Talk to any Non-Resident Indian (NRI) and they will give you a list of reasons why it is important to own an apartment or two in the motherland, because you never know when the love affair with the foreign land will end. But wait, it is not that easy for NRIs to buy property in India. There are several rules that govern such transactions. For your benefit, we have compiled a list of the 7 most frequently-asked questions (FAQs) that every NRI must go through.
1) Who is an NRI?
The Indian government defines an NRI as a citizen of India who holds an Indian passport and has temporarily migrated to another country for six months or more for work, education, to live there or for any other purpose.
2) What laws govern property purchases by NRIs?
In India, the Foreign Exchange Management Act of 1999 (FEMA) regulates the purchase of properties by NRIs, Persons of Indian Origin (PIO) and foreign citizens.
3) Are NRIs allowed to purchase property?
An NRI can purchase any immovable property in India other than agricultural land, plantation property and farm houses.
4) How are NRIs allowed to pay for property?
NRIs can pay for buying immovable property (other than restricted categories) out of funds received in India through normal banking channels or by way of inward remittance from any place outside India or by debit to his NRE / FCNR (B) / NRO account. These payments cannot be made either by travellers’cheques or by foreign currency notes or by any other mode except those specifically mentioned above.
5) Can NRIs jointly own property?
An NRI cannot jointly purchase property with anyone except for or with another NRI.
6) Are there any restrictions to transfer of property?
There are no specific restrictions on transfer of any immovable property as long as it is sold or gifted to an Indian resident. But an NRI cannot sell agricultural land, plantation property or farm houses to another NRI or a PIO resident outside India.
7) So who can an NRI sell this restricted property to?
NRIs and PIOs have the permission to sell it to a person who is a resident citizen of India, provided that the property was acquired by the NRI while they were a resident of India.
For more information on taxes, permissions and regulations governing property purchases by NRIs, read our other article – An 8-point checklist for NRIs buying or selling property in India
Edited by Nikhil Narayan Sivadas