The RBI defines NRI as an Indian citizen or a foreign citizen of Indian origin, residing abroad (check for exceptions).Students are included in this definition. The RBI permits NRIs to freely acquire and transfer immovable properties in India - residential, commercial or industrial - subject to certain restrictions laid down in the Foreign Exchange Management Act, 1999 (FEMA). The RBI permits NRIs, barring those excluded from the purview of its definition, to operate an NRE/FCNR account in India.

As per the Foreign Exchange Management Act, 1999 (FEMA), PIO is an Indian citizen who has opted for citizenship of another country (other than Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, and Bhutan) provided:

• The person has held an Indian passport at any time
• His/her parents or any grandparents were citizens of India
• The person is a spouse of an Indian citizen
• The person is a spouse of a person who has held an Indian passport at any time
• The person is a spouse of a person who was either a citizen of India, or had parents or grandparents who were citizens of India

Yes, if the acquisition is by way of purchase, gift, or inheritance, the RBI allows acquisition of immovable residential property in India.

• In the case of gift, the property should belong to a resident Indian, or an NRI, or a PIO
• In the case of inheritance, the property should have belonged to a resident of India as per the Provisions of Section 6(5) of the Foreign Exchange Management Act, 1999

An NRI/PIO/ foreign national of Indian origin can also acquire residential property by way of inheritance from a person who is a resident outside of India with the specific approval of RBI; however, the person bequeathing the property should have acquired such property in accordance with the provisions of foreign exchange law in force at the time of acquisition or under FEMA regulations.

Yes, as per provisions of the Foreign Exchange Management Act, 1999, RBI allows NRIs to sell or gift their property to an Indian resident/NRI/PIO.

Yes, NRIs can authorize a third party to act on their behalf by enabling him/her with a Power of Attorney to complete loan and related formalities. Ideally, the POA should be executed in favor of a resident Indian.

In the case of POAs executed outside India, the following conditions apply:

• Depending on the laws of individual countries where a POA is being executed, it must be drawn out either on stamp or plain paper
• An official of the Indian Embassy, Indian Consulate, or Trade Commissioner of the country where the executants reside has to attest the signatures of the executants
• The Power of Attorney becomes valid only when the POA holder's signature has been verified by an Indian notary, his/her employer, or banker on a separate paper and attached with the POA document

NRIs have options with respect to available categories of accounts that they are allowed to open and operate. The accounts can be either in Indian Rupee or foreign currency and the categories are as follows:

• NRO or Non-Resident (Ordinary) Account
• NRE or Non-Resident (External) Rupee Account
• NRE or Non- Resident (External) Rupee Account
• FCNR or Foreign Currency Non-Resident Accounts in Pounds Sterling, US Dollars, Japanese Yen, and Euro

Under the Exchange Earners Foreign Currency Account (EEFC) Scheme, RBI rules also permit an Indian earning in foreign currency to maintain a foreign currency account in India; however, the permissible limit is 50% of such foreign exchange earnings, which should be operated with a bank authorized to deal in foreign currency.

• NRO: Funds standing to the credit of this account cannot be repatriated outside India in foreign exchange, without prior permission of the Reserve Bank of India. However, interest earned on these accounts, net of Indian taxes, is eligible for repatriation outside India, via the authorized dealer where the account is maintained. This process does not require RBI approval, although the accountholder has to make an application in the prescribed form to the authorized dealer.
• NRE: The funds standing to the credit of this account, as well as interest earned thereon, can be remitted outside India in free foreign exchange, without RBI permission. The interest income is not liable to be taxed under Indian income tax laws. Remittances to the accounts should be from outside India in foreign exchange as well as other funds eligible to be remitted outside India, in free foreign exchange. Funds emanating from local sources are not eligible to be credited to these accounts, unless, under the existing Exchange Control Regulations such funds can otherwise be remitted outside India.
• FCNR: Regulations permit opening of accounts in four foreign currencies, namely, Pound sterling, US Dollar, Japanese Yen, and Euro. For opening an account in a particular currency, the remittance to India must be in the same currency. Only fixed deposit accounts can be opened with a minimum term of one year, and a maximum maturity period of three years. The account holder has the option of remitting both the principal and interest earned on these accounts outside India, in the same or any other convertible currency. The interest earned on these deposits is not liable to be taxed under Indian income tax laws.

RBI rules permit NRIs to hold NRO accounts jointly with Indian residents. However, NRE accounts can be held jointly only with NRIs.

The RBI permits certain housing finance companies and authorized dealers to grant housing loans to NRIs for buying a house or flat for self-occupation, but subject to certain conditions. The maximum tenure of such a loan should not exceed 15 years, and the repayment will have to be made from inward remittances, or out of funds held in the investors' NRE/ /NRO/FCNR accounts. The purpose of the loan, margin money, and quantum of loan however, are on a par with those applicable for Indian residents.

Yes, subject to certain conditions, an NRI can purchase a property with money borrowed from a close relative outside India; however, the borrowed amount should not exceed USD 250,000 or its equivalent; the conditions that will apply are as follows:

• the minimum tenure of the loan should be one year
• the loan should be interest free, and
• the loan should be in the form of an inward remittance in free foreign exchange, through normal banking channels or by direct debit of the NRI lender's NRE/FCNR account

As per RBI guidelines, a "Close Relative" is as defined in Section 6 of the Companies Act, 1956:

• members of a Hindu undivided family; or
• husband and wife; or
• one is related to the other in the manner indicated in Schedule IA

A. Repatriation of the sale proceeds outside India may be allowed through an authorized dealer, provided:

• the seller had acquired the immovable property in accordance with the provisions of the foreign exchange law in force at the time of acquisition
• the amount to be repatriated does not exceed the amount paid in foreign exchange( received through normal banking channels) to acquire the immovable property, or,
• the amount was paid out of funds held in a FCNR account, or,
• the foreign currency equivalent (as on the date of payment) of the amount paid, was made from funds held in an NRE account for acquisition of the property, and
• in the case of residential property, the repatriation of sale proceeds is limited to two such properties

B. In case the property was paid for in Indian Rupees and/or the loan was repaid by close relatives in India (as defined in Section 6 of the Companies Act, 1956), the amount can be credited to the NRI/PIO's NRO account. In case of capital gain accruals from the sale of the property, if any, the same can also be credited to the NRO account. Authorized dealers also allow NRIs/PIOs to repatriate an amount up to USD 1 million per financial year out of the balance in the NRO account / sale proceeds of assets / the assets in India acquired by way of inheritance / legacy. The remittance would have to be supported by the remitter with documentary evidence of such acquisition, inheritance, or legacy of assets, and a tax clearance / no objection certificate from the Income Tax Authority. Remittances exceeding USD 1 million in any financial year would need to be approved by the RBI

C. For the purpose of repatriation, an application in Form IPI 8 must be made to the Central Office of RBI within 90 days of the sale of property

On purchase of property, NRIs do not have any tax liability in India; however, NRIs are liable to pay tax in the following instances:

• Income earned from rental of a residential property is taxable under the head Income from House Property, of the Income Tax Act of 1961
• Income earned from the sale of a property is taxable under the head Capital Gains of the Income Tax Act of 1961