Who may be said to be “Persons Resident in India” and “Person Resident outside India”?

As per the definition, a person residing in India for more than 182 days during the preceding financial year would normally be considered as a person resident in India. However, this would not include persons who have gone outside India or stay outside India for:

  • Employment
  • Business or vocation
  • Any other purpose with an intention to stay outside India for an uncertain period.

Similarly, a person coming to India for the purpose of employment, carrying on a business or profession or with an inclination to stay in India for an uncertain period would become a ‘Resident’ from the first day on which he enters India. The 182 days rule will not be applicable in such cases.

Who is a ‘PIO’?

The term PIO is defined under different regulations as follows:

  • Citizen of any country other than Bangladesh, Sri Lanka or Pakistan, if:
    • He held Indian passport at any time;
    • The person or either of his parents or any of his grand- parents were citizens of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955);
    • The person is a spouse of an Indian citizen or a person referred to in sub-clause (i) or (ii);
  • Under the Foreign Exchange Management (Investment in firm or proprietary concern in India) Regulations, 2000: FEMA 24 The definition of PIO excludes citizens of Bangladesh and Pakistan as found in the regulations governing the ‘Deposits’, and Sri Lankan citizens.
  • Under Foreign Exchange Management (Acquisition and transfer of immovable property in India) Regulations, 2000, the definition of PIO excludes citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan.

What are the kinds of bank accounts an NRI can hold in India?

As per FEMA Notification No.5/2000-RB, dated 3rd May 2000, an NRI can have a ‘Rupee Account’ or a ‘Foreign Currency Account’ in India as described below:

  • Non-Resident (External) Account (also called as NRE account) – Rupee Account
  • Non-Resident Ordinary Account (also called as NRO account)
  • Foreign Currency (Non-Resident) Account Bank Scheme (called as FCNR-B account)

What are the various loan options available to a NRI?

Loans to NRIs may be:

  • Foreign currency loan in India against the security of funds held in FCNR (B) accounts.
  • Loan against the security of shares or other securities held in the name of the borrower or against the security of immovable property.
  • Housing loans.
  • Rupee Loan against security of assets ‘other than shares and immovable property’.
  • Rupee loan granted by an Indian body corporate, to an employee who is a non-resident Indian or a Person of Indian Origin. The loan may be for personal purposes including purchase of housing property in India.
  • Loan in foreign currency granted by an Indian company to its employees in branches outside India. The loan must be granted for personal purposes in accordance with the lender’s Staff Welfare Scheme / Loan Rules and other terms and conditions as applicable to its staff in India and abroad.

What are the rules governing the acquisition of immovable property?

  • Rules for Indian citizens residing outside India for acquiring immovable property by way of:
    • Acquisition:
      • Purchase – General permission is granted for purchasing any immovable property in India (other than agricultural land, plantation or farm house property).
      • Gift – General permission is granted to acquire any immovable property (other than agricultural land, plantation or farmhouse property) as a gift.
      • Inheritance -General permission is granted for inheriting immovable property including agricultural land, plantation or farm house property from a person resident in India, or an Indian citizen resident outside India or a foreign citizen of Indian origin. The inheriting person should have acquired the said property in accordance with the provisions of Foreign Exchange Law in force at the time of acquisition. Agricultural land, plantation or farmhouse property can be acquired by way of inheritance only.
    • Transfer / sell:General permission is available for transfer of any immovable property (other than agriculture land, plantation property and farm house) to:
      • Person resident in India;
      • Person resident outside India, who is an Indian citizen; or Person resident outside India, who is a foreign citizen of Indian origin.

      However, a person can sell, gift or transfer agricultural land, plantation or farm house properties to a citizen of India who is resident in India only.

