NRI Support
A “Non-Resident Indian” (NRI) is determined by the definition of a “Person resident in India” as outlined in Section 2(v) of the Foreign Exchange Management Act (FEMA), 1999. The criteria for identifying a “Person resident in India” include:
An individual who has resided in India for more than 182 days during the previous financial year, with exceptions for those who:
Have left India or stay outside India for employment, business, or any other purpose that suggests an intention to remain abroad for an indefinite period.
Have come to India or stay in India for reasons other than employment, business, or any other purpose that indicates an intention to remain in India for an indefinite period.
Additionally, the definition covers:
Any person or corporate body registered or incorporated in India.
Offices, branches, or agencies in India that are owned or controlled by a person resident outside India.
Offices, branches, or agencies outside India owned or controlled by a person resident in India.
Section 2(u) further clarifies that a “person” encompasses:
Individuals.
Hindu undivided families.
Companies.
Firms.
Associations of persons or bodies of individuals, whether incorporated or not.
Artificial juridical persons not included in the preceding categories.
Any agency, office, or branch owned or controlled by such persons.
FEMA 1999 has not given a definition of a Person of India Origin. However, the Reserve Bank of India in its various FEMA Notifications issued under FEMA, 1999 has defined a Person of India Origin as under:
For the purpose of opening non-resident bank accounts in India Person of India Origin means a citizen of any country other than that of Bangladesh or Pakistan, if –
He at any time held an Indian passport.
He or either of his parents or any of his grandparents was a citizen of India by virtue of the Constitution of India of the Citizenship Act, 1955 (57 of 1955).
The person is a spouse of an Indian citizen, or a person referred to in sub-clause (a) or (b) above.
For the purpose of investing in shares/debentures etc. in India Person of Indian Origin means a citizen of any country other than that of Bangladesh or Pakistan if-
He at any time held India passport.
He or either of his parents or any of his grandparents was a citizen of India by virtue of the Constitution of India of the Citizenship Act, 1955 (57 of 1955).
The person is a spouse of an India citizen, or a person referred to in sub-clause (a) or (b) above.
For the purpose of acquiring immovable property in India Person of Indian Origin means a citizen of a country other than that of Bangladesh or Pakistan or Sri Lanka or Afghanistan or China or Hong Kong or Macau or Iran or Nepal and Bhutan if-
He at any time held India passport.
He or whose father or mother or whose grandfather or grandmother was a citizen of India by virtue of the Constitution of India of the Citizenship Act 1955 (57 of 1955).
For the purpose of establishing a branch or office in India Person of Indian Origin means a citizen of any country other than that of Bangladesh or Pakistan or Sri Lanka or Afghanistan or China or Iran of Hong Kong or Macau if –
At any time held India passport.
He or either of his parents or any of his grandparents was a citizen of India by virtue of the Constitution of India of the Citizenship Act. 1955 (57 of 1955).
The person is a spouse of an Indian citizen, or a person referred to in sub-clause (a) or (b) above.
For the purpose of acquiring a PIO Card Person of Indian Origin means a citizen of any country other than that of Bangladesh or Pakistan, if –
He at any time held an India Passport.
He/she or either of his/her parents or grandparents or great grandparents was born in India and permanently resident in India as defined in the Government of India Act, 1935, and other territories that became part of India thereafter provided neither was at any time a citizen of any country as may be specified by Central Government from time to time.
Who is a spouse of a citizen of India, or a Person of Indian Origin as mentioned above.
An Overseas Citizen of India (OCI) is an individual who meets the following criteria:
A person of full age and capacity who is a citizen of another country but was an Indian citizen either at the commencement of the Indian Constitution or at any time thereafter.
A person who is a citizen of another country but was eligible to become an Indian citizen at the time the Constitution came into effect.
A person who is a citizen of another country but hails from a territory that became part of India after August 15, 1947.
A person who is the child of someone meeting any of the above criteria.
A minor child of an individual who falls under any of the categories mentioned above.
However, no person who is or has ever been a citizen of Pakistan or Bangladesh is eligible for registration as an OCI.
