RBI Guidelines For NRI Investments In Real Estate

NRIs can buy and sell real estate in India. NRI investments in India get governed by the Reserve Bank of India and are subject to the Foreign Exchange Management Act (FEMA). As a result, there are investment rules and regulations for NRIs in Indian real estate that must get followed during such transactions.

Share on facebook
Share on twitter
Share on linkedin
RBI Guidelines For NRI Investments In Real Estate

For NRIs, real estate is one of the most famous investment vehicles. Because of new real-estate market restrictions, anyone with an Indian passport can now invest in Indian real estate, making the process extremely simple. According to a report, NRIs spent US$13.3 billion in the Indian real estate industry in FY 21, an increase from the previous estimate of US$13.1 billion. The depreciation of the rupee, as well as the regulatory environment created by the reforms, has prompted many NRIs to invest in the Indian real estate market.

Can NRIs invest in Indian real estate? 

The Reserve Bank of India (RBI) has granted NRIs and PIOs general permission to purchase any residential or commercial property in India. They are not required to seek specific permission from the central bank, nor are they required to send any communication or notification to the RBI in this regard.

An NRI or PIO can purchase an unlimited number of residential or commercial properties under the existing general permissions. The income tax law also allows an NRI/PIO to own an unlimited number of residential or commercial properties. An NRI can buy the property as a sole owner or in partnership with another NRI. However, regardless of the second holder’s contribution to the purchase, a resident Indian or a person who is otherwise not permitted to invest in a property in India cannot become a joint holder in such property.

Read more about The Scope Of NRI Real Estate Investments In India In 2022.

Where can NRIs invest in real estate?

‘Where should I invest in the Indian real estate market?’ is every NRI thought and question. The following are the types of properties available for investment in India, as well as the best locations for the various types of properties and the status of the CRE market in different regions of India:

  • Commercial Real Estate: Properties purchased for the sole purpose of professional work are classified as commercial real estate. The CRE industry is divided into four segments: industrial, retail, office, and multifamily. When it comes to investment pooling, this is one of the fastest-growing sectors. Nowadays, as commercialization and urbanization have spread throughout the country, particularly in metropolitan areas, the investment potential of CRE has skyrocketed. NRIs prefer this real estate property for investment as well, where individuals are primarily looking to expand their business ventures.
  • Residential Real Estate: The next type of real estate is residential real estate, which is purchased for personal use. Such properties are popular among NRI investors who want to increase their capital and generate assets that they can use when they return to India from their jobs abroad. These properties are also raised on rent, with the owner earning a consistent income from deposits made by tenants. A large-scale NRI investor does not favor such real estate investments because the profit margin is lower and the maintenance costs are higher than in CRE.
  • Agricultural Land: NRIs are exempt from purchasing agricultural lands in India under the rules of the Foreign Exchange Management Act of 1999. If an NRI wishes to purchase agricultural land in India, they must go through a separate request procedure with the RBI, where the purchase is still uncertain.
  • Farmhouse or Plantation Property: As with agricultural lands, NRIs are not permitted to purchase Farmhouse or Plantation property. However, there are some exceptions to this rule, such as when the individual inherits the property, in which case it can be requested as a property investment.

But, how can NRI invest in Indian real estate?

NRIs can invest in real estate properties available to them through the following channels. But, traveler’s cheques (pre-paid, pre-printed fixed amount cheques for cross-border payments) and foreign currency notes are not accepted. All payments must get made solely in India.

  1. Self-Transactions involving:
  • In India, funds get held in NRE/NRO/FCNR (B) accounts.
  • Funds transferred to India from abroad (on one’s account; cannot pay the seller directly).
  1. Loan Facility (in INR) in India for NRIs; close to 80% of the property value based on the NRI’s eligibility, which gets repaid through:
  • Remittances From Abroad (money transferred into your account from abroad)
  • In India, funds get held in NRE/NRO/FCNR (Bank) accounts.
  • Rent from the recently purchased property.
  • Crediting the borrower’s loan account by close relatives (under section 6 of the Companies Act, 1956).

Can NRIs sell their real estate property in India?

An NRI can sell real estate in India that they have purchased or inherited to an Indian resident, NRI, or PIO. However, when selling agricultural land, plantation property, or farmhouses, the property must be sold to an Indian resident. Following the sale, the sale proceeds are repatriated to the country of residence. And in this case, you must adhere to certain guidelines established by the RBI under FEMA.

Read more Transferring Immovable property by NRIs: everything you must know.

Does NRI investment in Indian real estate attract tax?

NRIs will incur long-term capital gains of 20% if they sell the property after three years from the date of purchase. Gains get calculated as the difference between the indexed cost of purchase and the sale price.

The cost of purchase adjusted for inflation is known as the indexed cost of purchase. In the case of inherited property, the date and cost of purchase are assumed to be the date and cost to the original owner to calculate the period of holding and cost of purchase. NRIs get required by law to pay a TDS of 20%. If they sell the property within three years of the purchase date, they will be subject to a TDS of 30%, regardless of the tax slab. Short-term capital gains get calculated as the difference between the sale price and the purchase price. Short-term capital gains are not eligible for indexation.

Why should you choose Assetmonk for real estate investments?

Assetmonk is India’s fastest-growing wealth-tech platform focused on commercial real estate investments. Catering to investors from all over the world, Assetmonk offers high-quality investment opportunities at reasonable prices via fractional ownership. NRIs can easily access grade-A assets without any time-consuming hassles. Keen to understand individual investor objectives like passive income, capital appreciation, and risk mitigation, Assetmonk offers investment products based on varied risk appetites.

