A Non-Resident Indian’s (NRI) Guide to Buying Property in India

Indian residents like you and me have the right to property in India by any mode (gift, purchase, or inheritance). There might be some restrictions in a few states regarding purchasing agricultural or residential properties. Keeping this aside, an Indian resident can buy any number of properties (residential, commercial, or industrial land or properties).

In the last decade, the Indian property market has been booming with the rising interest in purchasing property in India from individuals residing outside India. This article will look at the rules and regulations surrounding the acquisition and transfer of immovable property in India by Non-Resident Indians [NRIs], Foreign Nationals, and Foreign Nationals of Indian Origin or, in other words, who can buy property in India.

Now let us understand who is a Non-Resident in India or an NRI.

Under FEMA Act (Foriegn Exchange Management Act),  1999, a person resident in India is defined as an individual residing in India for more than one hundred and eighty-two days (182 days) during the preceding financial year. The individual has come to India to either stay for employment, carry a business, or vocation in India or any other purpose, indicating his intention to stay in India for an uncertain period. A person who does not meet the above condition is considered a Non-Resident Indian. In simple, an individual has to meet both the requirements of 182 days stay in India and comply with the purpose/intention of staying a resident of India.

Which group of persons residing outside India can freely purchase property in India?

Non-Resident Indians (NRIs)(not currently a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan) who have held an Indian Passport or whose father or grandfather was an Indian citizen covered by the general permission. Those persons covered under the general license can freely purchase residential or commercial property in India.

Can an NRI buy property/land in India?

Non-Resident Indians (NRI) can purchase property in India. The Foreign Exchange Management Act (FEMA) authorizes the Reserve Bank of India (RBI) to structure the rules around prohibition, restriction, or regulation of acquiring or transferring immovable property in India by persons residing outside India.

As per this regulation, an NRI can purchase/acquire immovable property in India through:

Purchase: An NRI can purchase property from a builder, Indian resident, developer, or acquisition of property from an NRI. They can pay from their NRO/NRE account or transfer money from abroad through regular banking platforms or any loans from Indian Banks or Financial Institutions in India.

Gift: An NRI can receive a property as a gift from any Indian resident. A gift from a non-relative is subjected to Income tax. A relative is defined in section 56 of the Income-tax act. They can also acquire property from another NRI who is a relative (husband, wife, sister, brother, or any lineal ascendant or descendant)

Inheritance: An NRI can inherit from an Indian resident or an individual outside India if the person who has transferred it has acquired the property as per FEMA regulations when buying property in India as NRI.

How can a foreign national buy property/land in India?

1. A foreign national can purchase one immovable property (other than agricultural land/ farmhouse/ plantation property jointly with a foreign spouse. The wedding should be registered and exist for no less than two years immediately preceding the acquisition of such property.
2. Foreign Nationals (other than NRI or OCI) living in India can buy property in India. They can purchase with or without RBI permission.
3. Foreign nationals of non-Indian origin residing outside India cannot acquire property in India.
4. Long-Term Visa holders may purchase only one residential immovable property in India.

A document checklist for NRIs for purchasing property in India is mentioned below:

– title deed (in the name of the seller)
– building plan sanctioned
– certificate of commencement
– certificate of occupancy
– receipts paid for tax
– certificate of encumbrance
– documents of khata/mutation

The list of documents required during the registration process:

– Pan Card
– PIO or OCI card
– Passport
– Passport size photograph
– Address proof