If a non-resident Indian (NRI) or a person of Indian origins (PIO) is interested to purchase property and live in India, there are several conditions he has to meet.
We’ve written at length about these conditions which you can read in our India Buying Guide.
Buying property in India can be quite a complicated process. Therefore the only way to ensure you get the most out of your investment is to secure the aid of a trusted and veteran lawyer/real estate agent.
The types of property a NRI or PIO can buy vary slightly. There are different restrictions imposed on foreign nationals of non Indian origin and NRIs/PIOs.
The types of property and the way they can be acquired are largely fuelled by this distinction.
Foreign citizens of non-Indian origins are prohibited from owning or acquiring by way of gift agriculture land, farm houses or plantation property in India unless explicitly approved by the Reserve Bank of India (RBI).
NRIs and PIOs are also disallowed from purchasing agricultural land, plantations and farm houses in India. They cannot receive such properties (deemed immovable property) by way of gift unless the RBI gives approval.
However, they may acquire such properties by way of inheritance from a person who is a resident of India and is living there presently.
In some cases, the NRI/PIO may hold immovable property that is acquired through inheritance from another NRI/PIO.
Two things must happen for this to be approved though;
1. The RBI must approve the transference.
2. The bequeathed acquired the property in question in accordance with FEMA‘s (Foreign Exchange Management Act) rules or whichever foreign exchange law governing the exchange at the time of acquisition.
NRIs and PIOs can sell their agricultural land, plantation and farm house in India to an Indian citizen currently residing in the country. They may also gift the property to an Indian citizen currently residing in the country.
Foreign nationals of non-Indian origin would need to seek approval from the RBI should they wish to sell or give the property as a gift.
Leasing of such property is freely permitted but only for a period of five years or less.
NRIs and PIOs are allowed to purchase residential and commercial property in India. There are no restrictions on the number of properties they can purchase.
However, foreign nationals of non-Indian origin cannot be added as a second holder of the property.
NRIs and PIOs may also acquire residential/commercial property by way of gift or inheritance.
NRIs can sell residential/commercial property to a person residing in India, PIO or another NRI.
PIOs however can only sell the property to a resident of India currently residing in the country. He would require approval from the RBI if he wishes to sell to a NRI or another PIO.
The NRI or PIO may also gift residential/commercial property to an Indian citizen currently residing in India, a NRI or a PIO.
Foreign nationals of non-Indian origins are not permitted to purchase property in India unless approval is given by the RBI.
Similarly, they may not sell to persons residing in India or outside of India unless permission is given.
Foreigners of non-Indian origin may come to purchase property if the property is absolutely necessary such as if the person in question is working in India for an extended period or owns a company in India.
Take note that according to the Indian Income Tax Act, if more than one property is owned, only one is deemed as self-occupied and will not have income tax levied against it.
All other properties will be subjected to income or rental tax, whichever is applicable. It is the responsibility of the owner to calculate and make due payments.