Under the general permission granted by the Reserve Bank of India (RBI), the following categories are allowed to freely purchase immovable property in India:
- Non-Resident Indian (NRI): An individual who is a citizen of India but resides outside the country.
- Person of Indian Origin (PIO): An individual (excluding citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, or Bhutan) who:
- Previously held an Indian passport, or
- Has a father or grandfather who was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955.
However, this general permission is limited to the purchase of residential and commercial properties only. It does not extend to the purchase of agricultural land, plantation property, or farmhouses in India.
Additionally, Overseas Citizens of India (OCIs) are allowed to purchase immovable property in India, with the exception of agricultural land, plantation property, and farmhouses.
There are no restrictions on the number of residential or commercial properties that NRIs and PIOs can purchase under the general permission available.
Yes, A foreign national of non-Indian origin, including citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Hong Kong, Macau, Iran, Nepal, or Bhutan, is permitted to acquire residential accommodation on a lease for up to five years without requiring prior permission from the Reserve Bank of India.
Under general permission, NRIs or PIOs may acquire residential or commercial property as a gift from a resident of India, another NRI, or a PIO.
With specific approval from the Reserve Bank, a person residing outside India may hold immovable property in India that has been inherited from another non-resident, provided that the deceased had acquired the property in compliance with the foreign exchange laws in effect at the time of acquisition or under FEMA regulations.
Can transfer a residential or commercial property in India through a sale to either a resident of India, another NRI, or a Person of Indian Origin (PIO).
A Person of Indian Origin (PIO) can transfer residential or commercial property in India only to someone who is a resident of India.
He must obtain prior approval from the Reserve Bank for transferring residential or commercial property in India to an NRI or a PIO through a sale.
A foreign national, whether residing in India or abroad, must obtain prior approval from the Reserve Bank before transferring, by sale, any residential property in India that was originally acquired with the Reserve Bank’s specific permission, to either an Indian resident or another foreign national.
NRI/PIO can transfer residential or commercial property in India as a gift to a person who is a resident in India, another NRI, or a PIO.
No, he should obtain prior approval from the RBI. However, if an immovable property is purchased by a person residing outside India who has established a Branch Office or other business presence in India in accordance with FERA/FEMA regulations, they may, under the general permission available, use the property as collateral with an authorized dealer for any borrowing.
Under the general permission available, NRIs/PIOs may acquire residential or commercial property in India using funds remitted through normal banking channels or from their NRE/FCNR (B)/NRO accounts. Payment for the property should not be made from sources outside India.
Provided that the original payment was made through inward remittance or debited from an NRE/FCNR(B) account, no permission from the Reserve Bank is necessary. Instead, they can directly contact the Authorised Dealer for this matter
NRIs/PIOs can repatriate the sale proceeds of residential or commercial property in India if it was purchased using inward remittance through standard banking channels or debited to an NRE/FCNR (B) account. The repatriation amount should not exceed the amount originally paid for the property, which can be either in foreign exchange received through normal banking channels, debited from an FCNR (B) account, or the foreign currency equivalent on the payment date from an NRE account. Sale proceeds of property purchased using an NRO account cannot be repatriated and must be credited to the NRO account instead.
Repaying a loan in foreign exchange is considered equivalent to receiving foreign exchange for purchasing residential accommodation.
The repatriation of sale proceeds is limited to a maximum of two residential properties.
Remittances up to USD one million per calendar year can be made with documentary evidence supporting inheritance and a Tax Clearance Certificate or No Objection Certificate from the Income Tax authority. However, if the Person of Indian Origin (PIO) is a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Hong Kong, Macau, or Iran, they must obtain prior approval from the Reserve Bank, along with the necessary documentary evidence of inheritance and a Tax Clearance or No Objection Certificate. Remittances are not available to citizens of Nepal or Bhutan.
He must obtain prior approval from the Reserve Bank, providing documentary evidence to support the inheritance, and secure a clearance or no-objection certificate from the Income Tax authority.
