Beware of these rules before buying property in India for NRIs
Tuesday 11 September 2018 2:17 AM UTC
LONDON Sept 11: The Indian property market is hot right now. There is no doubt that Indian property could be a strong investment for PIOs/OCIs living abroad in countries like Britain.
It is widely believed that NRIs are eligible to buy any type of property in India. This is in fact incorrect. In the traditional Indian fashion, rules and regulations abound.
The most important rules to know about are set down by the Reserve Bank of India, and also have to do with foreign exchange regulations – specifically the Foreign Exchange Management Act 1999. Certain types of properties are unfortunately out of bounds to NRIs.
More information on these RBI rules can be seen below. An NRI cannot purchase agricultural land, farm house or plantation property. They may only inherit such a property upon death of the previous owner of the property – likely a relative. However that is the bad news out of the way.
On a more positive note, other types of property are available for purchase on the market. These include commercial and residential properties with absolutely no restrictions on the number of such properties that the NRI can buy.
It is possible for a Non Resident Indian to buy, receive as a gift or inherit a commercial or residential property or properties. Importantly, they can be resold or transferred as a gift to others.
By contrast a farm, plantation or agricultural land may only be inherited from another person, upon which it can be inherited, sold or gifted to other people.
It would be a good idea to check the deed of a property that you purchase in India to make sure that it is not classified as anything agricultural. This is the best way to avoid future problems from the bureaucracy which is well known for its obstinacy.
Importantly there are also specific rules for payments for property. Payments may be made out of NRE/NRO/FCNR accounts as well as money remitted to India through normal banking channels. Payments for property in India cannot be made in foreign currency, only the Indian rupee.
Click on the link below for RBI regulations on investing in or purchasing property in India. The below link will also advsie on how can a Non-resident Indian (NRI)i and an Overseas Citizen of India (OCI)ii acquire immovable property in India?