When it comes to making investments in India, buying immovable property in India is always on the priority list for NRIs, primarily residential property. However, the question ‘if they are eligible to buy property in India’ often hounds them. The extant regulatory framework governs such eligibility for the NRIs and does permit them to purchase properties, albeit with certain restrictions. The material provisions in this regard are as under:
- Type of Properties an NRI can purchase – An NRI can purchase all kinds of commercial and residential properties in India with the help of an NRI home loan. However, it is restricted for them to purchase agricultural land, farmhouse, or plantation areas. Further, the funds for buying eligible properties should be received through proper banking channels via inward overseas remittances or transferred from NRI bank accounts, including NRE/ NRO accounts.
- Negative List for Citizens of Specified Countries – NRIs and PIOs (Persons of Indian Origin) can make all the permitted real estate investments in India. However, if the PIO is a citizen of the specified countries, such individuals cannot acquire or transfer immovable property in India without prior RBI approval. Such a negative list of countries includes Pakistan, Sri Lanka, Afghanistan, Bangladesh, Nepal, Bhutan, China, Macau, Hongkong, Korea.
- Inhering Immovable Property – NRIs can inherit all kinds of immovable properties situated in India. Further, an important point to note for NRIs is that even while they cannot purchase agricultural land, farmhouses, and plantation areas, they can still inherit such properties within the extant regulatory framework.
- Gifting Immovable Property – Once an NRI has purchased or inherited any property, there is no restriction on them to gift such property to any other person. Such persons may include another NRI or resident Indians. However, inherited agricultural land, farmhouses or plantation areas cannot be gifted to another NRI in line with the restrictions on the purchase of such land. Further, an NRI cannot gift any immovable property to the citizens of the countries in the negative list under the FEMA Regulations, as also discussed in the above paragraphs.
- Income of NRIs from Immovable Properties in India – There is no restriction of receiving any rental income from properties owned by NRIs. However, such rental income from India must be received in an NRO account. This is because NRO accounts do not carry any restriction in receiving rupee credits from within India. The account holder can transfer such income abroad from the NRO account within specified limits, currently USD 1 million per year. If the NRI has sold the immovable property, it may remit a higher amount abroad out of such sale proceeds, however, subject to certain approvals.
- Legal remedies to NRIs for disputes related to immovable properties – There is no distinction within the regulatory framework on the disputes related to immovable properties. NRIs have the same legal rights and remedies as available to the resident Indians. Accordingly, an NRI may approach Consumer Forum, courts, and other authorities under RERA (Real Estate Regulation Act) framework to settle their disputes related to any immovable property in India.
The information provided in this article is for informational purposes only. You may consider consulting professionals for specific guidance for the applicable FEMA rules and Income Tax rules, as tax benefits are subject to changes due to change in tax laws.