An NRI can lawfully purchase, own, inherit, and sell property in India according to the rules prescribed by the Foreign Exchange Management Act (FEMA). There are certain rules and limitations that the NRI needs to adhere to while handling property in India.
Important Rules for NRIs Who Own Property in India:
1. Types of Property that NRIs Can Purchase
- NRIs are allowed to buy residential and commercial properties in India without a special license.
- There is no limit on the number of properties that an NRI can hold.
2. Restrictions on Agricultural and Farm Land
- NRIs are not allowed to acquire agricultural land, plantation property, or farmhouse in India.
- But they are allowed to receive these properties by way of gift or inheritance from resident Indian relatives.
3. Funding for Property Purchase
- NRIs are able to finance property acquisition in India from their NRE (Non-Resident External) or NRO (Non-Resident Ordinary) accounts.
- Indian banks extend home loans to NRIs but require repayment via NRE/NRO accounts or inward remittances.
4. Renting Out Property in India
- NRIs can rent out their properties and receive rental income in their NRO account.
- The tenant must deduct 30% TDS before transferring rent to the NRI’s account.
5. Inheritance and Gifting of Property
- NRIs may inherit property from Indian citizens, resident NRIs, or fellow NRIs.
- They may gift their property to resident Indians or fellow NRIs, but they may have taxation implications.
