Non resident Indians or PIO have been the darling of Indian property dealers and builders over the last few years. As per the laws in India, a Non-Resident Indian – NRI can purchase property in India. In fact if you are a PIO (person of Indian origin) or an NRI can purchase property which are either residential and commercial property . However PIO and NRI cannot acquire agricultural land/ plantation property / farm houses.
Infact there is no restriction to the number of properties that can be purchased by an NRI or PIO. The process of purchasing the property is easy as there is no requirement to file any paperwork to any authorities.
Pointers for PIO or NRI planning to buy property in India
a) Mode of payment for purchase of property by NRI or PIO
The payments can be made by
- funds remitted to India through normal banking channels or
- funds held in NRE / FCNR (B) / NRO account maintained in India
No payment can be made using foreign currency directly.
b) Can NRI / PIO avail of loan for purchasing residential property
NRI / PIO can avail of loan for purchasing residential property.
- NRI / PIO can avail loan from a financial institution or authorized dealer against the security of funds held in his NRE Fixed Deposit account / FCNR (B) account. However the maximum permissible loan is INR 10 mn (USD 0.25 mn).
- NRI / PIO can avail of housing loan in Rupees from an authorised dealer or a Housing Finance Institution in India approved by the National Housing Bank for purchase of residential accommodation. Loan sanctions upto 80% of the property value can be availed
c) Mode of payment of EMI
- by way of inward remittance through normal banking channel or
- by debit to the NRE / FCNR (B) / NRO account of the NRI/ PIO or
- out of rental income from such property or
- by the borrower’s close relatives, as defined in section 6 of the Companies Act, 1956, through their account in India by crediting the borrower’s loan account.
Pointers for PIO or NRI planning to sell property in India
a) To whom all can a PIO or NRI sell property in India
An NRI can sell property to a person resident in India or an NRI or a PIO. A PIO can sell to a person resident in India or an NRI. However a PIO can sell to another PIO only with prior approval of the Reserve Bank
b) Can NRI / PIO repatriate the sale proceeds of the property in India
A pertinent question and without this being allowed real estate investment in India would not have witnessed such high demand from the NRI / PIOs. However there are few restriction with regard to the repatriation
- There is no restriction on the amount to be repatriated provided the amount doesn’t exceed the the amount paid for purchase of the property in foreign exchange paid through FCNR account or normal banking channels or NRE account
- In case of residential property an NRI or PIO can repatriate the sale proceeds for upto a maximum of two properties
- While the transfer of the purchase cost of the property (amount paid through remittance of foreign exchange) would not be restricted , however the profits from the sale of the property must be credited to the NRO account and only remittance of upto a maximum of US Dollar one million is permitted in one financial year.