India is a land of diverse opportunities and has increasingly emerged as a beautiful destination for foreigners who intend to invest in properties. However, sometimes, the process of buying property in India can get quite intricate for NRIs, OCIs, or PIOs.
Different regulations apply depending on the type of property, whether the purchaser is a foreign national or otherwise, his residential status, and the purpose behind the purchase. Therefore, let us examine the question, can a foreigner buy property in India?
Who Can Buy a Property in India?
Here is a list of foreigners who can buy properties in India:
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Non-Resident Indians (NRIs)
Non-resident Indians have a clear, direct path to property ownership in India. They enjoy many privileges similar to those of resident Indians regarding buying residential or commercial properties.
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OCIs
In accordance with the overseas citizenship of India introduced by the Government in 2005, OCI shares similar rights in property ownership to NRIs, but it will exclude agricultural land, plantation property, and farmhouse property.
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Persons of Indian Origin (PIOs)
PIOs are citizens who, at any time, held an Indian passport or whose parents or grandparents were citizens of India. In 2015, PIO status was merged with the OCI scheme, after which they have had almost the same rights relating to property ownership as the OCIs.
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Foreign Nationals
Foreign nationals often face more restrictions than NRIs, OCIs, and PIOs. Citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran, Nepal, China, and Bhutan need prior approval from the RBI.
Legal Framework and Regulations
In order to answer the question,can a foreigner buy property in India, we need to first understand the legal framework and regulations related to the property purchase.
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Guidelines of Foreign Exchange Management Act (FEMA)
The Foreign Exchange Management Act is the principal legislation under which foreign exchange transactions in India are controlled. Accordingly, any foreign exchange transaction needs to be compliant with the regulations under FEMA.
The FEMA guidelines identify the conditions under which foreign transactions can take place, the permissions required, and the mode of payment for foreigners intending to buy property in India.
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RBI Regulations and Required Approvals
The Reserve Bank of India (RBI) assumes a big position with respect to the regulation of foreign investment within India, including real estate. It prescribes the procedures and approvals necessary for investing by foreign nationals or any entities incorporated outside India in any property in India.
Types of Properties Foreigners Can Buy
Here are two types of properties that foreigners can purchase in India:
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Residential Properties
Generally, foreigners can purchase residential properties in India under certain conditions. These conditions would depend on whether the foreign national is a Non-Resident Indian (NRI), a Person of Indian Origin (PIO), or a foreign national of non-Indian origin.
Normally, this would exclude agricultural land, plantation property, and farmhouse properties—foreigners cannot directly purchase such property without specific permission.
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Commercial Properties
Foreigners can acquire any commercial property in India for business purposes, such as office space, shops, industrial units, and warehouses.
Commercial property acquisition follows almost the same regulations as residential property, with some restrictions and conditions as per the guidelines of FEMA and RBI.
Read More: Can a Foreign Citizen Inherit Property in India?
Eligibility Criteria for Buying a Property in India
There are certain eligibility criteria that foreigners who buy property in India must meet, governed by the FEMA regulations. These include:
Mode of Payment
Payment has to be made in foreign currency through normal banking channels or from funds held in non-resident accounts in India.
Documentation
Photocopies of the documents such as passports, visas, and all other proofs related to identity have to be provided. NRIs and PIOs will have to show some more documents to prove their status.
Duration
To qualify as a resident under FEMA, a foreign national had to have lived within India for more than 182 days in the previous fiscal year.
Countries
Additional restrictions or special permissions are applicable in the case of nationals from Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, and any other country as notified from time to time by the Indian government.
Number of Properties
Normally, there is no restriction on the number of properties an NRI can acquire in India, except in a few states where special regulations may apply.
Taxes
Stamp duty, registration fees, and other taxes, as applicable under Indian laws, are payable by foreigners.
Clearances and Approvals
Depending on the location and type of property, clearances or approvals from local authorities or the Reserve Bank of India may be necessary.
Step-by-Step Guide to Buying Property in India
Now you know the answer to the question, can a foreigner buy property in India, let us know the step-by-step process of buying properties in India:
Step 1: Research and Selection of Property
Research the real estate market in the locality you desire to invest in within India. A number of factors will guide your decision about the purchase of the property and include prices, legal formalities, available amenities, and the outlook for the future. After choosing a property, verify the owners, legality of all documents, and other details.
Step 2: Documents Required
Get all the necessary documents like your passport, visa, proof of address, and others that Indian authorities may want. Besides, property-related documents—title deeds, land records, sale deeds, and tax receipts, should be carefully verified.
Step 3: Financial Planning and Obtaining a PAN Card
Foreign buyers must plan their finances pertaining to the source of funds for purchasing property, taxes, and fees. The Permanent Account Number (PAN) card from the Income Tax Department is necessary to carry out financial transactions in India, including property transactions.
Step 4: Appoint a Legal Advisor
Engage with a qualified legal advisor who deals with real estate transactions in India. The attorney will help with document verification, understanding of legal implications, drafting agreements, and compliance with Indian laws.
Step 5: Financing Options: Home Loans for NRIs/OCIs
You can explore financing options if needed. Housing loans are available for NRIs or OCIs. Most banks and leading financial institutions in India have special loan products designed to meet the needs of NRIs/OCIs when buying property.
Read Also: Ultimate Guide for NRIs Buying Property in India in 2024
Takeaway
So, can a foreigner buy property in India? Well, foreign investors who want to acquire Indian property have various investment alternatives provided for their different investment goals or risk levels.
Therefore, they must understand the need to invest wisely and do thorough research to ensure successful investments. By investing time in research, foreigners can get optimum returns and benefits from Indian property.
Get in touch with Rustomjee today for a hassle-free and seamless experience in property investment and avail of the best residential properties for foreigners.
FAQs
- Can a foreign spouse of an NRI/OCI buy property?
Yes, a foreign spouse of an NRI/OCI can purchase property in India. They are treated similarly to NRIs/OCIs in terms of ownership of property.
- Can a foreign national buy property in India?
In general, foreigners who meet specific requirements, which differ depending on whether they are a foreign citizen of non-Indian origin, a Person of Indian Origin (PIO), or a Non-Resident Indian (NRI), can buy properties in India.
- Do I need to be in India to purchase property?
No, it is not necessary that you need to be physically present in India to buy property. All property transactions can be executed either by power of attorney or remotely so long as all necessary legal requirements are met.
- What kinds of property may foreign nationals buy in India?
Foreigners can largely buy residential and commercial properties in India. However, agricultural land, plantation property, and farmhouse property come under restrictive categories.
- Are there any restrictions on the number of properties that a foreigner can buy?
There are absolutely no restrictions on the number of properties that a foreigner can buy in the country of India. However, they must adhere to the RBI guidelines and all the other state laws.
- Can a foreign company buy property in India?
Yes, a foreign company can purchase property in India, subject to certain conditions and regulations under the Foreign Exchange Management Act (FEMA). This often involves establishing a liaison office, branch office, or wholly-owned subsidiary in India.
