Non Resident Indians (NRIs) can avail home loans for the purchase of flats, bungalows and villas in India. They need copies of valid passport, statements of non-resident external (NRE) or non-resident ordinary (NRO) accounts, salary certificate, last six months bank account statement/passbook, work experience certificate and a valid job contract or work permit. A person must be employed for at least two years. Businessmen and self-employed individuals need to show proof of income.
If an NRI is availing a home loan, he/she needs to attest the salary certificate from the embassy in case the salary is not credited to a bank. The person must also provide a local address proof and provide power of attorney (PoA) to someone in India. Details of permanent address in India are also necessary. A completed home loan application form is a must and the English translation of the contract must be duly attested by consulate, employer, embassy or the Indian bank’s foreign branch, in case the contract is in some other language.
Other documents that the NRI would need to purchase property in India are agreement for sale/sale deed, copy of approvals for proposed construction, purchase or extension/approved building plans and a no objection certificate (NOC). For purchase or construction of house, the documents he would require are non-encumbrance certificate on the property (for 13 years), original title deed, land tax receipt and possession certificate. In case, the NRI wants to authorise a third party to avail loan instalments, complete mortgage formalities and execute documents, a notarised power of attorney is a must.
The documents required can be divided under headings such as Personal Details Documents, Financial Details Documents for Salaried Individuals, Financial Details Documents for Self Employed Individuals and NRI Personal Guarantor documents. Different banks have different formats for the same. Here we have mentioned them in bullet points of your ease.
NRI Personal Guarantor Documents
- NRI Guarantor’s passport and visa copies
- Income documents of guarantor
- Current overseas address verification proof, such as, driving license, bank statement, utility bill, latest insurance premium receipt showcasing overseas address
- Rapid increase in start-ups
- Medical Tourism
Financial Details Documents for Self Employed Individuals
- Copy of incorporation of business
- Copy of income proof
- Middle East: Last 2 years audited/C.A certified P&L accounts
- US & Canada: Last 2 years CPA compiled/reviewed/audited P&L accounts
- Others: Last 2 years C.A. or equivalent certified/audited P&L accounts
- Copy of business profile and office address proof
- Copy of last six months’ bank statements in company’s name & individual’s name
- MOA & AOA of the company for private limited companies
- Partnership deed for partnership firm
Financial Details Documents for Salaried Individuals
- Copy of salary certificate mentioning the current salary earned, designation and date of joining or copy of current appointment letter
- Copy of previous appointment letters
- Last four months’ salary slips in case of variable salary, or last three months’ salary slip in case of fixed salary
- Six months bank statement clearly indicating credited salaries
Certain other details may also be asked for such as copy of PAN Card for the first applicant OR Form 60, Cheque/Draft in INR for fees with date in dd/mm/yyyy format, valid visa copies for all applicants and one passport size latest photograph of each applicant (includes co-applicant) with signature across.
Who is a NRI?
As defined by the Foreign Exchange Management Act of 1999 (FEMA), Non Resident Indian (NRI) is a citizen of India, who stays abroad for employment/carrying on business or vocation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad is a non-resident. Non-resident foreign citizens of Indian Origin are treated at par with Non Resident Indian (NRIs).
Can a NRI/PIO acquire agricultural land/plantation property/farm house in India?
Since general permission is not available to NRI/PIO to acquire agricultural land/plantation property/farm house in India, such proposals will require specific approval of Reserve Bank and the proposals are considered in consultation with the Government of India
What mode of payment can an NRI/PIO make to purchase a residential property in India?
Under the general permission, an NRI/PIO may purchase a residential property in India by funds remitted to India through normal banking channel or funds held in his NRE/FCNR (B)NRO account. No consideration shall be paid outside India.
Can a NRI/PIO transfer his residential property by way of gift?
Yes. An NRI/PIO can transfer their residential property in India by way of a gift to an Indian resident/NRI/PIO
Can a PIO transfer his residential property by way of sale?
Yes. Under general permission an NRI can sell his or her residential property in India to an Indian resident only.
Can a NRI transfer his residential property by way of sale?
Yes. Under general permission an NRI can sell his or her residential property in India to an Indian resident/NRI/PIO
TAX ON INCOME FROM PROPERTY SELLING/RENTING
What is the Tax treatment for income generated from property selling or renting for NRI/ PIO/OCI?
The mere acquisition of property does not attract income tax. However, any income accruing from the ownership of it, in the form of rent (if it is let out)/annual value of the house (if is not let out and it is not the only residential property owned by that person in India) and/or capital gains (short term or long term) arising on the sale of this house or part thereof is taxable in the hands of the owner.
Do NRI/PIO/OCI have to file return in India for their property rental income and Capital Gains Tax?
The Government of India has granted general permission for NRI/PIO/OCI to buy property in India and they do not have to pay any taxes even while acquiring property in India. However, taxes have to be paid if they are selling this property. Rental income earned is taxable in India, and they will have to obtain a PAN and file return of income if they have rented this property. On sale of the property, the profit on sale shall be subject to capital gains. If they have held the property for less than or equal to 3 years after taking actual possession then the gains would be short term capital gains, which are to be included in their total income as tax as per the normal slab rates shall be payable and if the property has been held for more then 3 years then the resultant gain would be long term capital gains subject to 20% tax plus applicable cess.
How does the Double Taxation Avoidance Agreement work in the context of tax on income and Capital Gains tax paid in India by NRI?
India has DTAA’s with several countries which give a favorable tax treatment in respect of certain heads of income. However, in case of sale of immovable property, the DTAA with most countries provide that the capital gains will be taxed in the country where the immovable property is situated. Hence, the non-resident will be subject to tax in India 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.
Does Capital Gains Tax (CGT) apply to NRI/PIO/OCI ?
Yes. Long-term and short-term capital gains are taxable in the hands of non-residents.
The Reserve Bank of India (RBI) Guidelines specific to Investment in Immovable Property for Non Resident Indians (NRIs) and Persons of Indian Origin (PIOs).
NOTE: The below stated information has been taken from the FAQs section of the RBI, which was last updated on the April 01, 2016. We aim to keep updating this section with relevant information from time to time, however to ensure you have the latest information, you may also visit - rbi.org. In terms of the Foreign Exchange Management Act (FEMA), 1999 a person resident outside India means a person who is not resident in India.
What are the different types of accounts which can be maintained by an NRI 1/ PIO2 in India?
If a person is an NRI or PIO, she/he can, without the permission from the RBI, open, hold and maintain the different types of accounts given below with an Authorized Dealer in India, i.e. a bank authorized to deal in foreign exchange. NRO Savings Accounts can also be maintained with the Post Offices in India. However, individuals/ entities of Bangladesh and Pakistan require prior approval of the Reserve Bank.
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