If you’re an Indian citizen residing outside of India for a combined total of 183 days or more throughout the financial year, then our NRI Guide is sure to answer any questions you might have.
Non Resident Indian (NRI) is a citizen of India, who stays abroad for employment/carrying on business vocation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad as a non-resident. Non-resident foreign citizens of Indian Origin are treated at par with Non Resident Indians (NRI’s).
Person of Indian Origin (PIO) (not being a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan), who;
Provided that no person, who is or had been a citizen of Pakistan or Bangladesh shall be eligible for registration as an Overseas Citizen on India.
Under the general permission granted by RBI, the following categories can freely purchase immovable property in India:
The general permission, however, covers only purchase of residential and commercial property and not for purchase of agricultural land/plantation property/farm house in India. OCI can purchase immovable property in India except agricultural land/plantation property/farmhouse.
Since general permission is not available to NRI/PIO to aquire 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.
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.
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 and if the property has been held for more than 3 years then the resultant gain would be long term capital gains subject to 20% tax plus applicable cess, if Indexation is used; otherwise, it is at 10% if Indexation is not used.
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.
Yes. Long-term and short-term capital gains are taxable in the hands of non-residents.
Type of asset: Assets like house property, land and building, jewellery, development rights etc.
Rate of tax deduction at source (TDS)
Long term Short term
20.6% (Indexation applied) 30.9%
10.3 %(Indexation not applied)
Exemption available (only for long term capital gains)
The long term capital gains arising on sale of a residential house can be invested in buying/ constructing another residential house, within the prescribed time. The exemption is restricted to the amount of capital gains or amount invested in new residential house, whichever is lower.
If the amount of capital gains is invested in bonds of National Highways Authority of India (NHAI) or Rural Electrification Corporation, then the entire capital gains is exempted, else the proportionate gain is exempted.
In case the non-resident pays any tax on capital gains arising in India, he would normally be able to obtain a tax credit in respect of the taxes paid in India in the home country, because the income in India would also be included in the country of tax residence. The amount of the tax credit as also the basis of computing the tax credit that can be claimed are specified in the respective country’s DTAA and is also dependent on the laws of the home country where the tax payer is a tax resident.
Repatriation of sale proceeds of residential property purchased by NRI’s/PIO’s out of foreign exchange is restricted to not more than two such properties. Capital gains, if any, may be credited to the NRO account from where the NRI’s/PIO’s may repatriate an account up to USD one million, per financial year (April to March).
The rental income, being a current account transaction, is repatriable, subject to the appropriate deduction of tax and the certification thereof by a Chartered Accountant in practice. Repatriation of sale proceeds is subject to certain conditions. The amount of repatriation cannot exceed the amount paid for acquisition of the immovable property in foreign exchange.
An authorised dealer or a housing finance institution in India approved by the National Housing Bank may provide housing loan to a non-resident Indian or a person of Indian origin residing outside India for acquisition of a residential accommodation in India, subject to the following conditions, namely:
If you are an NRI/OCI/PIO, you would have to file your income tax returns if you fulfill either of these conditions:
Yes, there are two exceptions:
Tip: You may also file a tax return if you have to claim a refund. This may happen where the tax deducted at source is more than the actual tax liability. Suppose your taxable income for the year was below Rs.2.50 lakh but the bank deducted tax at source on your interest amount, you can claim a refund by filing your tax return.
Another instance is when you have a capital loss that can be set-off against capital gains. Tax may have been deducted at source on the capital gains, but you can set-off (or carry forward) capital loss against the gain and lower your actual tax liability. In such cases, you would need to file a tax return.
Traditionally, you could file your return either by giving a power of attorney to someone in India or by sending your form and documents to a tax expert in India who would then file returns on your behalf.
But nowadays, the easiest option for NRIs to file their Indian tax returns is by using the online platform. There are several options to file online.
Please refer to the below links for updated information
Ministry of External Affairs: http://mea.gov.in/
Indian Income tax: http://www.incometaxindia.gov.in/.
RBI (NRI FAQ): http://www.rbi.org.in/scripts/faqview.aspx?id=52
These are the broad guidelines meant for ready reference with respect to acquisition and transfer of immovable property in India by NRI/PIO/OCI and, in each case, the prospective buyer or seller of property in India must consult his/her own legal/finance/tax advisor and obtain suitable advice for their specific transaction. Bhartiya City Developers Pvt. Ltd. assumes no responsibility or legal liability for transactions entered into by placing reliance on these FAQs. These guidelines are subject to amendment by the regulatory authority. Bhartiya City Developers Pvt. Ltd. assumes no responsibility for updating these FAQs.