Simply acquiring property does not incur income tax. However, any income generated from owning it—such as rent (if the property is rented out), the annual value of the property (if it is not rented and is not the owner’s only residential property in India), or capital gains (short-term or long-term) from selling the property or a portion of it—is taxable for the owner.
Long-term and short-term capital gains are subject to tax for non-residents.
If a non-resident pays taxes on capital gains earned in India, they can typically claim a tax credit for these taxes in their home country. This is because the income earned in India is also subject to tax in their country of residence. The amount of tax credit available depends on the provisions of the Double Taxation Avoidance Agreement (DTAA) between the countries and the tax laws of the taxpayer’s home country.
If the property was acquired using foreign exchange, such as through normal banking channels or by debiting an NRE or FCNR(B) account, the repatriation amount should not exceed the amount paid for the property. This applies to foreign exchange received through these channels or the foreign currency equivalent of the payment date.
For NRIs/PIOs, the repatriation of sale proceeds from residential property purchased with foreign exchange is limited to a maximum of two properties. Any capital gains should be credited to an NRO account, from which up to USD 1 million per financial year can be repatriated.
If the property was acquired using rupee sources, NRIs/PIOs may remit up to USD 1 million per financial year from their NRO account balances (including sale proceeds of inherited or settled assets) for legitimate purposes, subject to compliance with tax regulations. This facility can also be used to remit capital gains, provided the property was acquired with funds remitted through normal banking channels or debited from an NRE/FCNR(B) account.
Rental income, as a current account transaction, can be repatriated after deducting the appropriate taxes and obtaining certification from a Chartered Accountant in practice. However, repatriation of sale proceeds must adhere to specific conditions. The repatriation amount cannot surpass the sum initially spent on acquiring the immovable property in foreign exchange.
A housing loan for the acquisition of residential property in India can be provided to a non-resident Indian or a person of Indian origin living abroad by an authorized dealer or a housing finance institution approved by the National Housing Bank, provided the following conditions are met
India has Double Taxation Avoidance Agreements (DTAAs) with numerous countries that offer favourable tax treatment for various types of income. However, for the sale of immovable property, most DTAAs specify that capital gains will be taxed in the country where the property is situated. Therefore, non-residents will be liable to pay tax in India on the capital gains from selling immovable property located in India. Similarly, rental income from immovable property in India is typically taxed in India according to most tax treaties, as the property is situated there.
Subject to specific terms and conditions, these loans can be repaid by the borrower through inward remittances via standard banking channels, debiting their NRE/FCNR (B)/NRO account, or using rental income generated from the property. Additionally, repayments can be made by the borrower’s close relatives using their accounts in India to credit the borrower’s loan account.
Yes, subject to certain terms and conditions rephrase
If you’re an NRI, OCI, or PIO, you need to file your income tax returns if you meet either of the following criteria:
- Your taxable income in India during the year exceeds the basic exemption limit of INR 1.6 lakh.
- You have earned short-term or long-term capital gains from the sale of investments or assets, regardless of whether the gains exceed the basic exemption limit.
Please note that the increased exemption limit for senior citizens and women applies only to residents, not non-residents.
- If your taxable income comes solely from investment income (such as interest) and/or capital gains income, and tax has already been deducted at source, you are not required to file a tax return.
- If you have long-term capital gains from selling equity shares or equity mutual funds, you don’t need to pay any tax on those gains and, therefore, you don’t need to report them in your tax return.
Tip: You might still want to file a tax return if you’re eligible for a refund. For example, if your taxable income for the year was below INR 1.6 lakh but the bank deducted tax at source on your interest, you can claim a refund by filing a return. Another situation is if you have a capital loss that you wish to offset against capital gains. Even if tax was deducted at source on your capital gains, filing a tax return will allow you to set off (or carry forward) the capital loss to reduce your actual tax liability.
- Traditionally, you could file your tax return by either granting power of attorney to someone in India or by sending your forms and documents to a tax expert there to file on your behalf. Nowadays, however, the simplest method for NRIs to file their Indian tax returns is through online platforms. Several options are available for filing online.
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