Who can purchase immovable property in India?

Under the general permission available, the following categories can freely purchase immovable property in India :
1. Non-Resident Indian (NRI) - that is a citizen of India resident outside India

2. Person of Indian Origin (PIO) - that is an individual (not being a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan).

3. At any time, held an Indian passport, or

4. Who or either of whose father or grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955). The general permission, however, covers only purchase of residential and commercial property and not for purchase of agricultural land / plantation property/farm house in India.

Can an NRI / PIO / foreign national sell his residential /commercial property?

(A) NRI can sell property in India to
1. A person resident in India
2. An NRI
3. A PIO.

(B) PIO can sell property in India to
1. A person resident in India.
2. An NRI
3. A PIO - with the prior approval of Reserve Bank

(C) Foreign national of non-Indian origin including a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan can sell property in India with prior approval of Reserve Bank to
1. A person resident in India
2. An NRI
3. A PIO

Can a non-resident gift his residential / commercial property?

Yes. (A) NRI / PIO may gift residential / commercial property to -
1. A person resident in India
2. An NRI
3. A PIO.

(B) Foreign national of non-Indian origin needs prior approval of Reserve Bank.

Can residential / commercial property be mortgaged?

NRI / PIO can mortgage to:
(A) An authorized dealer / housing finance institution in India without the approval of Reserve Bank.

(B) A party abroad - with prior approval of Reserve Bank.

(C) A foreign national of non-Indian origin can mortgage only with prior approval of Reserve Bank.

(D) A foreign company which has established a Branch Office or other place of business in accordance with FERA / FEMA regulations has general permission to mortgage the property with an authorized dealer in India.

How can an NRI / PIO make payment for purchase of residential / commercial property in India?

Payment can be made by NRI / PIO out of
(A) funds remitted to India through normal banking channel or

(B) funds held in NRE / FCNR(B) / NRO account maintained in India.

No payment can be made either by traveler's cheque or by foreign currency notes. No payment can be made outside India.

How can an NRI / PIO make payment for purchase of residential / commercial property in India?

NRI / PIO may repatriate the sale proceeds of immovable property in India
(A) If the property was acquired out of foreign exchange sources i.e. remitted through normal banking channels / by debit to NRE / FCNR (B) account The amount to be repatriated should not exceed the amount paid for the property:
1. In foreign exchange received through normal banking channel or
2. By debit to NRE account(foreign currency equivalent, as on the date of payment) or debit to FCNR(B) account.

Repatriation of sale proceeds of residential property purchased by NRI / PIO out of foreign exchange is restricted to not more than two such properties. Capital gains, if any, may be credited to the NRO account from where the NRI/PIO may repatriate an amount up to USD one million, per financial year, as discussed below.

(B) If the property was acquired out of Rupee sources, NRI or PIO may remit an amount up to USD one million, per financial year, out of the balances held in the NRO account (inclusive of sale proceeds of assets acquired by way of inheritance or settlement), for all the bonafide purposes to the satisfaction of the Authorized Dealer bank and subject to tax compliance.

Can Foreign Embassies / Diplomats / Consulate General purchase / sell immovable property in India?

Yes, Foreign Embassies / Diplomats / Consulate Generals can purchase and sell any immovable property other than agricultural land / plantation property / farm house in India with prior clearance from the Government of India, Ministry of External Affairs. The payment should be made by foreign inward remittance through normal banking channel.

Can NRI / PlO rent out the residential / commercial property purchased out of foreign exchange / rupee funds?

Yes, NRI / PlO can rent out the property without the approval of the Reserve Bank. Rent received can be credited to NRO / NRE account or remitted abroad. Powers have been delegated to the Authorised Dealers to allow repatriation of current income like rent, dividend, pension, interest, etc. of NRIs / PIO who do not maintain an NRO account in India based on an appropriate certification by a Chartered Accountant, certifying that the amount proposed to be remitted is eligible for remittance and that applicable taxes have been paid / provided for.[cf. A.P. (DIR Series Circular No. 45 dated May 14, 2002].

The Non-Resident Indians (NRIs) are recognized under the Foreign Exchange Regulatory Act, 1973. Every bank and housing finance companies follow the RBI guidelines to define NRI - "An Indian citizen who holds a valid document like Indian passport and who stays abroad for employment or for carrying on business or vocation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad is a NRI."

Broadly categorized, Non-Resident Indians qualifying for NRI housing loans are:

1. Indian citizens who stay abroad for employment or for carrying on business or vocation outside India or for any other purpose in circumstances indicating an indefinite period of stay abroad.

2. Government servants who are posted abroad on duty with the Indian missions and similar other agencies set up abroad by the Government of India where the officials draw their salaries out of Government resources.

3. Government servants deputed abroad on assignments with foreign Governments or regional/international agencies like the World Bank, International Monetary Fund (IMF), World Health Organization (WHO), Economic and Social Commission for Asia and the Pacific (ESCAP).

4. Officials of the State Government and Public Sector Undertakings deputed abroad on temporary assignments or posted to their branches or offices abroad.

The eligibility criteria of NRIs differ from Resident Indians based on a few parameters. The parameters include:
Age : The loan applicant has to be 21 years of age.

Qualification : The NRI loan seeker has to be a graduate.

Income : The loan applicant has to have a minimum monthly income of $ 2,000 (although, this criterion may differ across HFCs). The eligibility is also determined by the stability and continuity of your employment or business.

Payment options : The NRI also has to route his EMI (Equated Monthly Instalments) cheques through his NRE/NRO account. He cannot make payments from another source say, his savings account in India.

Number of dependants : The eligibility of the applicant is also determined by the number of dependents, assets and liabilities.

The Reserve Bank of India (RBI) has clarified that Non-Resident Indians (NRIs) and Persons of Indian Origin (PIO), purchasing immovable property in India should pay for the acquisition by funds received in India through normal banking channels by way of inward remittance from outside the country.

The NRIs and Resident Indians can also acquire immovable property in India other than agricultural property, plantation or a farmhouse. It has issued certain directive for sanctioning home loans to Non-Resident Indians.

The documentation required to be submitted by the NRIs are different from the Resident Indians as they are required to submit additional documents, like a copy of the passport, a copy of the works contract, etc. And of course NRIs have to follow certain eligibility criteria in order to get Home Loans in India.

Another vital document required while processing an NRI home loan is the power of attorney (POA). The POA is important because, since the borrower is not based in India; the HFC would need a 'representative' 'in lieu of' the NRI to deal with and if needed. Although not obligatory, the POA is usually drawn on the NRI's parents/wife/children.

1. Original title deeds tracing the title of the property for a minimum period of the last 13 years
2. Encumbrance Certificate for the last 13 years
3. Agreement of sale /construction, if any
4. Receipts for payments made for purchase of the dwelling unit
5. Approved plan / license
6. ULC clearance /conversion order etc
7. Receipts for having invested the margin money through normal banking channels from the Non-Resident (External) account in India and / or the Non-Resident (Ordinary) account in India
8. Latest tax paid receipt
9. Allotment letter from the co-operative society / association of apartment owners
10. Agreement for sale / sale deed /detailed cost estimate from Architect / Engineer for property to be purchased / constructed /extended / improved
11. Copy of approved drawings of proposed construction/purchase/extension

1. The current passport, with birthplace as 'INDIA'
2. The Indian passport, if held by the individual earlier
3. Parents/grandparents Indian passport/birth certificate/marriage certificate substantiating the individuals claim as a person of Indian origin

Before a construction can begin, the builder must seek several permissions and approvals from relevant bodies. Without these clearances, the construction may come under litigation.