Any NRI, who is interested in buying a property in India, should be aware of specific legal provisions about the purchase or ownership of immovable property in India under the Foreign Exchange Management Act (FEMA). For investment in real estate, NRIs and persons of Indian Origin get treated at par.
Types of properties, where NRIs or PIOs can invest
The RBI, through a circular, has given a common permission to NRIs, to buy any commercial or residential property in India. The investor need not look for any specific approval from the RBI, nor is he required to send any communication or intimation in this regard to the RBI. Under the existing general permissions, an NRI can purchase any number of residential or commercial properties. The income tax laws also allow an NRI to own as many residential or commercial property as s/he pleases.
In case the NRI is unable to come to India, the documents about the purchase can be done by any person, who is given a valid power of attorney. Under the RBI’s general permission, a Non-Resident of India can’t purchase any plantation property in India. Consequently, under the existing regulations, NRIs cannot buy farmhouses in India. So, if an NRI wants to purchase a farmhouse or plantation, s/he will have to approach the RBI for specific permission, and the RBI will consider this on a case-to-case basis.
Joint ownership For NA
A Non-Resident of India can buy the property, either as jointly or a single owner, with any other NRI. However, a resident Indian or a person, who is otherwise not permitted to invest in a property in India, can’t become a joint holder in such property, irrespective of the second holder’s contribution towards the purchase.
Continuance of ownership of property
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 entitled to let out the property, irrespective of when it was acquired. After appropriate Indian taxes have been paid on such lease, the rent received from such property can remit.
Similarly, any NRI is allowed to gift, sell an immovable property to any person resident in India. He/She can also gift or transfer any property, other than agricultural property, farmhouse, or plantation property, to any NRI.