A non-resident Indian (NRI) or a person of Indian origin (PIO) or an overseas citizen of India (OCI) staying abroad does not require special permission to purchase an immovable property in India, except in case of an agricultural land, plantation property or a farmhouse. All investments made by NRIs and PIOs come under the Foreign Exchange Management Act (FEMA) 1999, under the regulations issued by the Reserve Bank of India (RBI).

But, there is one important condition - an NRI or PIO buyer must give Power of Attorney (PoA) to a friend or relative to complete the process of property purchase.

Payment

Payments made in foreign currency are not acceptable for the purchase of a property. Travellers' cheques are also not accepted as payments. NRI buyers can make payments using the Indian currency only. They can use the money in their non-resident external (NRE), non-resident ordinary (NRO), or foreign currency non-resident (FCNR) accounts maintained in India. These accounts are needed to be maintained according to the FEMA and RBI regulations.

Documents required

The following documents are required to purchase, and thereafter register the property:

• Passport
• Photographs
• Registered PoA
• PAN Card (required for NRIs)
• Overseas Citizenship of India card/ PIO card
• Address proof

Taxation

After the sale of an immovable property in India by an NRI/PIO, capital gains are calculated at the rate of 20.6% on LTCGs and 30.7% on STCGs.

Repatriation of funds to the foreign country of residence

Repatriation is the return to the homeland of capital and the profit earned by the sale of goods or services abroad. In this case, repatriation means the transfer of sale proceeds from India to the current country of residence.

NRIs and PIOs can repatriate the amount generated from the sale of a property in India under the following conditions:

• Property purchase was in accordance with the FEMA directives, as applicable at the time of purchase
• Amount generated from the sale does not exceed the original amount paid for the property

There are a few circumstances that allow NRIs/PIOs to repatriate a maximum of $1million per financial year. These are:

• If one has acquired the property as a gift, they can deposit the sale proceeds to their NRO account to be repatriated later
• If one has inherited the property from a resident Indian, the sale proceeds can be repatriated on providing a documentary evidence of inheritance, an undertaking by the inheritor, and a certificate by an authorised chartered accountant in the format issued by the Central Board of Direct Taxes (CBDT)
• In case of residential properties, sale proceeds of maximum two properties can be repatriated at a time
• Citizens of Pakistan, Bangladesh, Sri Lanka, China, Afghanistan and Iran require specific approvals from the RBI to repatriate sale proceeds