Legal provisions – purchasing property by NRIs in India

Legal provisions – purchasing property by NRIs in India

If you are a Non-Resident Indian and not aware about the legalities of owning or purchasing real estate in India, you would like to read on to enlighten yourself on the legal provisions set by the competent authorities pertaining to the purchase or owning of an immovable property in India under the Foreign Exchange Management Act (FEMA). As per the act, NRIs and persons of Indian origin (PIOs) are treated at par for the purpose of investment in real estate in the country.

With regards to the Types of properties, where NRIs or PIOs can invest, The Reserve Bank of India gives general permission to NRIs to purchase any residential or commercial property in India. As per the guidelines, the investor is neither required to seek any specific permission nor send any communication or intimation in this regard to the RBI. Under the existing general permissions as well as the Income Tax laws, an NRI is permitted to purchase any number of residential or commercial properties in India.

However, under the same general permissions, an NRI is not allowed to purchase any agricultural land or plantation property like farmhouses in the country. Nonetheless, if an NRI wishes to buy a farmhouse or plantations, he will be required to approach the RBI for a specific permission which will be considered on a case-to-case basis.

With regards to joint ownership in real estate, An NRI can purchase the property either as a single owner or jointly with any other NRI. However, a resident Indian or a person who is otherwise not eligible to invest in a property in India cannot become a joint holder irrespective of the second holder’s contribution towards the purchase.

Further, in case a person who already owns a property in India becomes an NRI later, he can continue to hold the property in his name in India even if it is an agricultural land, plantation property, or farmhouse that he owned when he became an NRI. NRIs are permitted to lease out the property irrespective of when it was acquired and the rent received from such property can also be remitted, but only after appropriate Indian taxes have been paid on such receivables.

With respect to sale or transfer of property owned by a Non-Resident Indian, he is allowed to sell or gift an immovable asset to any person resident in India as well as another NRI. However in case of   transfer, sale or gift to an NRI, the property cannot be an agricultural land, a farmhouse or plantation territory.