  • Rules for a foreign citizen of Indian origin for acquiring immovable property by way of:
    • Acquisition:
      • Purchase – There is a general permission to acquire any immovable property (other than agricultural land, plantation or farm-house property) by way of purchase, provided the payment is made out of foreign exchange inward remittance or by debit to any Non Resident bank account in India, i.e. NR(E), FCNR(B) or NRO.
      • Gift – General permission is granted to acquire any immovable property (other than agricultural land, plantation or farmhouse property) by way of gift from a person (donor) who is (i) resident in India, or (ii) resident outside India (an NRI) Indian citizen or a foreign citizen of Indian origin.
      • Inheritance – General permission is granted for inheritance of immovable property including agricultural land, plantation or farm house property from a person resident in India, or a person resident outside India who may be an Indian citizen or foreign citizen of Indian origin. The inheriting person should have acquired the said property in accordance with the provisions of Foreign Exchange Law in force at the time of acquisition. Agricultural land, plantation or farm-house property can be acquired by way of inheritance only.
    • Transfer / sell:General permission is available for transfer of any immovable property (other than agricultural land, plantation property or farm house) to a person resident in India only. However, a person of Indian origin is permitted to make a gift of such property to a person resident in India or to an Indian citizen, residing outside India, or to a person of Indian origin resident outside India.Agricultural land, farm house, and plantation property can be transferred as a gift or sold only to an Indian resident or a person residing in India.Citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan cannot acquire or transfer immovable property in India, other than on lease, not exceeding five years, without prior permission from the Reserve Bank of India.

Can an NRI freely repatriate the sale proceeds of immovable property?

The facility to remit the sale proceeds of immovable property is not available to a citizen of Pakistan, Bangladesh, Sri Lanka, China, Afghanistan, Iran, Nepal and Bhutan.

The following conditions apply for repatriation of immovable property:

  • Immovable property acquired through foreign exchange:
    • Acquisition should be in accordance with the existing Foreign exchange laws;
    • The purchase price is met out of Foreign Exchange Inward Remittance or NRE / FCNR (B) account;
    • Repatriation is restricted to a maximum of two properties in the case of residential properties. Such restrictions do not apply to commercial or industrial properties.
    • The amount of repatriation is restricted to the foreign exchange equivalent of the purchase price.
  • Immovable property acquired through local funds: NRIs/PIOs are allowed to repatriate funds held in their NRO account up to US $1 million per financial year. The limit includes sale proceeds of immovable property also.
  • Immovable property acquired through inheritance / settlement and legacy: If a property is acquired by way of inheritance / settlement or legacy, there is no lock-in-period with respect to the holding period for the property. The sale proceeds will be credited to the NRO account and thereafter in view of the permitted remittance up to US$ 1 million per financial year, the sale proceeds can be repatriated. However, note that remittance of assets acquired through “settlement” is available only on the demise of the settler.
  • Immovable property acquired by raising a loan in India: NRI/PIO acquires immovable property through a loan obtained from authorised dealers or housing finance institutions in India approved by National Housing Bank. The loan is raised for the purchase of residential accommodation and is subsequently repaid by remitting funds from abroad or by debiting NRE/FCNR accounts. Then the authorised dealers can allow repatriation of the sale proceeds of the residential accommodation to the extent of such loan’s repaid by them out of foreign inward remittances received through normal banking channels or by debiting NRE/FCNR accounts.

What are the provisions governing remittance of assets by NRI/PIO?

A Non-Resident Indian (NRI) or a Person of Indian Origin (PIO) may remit an amount up to USD one million, per financial year, out of the balances held in his Non-Resident (Ordinary) Rupee (NRO) account, or out of the sale proceeds of assets (inclusive of assets acquired by way of inheritance or settlement), for all bonafide purposes. The remittance facility in respect of sale proceeds of immovable property is not available to a citizen of Pakistan, Bangladesh, Sri Lanka, China, Afghanistan, Iran, Nepal and Bhutan.

  • Remittance of current incomeAn NRI / PIO can freely remit current income like rent, dividend, pension, interest etc., even if they do not maintain an NRO account.
  • Facilities for studentsAs Non-Residents, they will be eligible to receive remittances from India based on the following conditions:
    • Up to USD 100,000 from close relatives in India on self declaration towards maintenance, which could include remittances towards their studies also
    • Up to USD 1 million out of sale proceeds of assets or balances in their account maintained with an AD in India.
  • International Credit Cards:NRIs / PIO can use International Credit Cards abroad and settle bills out of balances held in the cardholder’s FCNR / NRE / Non-Resident (Ordinary) rupee accounts.

For details please refer to the following link on the Reserve Bank of India(RBI) website:

https://www.rbi.org.in/scripts/FAQView.aspx?Id=33