A Non-Residential Indian is a citizen of India who lives abroad for employment, business or vocation purposes for an uncertain amount of time.
NRIs do not require the permission of the Reserve Bank of India in order to purchase immovable property and can obtain loans for the purchase of such property from certain financial institutions. However, the repayment of the loan must be made within 15 years of taking the loan.
NRI investors have different conditions for purchase than residents. He/she must be at least 21 years of age with a minimum of $2000 monthly income. An NRI is not allowed to make Equal Monthly Installments (EMI) through any source other than his/her NRE/NRO account. The eligibility of loan will be determined on a number of factors such as income stability, number of dependents, repayment capacity, cost of property etc. and can range from 5 lakhs to 1 crore. As in the case of a resident, an NRI can enhance his home loan eligibility by applying with a co-applicant who has a separate source of income.
An applicant will be eligible for a maximum of 85% of the cost of the property or the cost of construction as applicable and 75% of the cost of land in case of purchase of land, based on the repayment capacity of the borrower. Furthermore, the interest rates on home loans for NRIs are higher than those offered to residents. The amount differs by 0.25%-0.50%. Some Housing Finance Company's also having an internally earmarked 'negative criterion' for NRI home loans. As such, the NRIs who hail from locations that are marked as being 'negative' in the books of HFCs, find it difficult to get a home loan.
NRI's can invest in any immoveable property in India except the following:
Payment of purchase price for acquisition of property can be made only through the following:
Transfer of Immoveable Properties in case of an NRI citizen of India:
In connection with the above, it should be noted that the benefit of indexation would not be available. However, NRIs could explore the option of claiming certain specified exemptions (subject to conditions) in respect of capital gains arising from sale of property.