Non-resident India (NRI) is a citizen of India resident outside India. The Foreign Exchange Management Act, 1999 has given definition of "Person resident in India" and from the definition one has to conclude whether he or she is Non-Resident India or not. Following is the definition of Person resident in India.

A person residing in India for more than one hundred and eighty-two days during the course of the preceding financial year but does not include –

A person who has gone out of India or who stays outside India, in either case

• For or on taking up employment outside India
• For carrying on outside India a business or vocation outside India
• For any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period

A person who has come to or stay in India, in either case, otherwise than

• For or on taking up employment in India
• For carrying on in India a business or vocation in India
• For any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period

Person of Indian Origin (PIO) (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 an 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).

Yes. Reserve Bank has accorded general permission to purchase only a residential/commercial property in India to a person resident outside India who is a citizen of India (NRI) and who is a Person of India Origin (PIO).

NRIs and PIOs can invest in most types of properties in India, including residential and commercial. However, there are certain restrictions on the acquisition of agricultural land, plantation property, and farmhouse property. However, there is no restriction on number of residential/commercial property that NRI/PIO can purchase under the general permission available.

Since general permission is not available to NRI / PIO to acquire agricultural land/plantation property/farm house in India, such proposals will require specific approval from the Reserve Bank and the proposals are considered in consultation with the Government of India.

NRIs can finance their real estate investments in India through funds remitted from abroad through normal banking channels or through funds held in their Non-Resident External (NRE), Non-Resident Ordinary (NRO), or Foreign Currency Non-Resident (FCNR) accounts.

NRIs generally do not require any special permissions or approvals to invest in real estate in India. However, they are required to adhere to the guidelines set by the Reserve Bank of India (RBI) and other relevant authorities.

NRIs are subject to the same tax regulations as resident Indians on real estate transactions. This includes taxes such as capital gains tax, stamp duty, and property tax. Additionally, there may be tax implications in their home country that NRIs should consider. However, mere acquisition of property does not attract income tax. Any income accruing from the ownership of it, in the form of rent /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 arising on the sale of this house or part thereof is taxable in the hands of the owner.

Like an average citizen of the country, an NRI is liable to pay taxes on the income they earn from an immovable property, be it rental income or short-term or long-term capital gains. However, a key benefit they enjoy is the Double Taxation Avoidance Agreement (DTAA), which India has signed with more than 85 countries. This allows them to work and live in one country while earning income in another through an investment in real estate or through any other modes. 

If an NRI holds a property for 3 years or more, it is considered a long-term capital gain, and the same will be taxed at 20.6%. Like any Indian resident, they can apply for refund of the TDS or tax exemption under sections 54, 54 EC and 54 F. Please note that the tax rates may change periodically.

NRIs are allowed to repatriate the sale proceeds of residential and commercial properties in India, subject to certain conditions and limits set by the RBI. They are required to follow the repatriation guidelines and provide necessary documentation to the authorized banks.

NRI/PIO may repatriate the sale proceeds of residential/commercial property in India acquired by way of inward remittance through normal banking channel or by debit to NRE/FCNR (B) account. The amount to be repatriated should not exceed the amount paid for acquisition of residential/commercial property (a) in foreign exchange received through normal banking channel or by debit to FCNR (B) account or (b) the foreign currency equivalent as on the date of payment, of the amount paid by debit to NRE account. The sale proceeds of residential/commercial property in India acquired by way of debit to NRO account cannot be repatriated and should credited to NRO account only. 

The rental income, being a current account transaction, is repatriable, subject to the appropriate deduction of tax and the certification thereof by a Chartered Accountant in practice. 

Yes, NRIs are eligible for home loans in India from various financial institutions, subject to their eligibility criteria. The loan amount, tenure, and interest rates may vary based on factors such as income, credit history, and property value.

Though there are multiple ways in which an NRI may prefer to manage their property in India, a power of attorney is also a powerful legal tool that authorizes another person, usually a trusted individual, to act on the owner’s behalf. As an NRI, when you buy a property in India, giving a power of attorney to a trusted individual may make the entire process of owning the property smooth and hassle-free. 

NRIs can also consider engaging services of property management companies to handle their real estate investments in India. These professionals can assist with tasks such as property maintenance, rental management, and legal compliance. You may count on iProp91 to manage you property in India with full support.