Can OCI card holders purchase property in India?
According to the general permission granted by the Reserve Bank of India, NRIs, PIOs & OCIs can purchase immovable property in India. But this general permission only covers the purchase of residential and commercial property. It does not allow the purchase of agricultural land, plantation property or a farm house in India. But it is to be noted that an NRI or a PIO or foreign national of non-Indian origin (OCI) can hold immovable property acquired by way of inheritance. No permission from RBI is required.
The Government of India has announced vide Gazette Notification No.26011/01/2014-F.I dated 09.01.2015, that all PIO cards issued till 09.01.2015 are deemed to be OCI card. The scheme has been withdrawn now.
Documents Required for Buying Property
Here are the documents an overseas Indian would need when they’re trying to purchase commercial or residential property in India.
- Address proof
- OCI/PIO card (In case of OCI/PIO)
- PAN card (Permanent account number)
- Passport (In case of NRI)
- Passport size photographs
Long term/ Short term Gains and Income Tax
According to the general permission granted by the Government of India, NRIs, PIOs and OCIs do not have to pay any taxes when they are acquiring property in India. But if they are selling this property, they will have to pay Long Term or Short Term Capital Gains Tax. Also, any rent collected from the property is taxable, and the owner will have to obtain a PAN card and file their income tax returns.
The RBI allows NRIs to take home loans for purchasing property in India. They are also permitted to take loans for home repairs and renovations.
Repatriation of Funds
An NRI, PIO or OCI can purchase immovable (commercial & residential) property in India using their repatriable funds. But a major clause regarding the purchase is that none of the payments can be made in foreign currency.
The buyer has to make the purchase in rupees through funds received in India via normal banking channels, or through funds maintained in any non-resident account under FEMA and RBI regulations.
Another condition is that the amount to be repatriated should not exceed the amount paid for the property in foreign exchange received through normal banking channel or by debit to an NRE account.
An NRI or PIO can open, hold and maintain the following types of accounts with an authorized bank in India, without explicit permission from the Reserve Bank.
- Non-Resident Ordinary Rupee Account (NRO Account) :Any individual residing outside India may open an NRO account with an authorized dealer (or an authorized bank) for the purpose of conducting a legitimate transaction in rupees. NRO savings accounts can also be maintained through post offices in India.
- Non-Resident (External) Rupee Account (NRE Account) : An NRE account can be in the form of savings, current, recurring or fixed deposit accounts. These accounts can only be opened by the NRI himself (as defined under Regulation 2(vi) of Notification No. FEMA 5/2000-RB dated May 3, 2000) and not through the person who holds the power of attorney.
- Foreign Currency Non Resident (Bank) Account – FCNR (B) Account : NRIs are eligible to open and maintain FCNR (B) accounts in the form of term deposits taken for a period of 1 to 5 years. The account can be held in any freely convertible currency.
Power of Attorney
The NRI does not have to be physically present in India in order to purchase or sell a property. The process can be facilitated by one of their representatives in India – someone who holds the Power of Attorney to act on their behalf.
A PoA can be given to execute all contracts, deeds, mortgages, lease, sell and all matters relating to managing the property. You may choose not to give this PoA but it would lead to delays since all documents would have to be mailed to your foreign address. Giving a specific PoA would be a better option.