There are certain provisos that NRIs and PIOs must be aware of before they attempt to buy land and immovable property in India. This article provides a list.
Many NRIs today look to invest in property and/or land in India. The Indian laws have changed on the purchase or sale of land or property to persons based on their citizenship. The rules on purchase and sale were quite stringent earlier. Today, NRIs and PIOs have greater freedom to buy property and land in India, subject to certain conditions.
Understanding the difference between NRIs and PIOs
NRIs (Non Resident Indians) are Indian citizens living abroad for an unspecified amount of time, but who is not settled in a foreign country permanently. A PIO (Person of Indian Origin) is a citizen of another country, but who has held an Indian passport at any point in their life. PIO status is also granted to those citizens whose father or grandfather has been an Indian citizen. However, this status is not extended to citizens of countries like Bangladesh, Pakistan, Afghanistan, China, Sri Lanka, Nepal, Bhutan or Iran.
The PIO or NRI status is a determining factor in whether you may be able to buy land or property in India, with certain conditions attached to the purchase.
NRIs buying land in India…
As an NRI wishing to buy land in India, you are beholden to prove your residential status as well as NRI status. The RBI grants a general permission to NRIs and PIOs to purchase residential or commercial property in India. Leading banks and financial institutions also offer NRI home loans, as also loans against plots to buy land to build a house upon. The NRI home loan interest rates normally differ from those of other types of home loans, though these rates are decided at the discretion of the housing finance company. However, there is no provision to allow the co-borrower or co-applicant as a foreign national not of Indian origin.
Most housing finance companies do not grant loans against land for NRIs or PIOs wishing to buy plantation/plantation property, farmhouse land, or agricultural land. If the loan is granted, it is subject to specific approval and permission from the RBI.
Transfer and sale of property and land
NRIs can sell residential or commercial property to Indian residents, PIOs and NRIs. However, PIOs may sell residential or commercial property to residents of India only. In case the buyer is an NRI or PIO, the PIO seller requires formal approval from the RBI before initiating the sale of the residential or commercial property.
Meanwhile, both NRIs and PIOs are allowed to sell their inherited or family-owned agricultural land/plantation/farm house located in India to an Indian resident only.
Getting funding for the purchase
Leading banks and housing finance companies have specific guidelines for NRIs buying NA land and immovable property in India. Present the housing finance company with the land documents/property sale agreement to discuss your options and get a feel of the application process. You can also find out the NRI home loan interest rates and rates for loans against plots, before making your application.