?
  • Pan card (Permanent account number)
  • OCI/PIO card (In case of OCI/PIO)
  • Passport (In case of NRI)
  • Passport size photographs
  • Address proof
Who can purchase immovable property in India?

Under the general guidelines granted by RBI, the following categories can freely purchase immovable property in India:

  • Non-Residential Indian (NRI)- that is a citizen of India residing outside India
  • 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).
Can NRI/PIO acquire land/ plantation property/farm house in India?

No, as per the general permissions set by RBI, it entitles only purchase of residential and commercial property and are the purchase of agricultural land/ plantation property/farm house in India are not available in India.

Is there any scope of relaxatiuon/ exemption for Tax in terms of income generated from property selling or renting for NRI/PIO/OCI?

The mere acquisition of property does not attract income tax. However, any income generated from its ownership of it, in the form of rent/ 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 available for capital gains (short term/ long term) arising on the sale of that house or part thereof is taxable for the owner.

Do NRI/PIO/OCI have to file return in India for their property rental income and Capital Gains Tax?

The Government of India has generated very easy general permissions for NRI/PIO/OCI for purchase in Real Estate Industries in India. They do not have to pay any tax as such but they have to if they are sellling the property/ on rental income.

What is the conditions applied on the sale of the property?

On sale of the property, the profit thus obtained will be considered as a capital gain. If they held the property for less than or equal to 3 years after possession, then the gains would be short term capital gains. This will be included in their total income tax as per the slab rates and if the property has been held for more than 3 years then the resultant gain would be long term capital gains subject to 20% tax plus applicable cess.

Does Capital Gains Tax (CGT) apply to NRI/PIO/OCI?

Yes. Long-term and short- term capital gains are taxable.

Can a foreign national who is a person resident in India purchase immovable property in India?

Yes, a foreign national or a person residing in India can obtain a property in India within the Section 2 (v) of FEMA, 1999 can purchase immovable property in India, but the person concerned would have to obtain prior approval and fulfill the requirements to obtain the property.

While a foreign national resident in India who is a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan would require a formal approval of the Reserve Bank.

Are NRI/PIO/OCI eligible for Housing loans to buy property from any Indian Bank?

An authorised dealer or a housing finance institution in India approved by the National Housing Bank may provide the desired loan amount.

Who can determine whether a person is resident in India or not?

FEMA, residential status is determined by operation law.

If the immovable propoerty was received as inheritance by the NRI/PIO can he repatriate the sale proceeds?

Yes, general permission are available to the NRIs/PIO to repatriate the sale proceeds of the immovable property inherited from a person who is the citizen of this country. NRI/PIO can be repatriated even if the property is inherited from a person resident outside India (with approval of Reserve Bank).

If the immovable property was acquired by way of gift by the NRI/PIO, can he repatriate abroad the funds from sale?

The sale proceeds of immovable property acquired by way of gift should be credited to NRO account only. From the balance in the NRO account, NRI/PIO may remit up to USD one million, per financial year, subject to the satisfaction of Authorised Dealer and payment of applicable taxes.

Can an NRI/PIO/foreign national sell his residential/ commercial property?
  • Any NRI can sell property in India to-
    • a person resident in India or
    • an NRI or
    • a PIO
  • PIO can sell property in India to-
    • person resident in India.
    • an NRI or
    • a PIO – with the prior approval of Reserve Bank
  • Foreign national of non-Indian origin including a citizen of Pakistan or Bangaladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan can sell property in India with prior approval of Reserve Bank to-
    • a person resident in India
    • an NRI
    • a PIO