Can An NRI Buy Property In India?

By | February 20, 2019

To ensure that the road to making the right investment is not a bumpy ride, we have a few tips that NRIs can follow before investing in real estate in India.

The rules under the Foreign Exchange Management Act pave the way for investment in property in India by NRIs, PIOs, and foreign nationals residing in India.

The government of India permits the Non-Resident Indian (NRI) and Person of Indian origin (PIO) to purchase immovable property in India. This is general permission and covers only the purchase of residential and commercial property. The purchase of agricultural land, plantation property or farmhouses in India is not permitted. The government has not fixed any limitation on the number of residential or commercial properties that can be purchased by NRIs or PIO.

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If an NRI purchases a residential or commercial property under the general permission, he/she does not have to file any documents or reports with the Reserve Bank of India (RBI).

An individual of non-Indian origin and residing outside India cannot purchase any immovable property in the country unless such property is acquired by the way of inheritance from a person who is a resident of India. A foreign national who is a person resident in India can purchase immovable property in India, only after he/she has obtained the approvals and fulfilled the requirements. On the other hand, a foreign national resident in India who is a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan requires prior approval of the RBI.

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An NRI or a PIO can acquire immovable property in India by way of a gift either from a person resident in India or an NRI. The property can, however, be only commercial or residential in nature. Agricultural land, plantation property, farmhouses in India cannot be acquired by way of gift. The government of India has offered permission for the branch office of a foreign company to purchase immovable property in India.

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A foreign company, which has established a Branch Office or other place of business in India, in accordance with the Foreign Exchange Regulations, 2000, can acquire any immovable property in India, which is necessary to carry out their business activities.

The payment for acquiring such a property should be made by way of foreign inward remittance through proper banking channels. A declaration through Form IPI should be filed with the RBI within ninety days from the date of acquiring the property.

Such a property can also be mortgaged with an Authorized Dealer as a security for loan purposes. In case the business is to be closed, the sale proceeds of the property can be repatriated only with the prior approval of the Reserve Bank.

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It is important for entities incorporated in Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, and Bhutan and those who have set up branch offices in India to get prior approval of the Reserve Bank if they want to acquire any immovable property in the country.

However, if the foreign company has established a Liaison Office in India, it cannot acquire immovable property. In such cases, Liaison Offices can acquire property by way of a lease not exceeding 5 years.

Additional Reading: Financial Advice For NRIs Returning To India

NRIs who have property acquired in the country can rent out the property without the approval of the Reserve Bank. The rent received can be credited to Non Resident Ordinary Rupee (NRO) or Non-Resident External Rupee (NRE) accounts or remitted abroad.

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Authorized dealers could allow the income to be taken home by those who do not maintain an NRO account in India based on an appropriate certification by a Chartered Accountant, certifying that the amount proposed to be remitted is eligible for remittance and that applicable taxes have been paid.

Now that you know these rules about an NRI purchasing a property in India, let’s look at a few things you must bear in mind before doing so.

Research is essential. Before pouring your money on a property, assess the location, age, and price of the property. If possible, try gauging its future prospects and understand if it can provide returns in the future. Before investing, determine how you’d like to use the property, be it for residential purposes or for setting up a business of your own.

What’s more? An NRI can enjoy all the tax benefits that an Indian gets from purchasing a house. As per Section 80C under the Income Tax Act, 1961, an NRI can obtain a deduction of up to Rs.1.5 lakh.

Looks like you’re all set to get a place of your own in India. If you’re on the lookout for other financial products, we have plenty of options for you!

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2 thoughts on “Can An NRI Buy Property In India?

    1. Vishwanath.

      Dear Sree Venkatakrishnan,
      in case where immovable property is brought by a foreigner and mentioned in the sale deed that he is Indian, further if he applies for PIO card after about one to two years after purchase then what action or measures are taken by Government of India ?
      how to know if the PIO card obtained is correctly scrutinised that his ancestrars house or relations house exists in India or not?
      Pl advise in the interest of our country Mother india. There may be, i feel possibilities of foreigners getting PIO cards through their influences. Please reply to boost my confidence in breaking open such cases.


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