A non-resident is an Indian citizen who remains overseas for employment, business, or a profession outside of India, or who stays abroad in circumstances indicating a desire to stay abroad for an indeterminate period of time.
A Person of Indian Origin is defined as an individual (who is not a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan) who has held an Indian passport at any time, or whose father or paternal grandfather was a citizen of India under the Indian Constitution or the Citizenship Act of 1955.
Overseas Citizenship of India (OCI) is an immigration status that allows a foreign citizen of Indian descent to reside and work in the Republic of India indefinitely.
Yes. NRIs can purchase and sell residential and commercial property in India.
The Reserve Bank has provided universal authorisation to overseas persons of Indian descent, whether resident in India or elsewhere, to purchase immovable property in India for legitimate residential purposes. They are therefore not required to seek approval from the Reserve Bank.
There are no restrictions on the number of residential or commercial properties that an NRI may own in India. However, the legislation prohibits NRIs from owning any type of agricultural land, plantation property, or farmhouse in India.
The simple purchasing of property does not result in income tax. However, any income derived from its ownership, such as rent (if it is rented) or the annual value of the house (if it is not rented and is not the owner's only residential property in India), and/or capital gains (short or long term) arising from the sale of this house or a portion of it, is taxable in the owner's hands.
Yes. Non-residents must pay taxes on both long-term and short-term capital gains.
The Double Tax Avoidance Agreement (DTAA) with the majority of countries stipulates that capital gains will be subject to taxation in the nation where the real estate is located. Therefore, if an NRI holds real estate in India, the capital gains on the sale of the property will be taxable in India. In a similar vein, most tax treaties with India would impose taxes on the rental of real estate.
NRIs must meet certain eligibility requirements and submit additional documentation, such as a copy of their passport and a copy of their employment contract. The Power of Attorney (POA) is another essential document needed to process an NRI home loan, since the Home Finance Company would want a "representative" in lieu of the NRI to deal with the borrower. The POA is typically drawn on the NRI's parents, spouse, children, close relatives or friends.
The documents needed are bank-specific. The general list includes:
For self-employed NRI applicants, additional documents typically required: the most recent contract copy, business or trade licence, six months' worth of foreign bank account statements and NRE/NRO accounts, plus a computation of income, P&L account and balance sheet for the previous three years.
In India, an NRI or PIO is typically prohibited from purchasing farm buildings, plantations, or agricultural land. The RBI must expressly accept proposals to purchase such land after consulting with the Indian government. NRIs/PIOs can only obtain agricultural land by inheritance.
Within ninety days of the date of the purchase of real estate, or the final payment of purchase consideration, they must submit a declaration in Form IPI 7 to the Reserve Bank Central Office in Mumbai, along with a certified copy of the document proving the transaction and a bank certificate pertaining to the consideration paid.
The information above is provided for general guidance. Please consult a qualified tax or legal advisor for advice specific to your circumstances.
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