RBI Guidelines For NRI Investments In Real Estate FAQ'S:

Non-resident Indians (NRIs) do not need prior permission to buy or sell immovable property in India.

NRIs can purchase and transfer immovable property in India on a five-year lease, and they can inherit immovable property in India from a resident.

NRI investment in India gets regulated by the Government of India’s Foreign Direct Investment (FDI) policy and the provisions of the Foreign Exchange Management Act (FEMA) 1999.

Related Articles

child saving scheme

Child Saving Schemes

A child is the most precious thing in your life, and it’s important that you take care of them. However, it can be hard to know how much money you should save for their future education, health, and insurance needs. There are many different types of child saving schemes available for parents who want to safeguard their children from financial difficulties later in life. Here are some examples: Sukanya Samriddhi Scheme The Sukanya Samriddhi Yojana is a child saving scheme specially made for girl children. It was launched by Prime Minister Narendra Modi on January 22, 2015. The objective of this scheme is to promote the financial inclusion of girls in India by incentivizing them to save money through the Sukanya Samriddhi account. The interest rate ordered by this scheme is 7.6% per annum, and the minimum and maximum investment amounts are ₹250 and ₹1.5 lakh per annum respectively. Also, the maturity period of the Sukanya Samriddhi Scheme depends on…

Read more
istockphoto 1159806988 612x612 1

Gratuity Calculation

Wondering how to do gratuity calculation? After a certain period of service, gratuity is the payment of a lump sum to an employee. It is a reward for long-standing service. It is usually paid upon retirement, but it can be requested if you are changing jobs after a certain period (5 years). The gratuity calculation ot calculator formula works out to be a percentage of your salary. What’s the Gratuity Act? The Gratuity Act is shorthand for the Payment of Gratuity Act 1972, which was passed in   September 1972. This Act was created to give monetary benefits to employees who have served a long time for one employer. The Gratuity Act applies to all Indian industries and organizations, but certain conditions must be met to qualify for gratuity as per existing Gratuity Act rules. What are the gratuity rules? India’s gratuity rules apply to employees that are covered under the Payment of Gratuity Act 1972, as well as employees…

Read more
istockphoto 1209874109 612x612 1


SIP vs PPF: Which is better for you? Did you know you can invest in mutual funds through SIPs and PPFs? SIP (Systematic Investment Plan) is a way of investing in mutual funds, where a specific amount of money is invested in mutual funds on a monthly/quarterly/annual basis. The recurring investment strategy of a SIP protects you from the downtrend of the market peak and helps to flatten the curve between the previous investment amount and the present investment amount. It is also important to note that a SIP provides a greater extent of mutual fund units than investing in one go. Whereas, Public Provident Fund or PPF is a savings scheme that is guaranteed and approved by the Indian government. It is a regulated fund, which is managed by various financial institutions of the Indian government. The returns from PPF are revised by the government every quarter. To avail of this scheme, you will need to open a bank…

Read more
istockphoto 1200759231 612x612 1

EPF Form 11

If employees are not members of the Employee Provident Fund Organisation, they should fill and submit an EPF form when entering a new firm that provides the EPF Scheme (Employees Provident Fund). If employees are currently members of the Employee Provident Fund Organisation, the employers must continue to meet the employee’s PF requirements. EPF Form 11 comprises the employees’ EPF records and is required to be filled out when employees join a company. It can immediately transfer the PF account. Who Must Fill an EPF Form 11? Individuals should fill an EPF form 11 when entering a new company that is recognized under the EPF Scheme of 1952. Current members, on the other hand, should fill out this form when changing jobs because it includes all of the facts about the employees’ contributions. Additionally, this form is utilized to move your PF account to another. Features of an EPF Form 11? Objective For fresh EPF Scheme members: It is a…

Read more
istockphoto 1439112216 612x612 1

EPF Form 31 – Partial Withdrawal

EPF Form 31 is used by employees to register claims for a fractional withdrawal of money from the EPF. Employees’ Provident Fund is a savings scheme backed by the govt. that can help employed persons establish a substantial corpus to satisfy their financial obligations after retiring. Employees are expected to deposit a percentage of their basic salary (12 percent) per month to this type of PF. The employer then makes a matching contribution to this investment. The corpus for workers is generated by pooling these deposits with relevant government interest. Employees might also opt to pull from their EPF savings throughout their job tenure to pay any unexpected bills that may occur. Also, read EPF Form 11. When can you withdraw your EPF funds?  An individual can withdraw his EPF money in part or in full via EPF withdrawal Form 31 only under particular conditions. Employees are eligible for withdrawal of their whole EPF savings amount in the events listed…

Read more
istockphoto 1200759231 612x612 1

EPF Passbook Download

Employees can download EPF Passbook online. Employee provident Fund Organisation offers an EPF passbook service online. It functions similarly to a passbook of a bank in that it records an individual’s EPF account spending. It allows one to easily see, import, and print their account statement. This online EPFO member passbook may also be accessed via the program. But, prior to installing the EPFO passbook, the UAN passbook must be unlocked. So, the EPF passbook is a database that contains a record of all contributions made to EPS and EPF accounts by the worker and the employer. The passbook details all contributions made each month. Interests earned in the account of the beneficiary are still kept in the passbook. Read EPF – Employees’ Provident Fund, EPFO Benefits & Process. Information in the EPF Passbook The company’s or employer’s name The ID of the establishment  The type and name of the EPFO office Contributions from both the employer and the employee…

Read more