Under the RBI’s guidelines, a non-resident Indian (NRI) is allowed to purchase certain types of properties, while other forms of realty may require special permissions.
A non-resident Indian (NRI), who is interested in buying a property in India, can do so. However, his property investment must be made in line with the provisions of the Foreign Exchange Management Act (FEMA). The same FEMA rules are applied to property investments by the people of Indian origin (PIOs).
The Reserve Bank of India (RBI) has given a general permission to NRIs and PIO to buy any residential or commercial property in India. They need not seek any specific permission from the central bank nor are they required to send any communication or intimation in this regard to the RBI.
Under the existing general permissions, an NRI or PIO can buy any number of residential or commercial properties. The income tax law also allows an NRI/PIO to own as many residential or commercial property as he pleases.
In case the NRI is unable to come to India, the documents pertaining to the purchase can be executed by any person, who is given a valid power of attorney. Under the RBI’s general permission, an NRI cannot purchase any agricultural land or plantation property in India. Consequently, under the existing regulations, NRIs cannot purchase farmhouses in India. So, if an NRI wants to purchase a farmhouse or plantation, s/he will have to approach the RBI for a specific permission and the RBI will consider this on a case-to-case basis.
An NRI can purchase the property, either as a single owner, or jointly, with any other NRI. However, a resident Indian or a person, who is otherwise not allowed to invest in a property in India, cannot become a joint holder in such property, irrespective of the second holder’s contribution towards the purchase.
What if a person who owns properties in India, subsequently, becomes an NRI? Such a person can continue to hold the property in his name in India. An NRI is also allowed to continue to own any agricultural land, plantation property, or farmhouse that he owned when he became an NRI, which he is otherwise not allowed to purchase, after becoming an NRI. They are also allowed to let out the property, irrespective of when it was acquired. The rent received from such property, can be remitted, after appropriate Indian taxes have been paid on such rent.
Likewise, any NRI is allowed to sell, or gift an immovable property to any person resident in India. S/he can also gift or transfer any property, other than agricultural property, farmhouse, or plantation property, to any NRI.