A NRI is a person resident outside India who is either a citizen of India or a person of Indian origin. A NRI is an Indian Citizen who has migrated to another Country. For all official purposes the Government of India considers Indian National away from India for more than 182 days, in a year, as Non Resident Indian (NRI).
A person of Indian origin means an individual (not being a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan) who:
  • Held an Indian Passport at any time, or
  • Who or whose father or paternal grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955.

NRIs of Indian origin can acquire immovable property other than agricultural land/ plantation property/ farm house in India.

NRIs may transfer immovable property to a Person of Indian origin (PIO) or Indian citizen. Payment of acquisition of immovable property can be done through normal banking channels [Dr to NRE/NRO/FCNR Account]. Such payments cannot be made either by Traveller’s cheque and foreign currency notes.

PIO can purchase immovable property, acquire property by the way of gift or inheritance. Immovable property in India by Foreign Embassies / Diplomats / Consulate Generals can be acquired provided clearance from Government of India, Ministry of External Affairs is obtained and the consideration in India is paid out of funds remitted from abroad through normal Banking Channels.

NRIs can earn rental income. It should be credited to the NRO account.

If rental income directly remitted to abroad then certificate by CA.

TDS @30% should be deducted and the deductor should have TAN No. and he should provide TDS certificate.

If the deductor does not deduct TDS then he is responsible for non deduction of TDS.

Rent will be taxed in the country in which the property is situated and due credit will be taken. For claiming refund of excess TDS, filing of Return of income is compulsory.

NRIs can avail home loans for purchase of property in India. The tenure may extend from 7-20 years and 25 years in exceptional cases (Extension at the sole discretion of the bank).

NRIs can avail home loan for maximum 80-85 % of the value of property depending upon individual gross monthly earnings. This amount is up to 36-40 times of the Gross Monthly Income.

The repayment of the loans availed by NRI can be made only through the NRO Account and not through any other sources.

The banks stress on keeping first mortgage of property in their name and if the property is under construction, an additional security such as guarantee of third party is required. Third party can either be a resident or non resident of the country.

Property acquired by the way of Purchase :
  • An NRI or PIO or his successor shall not, except with the prior permission of Reserve Bank, repatriate outside India the sale proceeds of any immovable property (Sale / Rent).
  • In the event of sale of property other than agriculture land/ farm house/ plantation property in India by a person resident outside India being an NRI or PIO, the authorized dealer may allow repatriation of sale proceeds out of India.

The property was acquired by the seller in accordance with the provisions of the foreign exchange law in force at the time of acquisition by him or the provisions of these regulations.

The amount repatriated does not exceed:
  • the amount paid for acquisition of the immovable property in foreign exchange received through normal banking channels, or
  • the amount paid out of funds held in Foreign Currency Non-Resident Account, or
  • the foreign currency equivalent (as on the date of payment) of the amount paid where such payment was made from the funds held in Non-Resident External account for acquisition of the property.

In case of residential property, the repatriation of sale proceeds is restricted to max two such properties

Property acquired by the way of inheritance/ legacy/out of rupee funds:

An NRI or PIO can remit an amount not exceeding USD 1,00,000 per financial year out of the balances held in the NRO accounts/sale proceeds of the assets by the way of purchase/ assets acquired by the way of inheritance/ legacy out of rupee funds subject to production of documentary evidence in support of acquisition, inheritance or legacy of assets by the remitter, and tax clearance/ no objection certificate from Income Tax Authority for the remittance.

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