The NRI Guides Team regularly reviews this article to ensure the content is up-to-date and accurate. The last editorial review and update were on 22 October 2023.
For foreign citizens looking to invest in property, India is a viable option. There are several aspects that make purchasing property in India attractive for overseas buyers, including the country’s rapidly growing economy and stable political environment.
There are also several, Non-Resident Indians (NRI) with foreign passports and Persons of Indian Origin (PIO) who want to settle down in India. When they plan to move back to India, one of the first steps would be to buy a property.
However, there are a number of legal restrictions on foreigners buying property in India. Here we will discuss some of the key factors foreign nationals should consider when purchasing property in India.
The below information has been prepared after studying the guidelines issued by the Ministry of External Affairs and Reserve Bank of India.
Since there are different conditions applicable for Persons of Indian Origin (PIO), foreigners of non-Indian origin living outside India, and foreigners of non-Indian origin living in India, let’s discuss them in detail.
A foreign citizen who is a Person of Indian Origin (PIO) can purchase any immovable property in India other than agricultural land, farmhouse or plantation property. He/she can also inherit such property by way of a gift from an Indian Resident, an NRI, or a PIO. Normally he/she wouldn’t require any approval from the authorities.
However, citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Macau, Hong Kong or DPR Korea, cannot acquire or transfer immovable property in India without the prior permission of the Reserve Bank of India (RBI). They can only lease a property for a period not exceeding five years.
Foreign nationals of non-Indian origin, resident outside India, are not permitted to acquire any immovable property in India unless such property is acquired by way of inheritance from a person who was resident in
India.
Also, note that foreign nationals of non-Indian origin who have acquired immovable property in India by way of inheritance with the specific approval of RBI cannot transfer such property without prior permission from RBI.
Some exceptions to this rule would be foreigners buying property for business activity, foreign diplomats or foreign spouses of NRIs/OCIs (which are explained below).
Foreign nationals of non-Indian origin, who are Indian residents are allowed to purchase property in India but have to obtain the approvals and fulfil the requirements if any, prescribed by other authorities, such as the concerned State Government etc.
However, a foreign national resident in India who is a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Macau, Hong Kong or DPR Korea, would require prior approval from the RBI. Such requests are considered by RBI in consultation with the Government of India.
According to RBI, a person resident outside India, not being a Non-Resident Indian (NRI) or an Overseas Citizen of India (OCI), who is a spouse of an NRI or an OCI may acquire one immovable property (other than agricultural land, farm house or plantation property), jointly with his/her NRI/OCI spouse subject to the conditions laid down in regulation 6 of FEMA 21(R).
The conditions are as below:
Citizens of Afghanistan, Bangladesh, or Pakistan who belong to minority communities like Hindus, Sikhs, Jains, Buddhists, Parsis, or Christians and have a Long-Term Visa (LTV) from the Indian Government can buy one residential property in India for themselves. They can also purchase one property for their own work or business.
An NRI, PIO or a foreign national of non-Indian origin can inherit and hold immovable property in India from:
However, the person from whom the property is inherited should have acquired the same in accordance with the foreign exchange regulations applicable at that point in time.
Note that in such cases, a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Macau, Hong Kong or DPR Korea, should seek specific approval from the Reserve Bank.
A PIO or NRI may transfer agricultural land, plantation property or farmhouse acquired by way of inheritance, only to Indian citizens permanently residing in India.
A Person of Indian Origin (PIO) may sell any immovable property other than agricultural land, plantation property or farmhouse in India to a person resident in India. He can also transfer it as a gift to an Indian Resident or another NRI / PIO.
A PIO may transfer agricultural land, plantation property, or farmhouse in India by way of sale or gift to a person resident in India who is a citizen of India.
Transactions allowed for Persons of Indian OriginA branch, office or another place of business, (excluding a liaison office) in India of a foreign company established with requisite approvals wherever necessary, is eligible to acquire immovable property in India which is necessary for or incidental to carrying on such activity. This should be by following all applicable laws, rules, regulations or directions in force that are duly complied with.
The entity/concerned person is required to file a declaration in the form IPI with Reserve Bank, within ninety days from the date of such acquisition. The non-resident is eligible to transfer by way of mortgage the said immovable property to an authorised bank as a security for any borrowing.
On winding up of the business, the sale proceeds of such property can be repatriated only with the prior approval of the Reserve Bank.
First, it’s important to be aware of the restrictions on foreign ownership. As explained above, foreigners are only allowed to purchase property for commercial purposes, such as office space or retail outlets, residential properties are generally off-limits.
That said, there are a few exceptions to this rule. So it’s always best to check with the local authority or lawyer before making any purchase.
Secondly, it’s important to have a realistic budget in mind. Prices in India’s major cities have been skyrocketing in recent years, and they show no signs of slowing down. If you’re not careful, you could easily end up overpaying for your property.
Finally, don’t forget about due diligence. Foreigners buying property in India should make sure to do their research and visit the site in person. There are a lot of scams in India’s real estate market, so it’s important to be cautious and go through trusted agents.
No. An NRI / PIO who has purchased residential/commercial property under general permission is not required to file any documents with the Reserve Bank.
No, a foreign national of non-Indian origin cannot be the second holder of such property.
A foreign national of non-Indian origin may take residential accommodation on lease provided the period of lease does not exceed five years. In such cases, there is no requirement to take any permission or report to the Reserve Bank.
An NRI or OCI is not allowed to acquire agricultural land, plantation property, or farmhouse.
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Aneesh, the Founder & Editor of DG Pixels, holds a Master’s Degree in Communication & Journalism, and has two decades of experience living in the Middle East. Since 2014, he and his team have been sharing helpful content on travel, visa rules, and expatriate affairs.
