NRI
NRI - Frequent Ask Question
To make the process of buying a property easier for our ever-growing NRI customer base, we have compiled a comprehensive set of facts, rules, and requirements in one place which makes investing in our properties hassle-free.
Who is a NRI?
Non Resident Indian (NRI) is a citizen of India, who stays abroad for employment/carrying on business or vocation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad is a non-resident. Non-resident foreign citizens of Indian Origin are treated at par with Non Resident Indian (NRIs).
Documents required for buying property
1. PAN card (Permanent account number)
2. OCI / PIO card (In case of OCI / PIO)
3. Passport (In case of NRI)
4. Passport size photographs
5. Address proof
Who can purchase immovable property in India?
Under the general permission granted by RBI, the following categories can freely purchase immovable property in India:
1. Non-Resident Indian (NRI)- who is a citizen of India residing outside India
2. Person of Indian Origin (PIO)- who is an individual (not being a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan), who
At any time, held Indian passport or
Whose father or grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955).
The general permission, however, covers only purchase of residential and commercial property and not for the purchase of agricultural land/plantation property/farm house in India. OCIs can purchase immovable property in India except agricultural land/plantation property/farmhouse.
Are NRI / PIO / OCI eligible for Housing loans to buy property from any Indian Bank?
An authorized dealer or a housing finance institution in India approved by the National Housing Bank may provide housing loan to a non-resident Indian or a person of Indian Origin residing outside India for acquisition of a residential accommodation in India, subject to the following conditions, namely:
The quantum of loans, margin money and the period of repayment shall be at par with those applicable to housing finance provided to a person residing in India.
The loan amount shall not be credited to Non-Resident External (NRE)/Foreign Currency Non-Resident (FCNR)/Non-Resident non-Repatriable (NRNR) account of the borrower.
The loan shall be fully secured by an equitable mortgage by deposit of title deal on the property proposed to be acquired, and if necessary, also be lien on the borrower’s other assets in India.
The installment of loan, interest and other charges, if any, shall be paid by the borrower by remittances from outside India through normal banking channels or out of funds in his Non-Resident External (NRE)/Foreign Currency Non-Resident (FCNR)/Non-Resident Non-Repatriable (NRNR)/Non-Resident Ordinary (NRO)/non-Resident Special Rupee (NRSR) account in India, or out of rental income derived from renting out the property acquired by utilization of the loan or by any relative of the borrower in India by crediting the borrower’s loan account through the bank account of such relative (The word ‘relative’ means ‘relative’ as defined in section 6 of the Companies Act, 1956.)
The rate of interest on the loan shall conform to the directives issued by the Reserve Bank of India or, by as the case may be, the National Housing Bank.
What is the Tax treatment for income generated from property selling or renting for NRI/PIO/OCI?
The mere acquisition of property does not attract income tax. However, any income accruing from the ownership of it, in the form of rent (if it is let out)/annual value of the house (if is not let out and it is not the only residential property owned by that person in India) and/or capital gains (short term or long term) arising on the sale of this house or part thereof is taxable in the hands of the owner.
Do NRIs / PIOs / OCIs have to file returns in India for their property rental income and Capital Gains Tax?
The Government of India has granted general permission to NRI / PIO / OCI to buy property in India and they do not have to pay any taxes even while acquiring the property in India. However, taxes have to be paid if they are selling this property. Rental income earned is taxable in India, and they will have to obtain a PAN and file a return of the income if they have rented this property. On sale of the property, the profit on sale shall be subject to capital gains. If they have held the property for less than or equal to 3 years after taking actual possession then the gains would be short term capital gains, which are to be included in their total income and will be taxed in the normal bracket. However, if the property has been held for more than 3 years, then the resulting gain would be labeled as long term capital gains subject to 20% tax and some additional levy (cess)
How does the Double Taxation Avoidance Agreement (DTAA) work in the context of tax on income and Capital Gains tax paid in India by NRI?
India has DTAAs with several countries which give a favorable tax treatment in respect of certain heads of income. However, in case of sale of immovable property, the DTAA with most countries provide that the capital gains will be taxed in the country where the immovable property is located. Hence, the non-resident will be subject to tax in India on the capital gains which arise on the sale of immovable property in India. Letting of immovable property in India would be taxed in India under most tax treaties in view of the fact that the property is in India.
Indicative list of documents required for home loans
Salaried individuals
1. Copy of employment contract
2. Latest Salary slip
3. Latest work permit
4. Bank statement for 4 months or NRE / NRO a/c 6 months statement
5. Passport/visa copy
6. Utility bill for address proof
7. PIO / OCI card
8. Power of Attorney (if applicable, in respective bank’s format)
9. Customer credit check report
10. Property agreement duly registered or other related docs
11. Income Tax returns last 2 years
Self-employed individuals
1. Balance sheets and P&L a/c of the company for last 3 years
2. Bank a/c statements for last 6 months for company and individual, both
3. Income tax returns (3 years)
4. Passport/visa copy
5. Utility bill for address proof
6. PIO / OCI card
7. Power of Attorney (if applicable, in respective bank’s format)
8. Credit check report
9. Property agreement or other related docs