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Who is an NRI?

A Non-Resident Indian or NRI is a citizen of India that resides in the country for less than 182 days during the preceding financial year, or one that is living outside India for reasons of business, employment or any other purpose that would indicate his intention to stay there for an uncertain period of time.

Who is a Person of Indian Origin?

PIO, or a Person of Indian Origin is an individual (not a citizen of Pakistan, Bangladesh, Nepal, Bhutan, Sri Lanka, Afghanistan, China or Iran), who at any time held an Indian passport. Even a person whose parents or grandparents used to be citizens of India is considered to be a PIO.

Who is a person resident in India?

A person resident in India is someone who has been living in India for business, employment or for any other vocation purposes for a period greater than 182 days during the previous financial year (April-March).

Are there any tax benefits for NRIs buying property in India?

No, there are no tax benefits available exclusively for NRIs. However, when filing their returns, NRIs are eligible to avail most of the deductions applicable to resident Indians under section 80C.

What documents are required for NRIs obtaining home loans?

Apart from the documents mentioned under the home loan section for Indian citizens, there are a few additional documents required to be submitted by NRIs. These include:

  • Passport copy
  • The power of attorney (POA)
  • A copy of the labour card or the works contract
What is the mode of payment for home loans for NRIs?

NRIs can pay instalments, interest, and other charges through banking channels or via remittances from outside India from either their non-resident external (NRE) rupee, non-resident ordinary (NRO), or foreign currency non-resident (FCNR) account, maintained in India.

It should be noted that such payments cannot be made using foreign currency or traveller’s cheques.

What repayment period is there for NRI home loans?

In most cases, the repayment period for the home loan offered to NRIs is between 5 to 7 years, although some banks offer loan tenure up to 30 years as well. The borrower needs to be of at least 18 years. The repayment for the loan is done through EMIs or monthly instalments, which usually begins after the full loan is disbursed.

What eligibility criteria are there for NRIs obtaining home loans?

The eligibility criteria for NRIs is calculated in the same way as resident Indians, with special emphasis on:

  • Work Experience – The candidate should have at least two years of experience in the company he/she is currently employed with.
  • Loan Amount – The loan amount varies depending on the individual borrower’s profile and is not the same for everyone.
  • NRIs require an Indian resident to be a guarantor, co-borrower, co-applicant or co-owner of the property for which they are asking for a loan.
  • Chances of servicing the loan with an extended tenure in cases where the applicant is required to return to India
What types of property can an NRI avail home loans for?

NRI investment in Indian real estate is allowed only in residential or commercial properties. Banks offer home loans to NRIs for buying a house that is either ready to move in, under construction or bought from a previous owner. One can also get a loan for renovation of existing property in India, purchase of non-agricultural land, or for construction of a property by self on a plot of land.

Can proceeds of the sale of properties purchased by NRIs be remitted out of India?

For residential properties, the repatriation of sale proceeds is restricted to not more than two properties if the property was purchased from NRE account funds. Also, the amount remitted out of India should not exceed the amount paid for the purchase of the immovable property in foreign exchange received from the funds held in FCNR or NRE Account, or through normal banking channels.

Can an NRI/PIO acquire residential or commercial property as a gift from a person resident in India or an NRI/PIO?

Yes. According to the general RBI guidelines, an NRI or PIO can acquire residential/commercial property by way of gift from a person resident in India or an NRI/PIO.

Do NRIs require the RBI’s consent to buy immovable property in India?

No, provided the immovable property is residential or commercial in nature, NRIs do not require consent of the Reserve Bank of India (RBI) to buy an immovable property in India.

Can a land/home be sold by an NRI or PIO without the permission of the RBI?

Yes, the RBI grants general permission for sale of property. But on occasions when the property is purchase by another foreign citizen of Indian, the funds towards the purchase should either be paid out of balances in non-resident accounts maintained with banks in India or be remitted to India.

What mode of payments can be used for purchase of residential/commercial property in India by an NRI or PIO?

An NRI/PIO can purchase residential or commercial property in India through funds held in his NRE/FCNR (B)/NRO account or with funds remitted to India through normal banking channels. No foreign currency or traveller’s cheques can be used to make such payments.

Can an NRI or a PIO hold any immovable property in India acquired through inheritance from a person resident outside India?

With proper approval from the RBI, a resident outside India (i.e. NRI or PIO or foreign national of non-Indian origin) may hold an immovable property in India that has been acquired through inheritance from a person resident outside India. But this is only allowed if the owner had acquired such property under FEMA guidelines or in accordance with the regulations of the foreign exchange law applicable at the time of acquisition. When acquiring inherited property from a person resident in India, no such condition is needed to be fulfilled.

Can a resident outside India hold a property in India acquired by inheritance from a person resident in India?

Yes, according to the provisions of the Foreign Exchange Management Act 1999, a person resident outside of India can hold property acquired by way of inheritance from a person resident in India.

Can an NRI/PIO buy immovable property in India jointly with a foreign citizen?

No, an NRI or PIO cannot buy property in India jointly with a foreign citizen.