At Yoshitha, we provide global services in property management and investments that are hassle-free and can be managed from the comfort of your homes. We work very closely with our customers through every step to help you in investments, management and related services with regards to properties in India as NRIs.
As per the RBI’s rules and regulations, an NRI can buy both residential and commercial properties in India. There is no requirement of gaining any special permission, nor are there any limitations as to how many properties an NRI can purchase. The income tax laws also favour NRIs. When an NRI is unable to come to India, he/she can give a Power of Attorney to another person who can execute the deal on his/her behalf.
According to the Foreign Exchange Management Act (FEMA), an NRI is a citizen of India who is a resident outside India. FEMA is the act which governs the purchase of Indian real estate by NRIs.
A PIO (not a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan) should have:
According to the general permission granted by the Reserve Bank of India (RBI), people under the following categories can freely purchase immovable property in India.
Since general permission is not available for this purpose, an NRI / PIO would require specific approval from the Reserve Bank of India and such an approval would be granted only after considering the proposal in consultation with the Government of India.
The acquisition of property does not attract income tax. But, any income that is accrued from the ownership of the house, in the form of rent (if it is tenanted), or the annual value of the house (if it is not tenanted and it is not the only residential property owned by that person in India) and / or capital gains (short-term or long-term) arising from the sale of the house or part thereof is taxable in the hands of the owner.
The Government of India has granted general permission for NRI / PIO / OCI to buy property in India and they don’t have to pay any taxes even while acquiring property in India. But they have to pay taxes if they are selling the property. Rental income earned is taxable in India, and they will have to obtain a PAN card and file returns on income if they have rented out the property. If they sell the property, the profit on sale would be subject to capital gains. If they have held the property for less than or equal to 3 years after taking actual possession.
India has DTAAs with several countries which give favourable tax treatment in respect of certain heads of income. But, in the context of the sale of immovable property, the DTAA with most countries dictates that the capital gains will be taxed in the country where the immovable property is located. Hence, the non-resident will be subject to tax in IIndia on the capital gains which arise on the sale of immovable property in India. Letting of immovable property in India would be taxed in India under most tax treaties in view of the fact that the property is situated in India.