All matters related to property investment are tricky and require utmost attention. The reason for calling them tricky is subjected to the fact that most of us are ill-informed about in-depth laws about such investments. We have already answered some frequently asked questions on the matter, and now it is time to give some relevant guidelines on the subject –
1. Documents Required
For making any property investment, NRI’s need PAN card. In the case of PIO and OCI, respective PIO and OCI card is also required. Apart from this, certain other document required are – address proof, work permit, POA (if any), etc.
2. RBI Approval
RBI has granted permission to NRI/PIO/OCI to purchase property in India. However, there is a restriction on the purchase of commercial properties including plantation/agriculture/farm house. Special permission from RBI is required in case of acquisition of such properties.
3. Restricted Citizenship
There are certain PIO that are not allowed to purchase property in India pertaining to their nationality. Such PIO requires special permission from RBI to go forth with such investments. The list includes following countries – Bhutan, Nepal, China, Pakistan, Iran, Sri Lanka, Bangladesh, and Afghanistan.
4. Number of Properties
According to RBI mandate, there is no restriction on the number of properties purchased by NRI.
5. Lease Properties
NRI/PIO/OCI can take residential or commercial properties on lease in India of a period of 5 years with any restriction.
6. Change in Status
There will be no change in the status of the property if in future one’s status changes from Indian resident to NRI. According to law, rules and regulations are applied according to the status of the owner at the time of purchase.
7. Income Tax
There is no difference in the income tax rules applied to NRI’s or Indian residents in case of capital gain and income from house property. For all the revenue earned by NRI/PIO/OCI from India, it is mandatory to file Income Tax Return.
8. Double Taxation Avoidance Agreement
India has signed DTAA treaty with various countries, under with capital gains in India against the sale of property is to be taxed in India. NRI/OCI/OCI can avail tax credit in their home country against such taxes paid in India. It is therefore required for NRI’s to check DTAA treaty rules between their countries of origin and India.
