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Frequently Asked Questions on Purchases of Properties in India by Non-Resident Indian (NRI) or a Person of Indian Origin (PIO)

A. Purchase of Immovable property by NRIs/PIOs

Q1. Can NRIs /PIOs purchase immovable property in India?
Ans. Yes, NRIs/PIOs are allowed to purchase residential/commercial property in India.

Q2. Who is a PIO?
Ans. For the purpose of purchase and transfer of immovable property in India, a PIO means an individual (not being a citizen of either Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan), who:
at any time, held an Indian passport, or
who 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).

Q3. Who is an NRI?
Ans. An NRI is:
an Indian citizen residing outside India and
a foreign citizen of Indian origin residing outside India.

Q4. Are there any restrictions on the number of residential/commercial properties that NRIs/PIOs can purchase?
Ans. No, there are no restrictions on the number of residential/commercial properties that NRIs/PIOs can purchase.

Q5. Are NRIs required to file any documentation with the Reserve Bank of India (RBI) for purchasing a property in India?
Ans. No, NRIs/PIOs are not required to file any documentation with the RBI for purchasing a property in India.

Q6. Are PIOs required to file any documentation with the Reserve Bank of India (RBI) for purchasing a property in India?
Ans. PIOs are required to file a declaration in the prescribed format with the RBI within 90 days from the date of purchase of immovable property, or final payment of purchase consideration.

Q7. Is the personal presence in India of the NRI/PIO purchaser required at the time of registration of the property in the name of the NRI/PIO purchaser?
Ans. No, an NRI/PIO purchaser can be represented in India by a person in whose favour the NRI/PIO has executed a power of attorney at the time of registration of the property.

Q8. Are PIOs required to submit a copy of their PIO card at the time of registration of the property in India?
Ans. Yes, PIOs are required to submit a copy of their PIO card at the time of registration of the property in India.

B. Sale of immovable property in India by NRIs/PIOs

Q9. Are NRIs allowed to sell their residential/commercial property?
Ans. Yes, NRIs are allowed to sell residential/commercial property in India to a person resident in India or to another NRI or a PIO.

Q10. Are PIOs allowed to sell their residential/commercial property?
Ans. Yes, PIOs are allowed to sell their residential/commercial property but only to a person resident in India.

Q11. Can PIOs transfer sell their residential/commercial property to NRIs/ PIOs?
Ans. No, PIOs would need to seek RBI’s prior approval for transfer by way of sale of residential/commercial property in India to a NRI or a PIO.

C. Repatriation (taking monies out of India) of sale proceeds of residential / commercial property purchased by NRIs / PIOs

Q12. Can NRIs/PIOs repatriate the sale proceeds of residential/commercial property in India? If so, how much can be repatriated?
Ans. NRIs/PIOs may repatriate the sale proceeds of residential / commercial property in India acquired by way of inward remittance through normal banking channels. The amount to be repatriated should not exceed the amount paid for the acquisition of the residential/commercial property in foreign exchange received through normal banking channels.

Q13. Is there any lock-in period for sale of residential/commercial property?
Ans. No, there is no lock-in period for sale of residential/commercial property.

Q14. Is there any restriction on the number of residential properties in respect of which sale proceeds can be repatriated by NRIs / PIOs?
Ans. Yes, the repatriation of sale proceeds is restricted to not more than two residential properties.

Q15. What are the documents required for the purposes of the repatriation of sale proceeds by NRIs /PIOs?
Ans. NRIs/PIOs will be required to produce a certified copy of the document evidencing the transaction and a certificate regarding inward remittance from the bank which received the consideration amount of the property from the NRI/PIO.

D. Taxes and Duties

Q16. What taxes would be applicable if NRIs/PIOs sell the residential/commercial
property in India?
Ans. If the property is sold at a profit then capital gains tax will become payable in India.

Q17. What are the capital gains tax rates in India?
Ans.
If NRIs/PIOs sell residential/commercial property within 3 years of purchase, short term capital gains tax will be chargeable on the profits as follows:

If the profit is less then INR 100,000 – no tax
If the profit is between INR 100,001-150,000 – 11.22%
If the profit is between INR 150,001-250,000 – 22.44%
If the profit is above INR 250,001 – 33.66%

If NRIs/PIOs sell residential/commercial property after 3 years of purchase, long term capital gains tax will be chargeable at a rate of 22.44% The calculation of capital gains tax is subject to indexation which means that the government takes inflation into consideration for calculating gains.

Q18. Is rental income arising from the NRIs/PIOs’ residential/commercial
property taxed in India?
Ans. Yes, rental income is taxable in India.

Q19. What is the rate of stamp duty payable in Goa on the purchase of residential/commercial property?
Ans. Stamp duty in Goa is payable at a rate of 2% of the market value of the property.

Q20. What is the registration charge payable in Goa upon the purchase of residential/commercial property?
Ans. The registration charge payable in Goa is 2% of the market value of the property.
 

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