1 I Colliers International
NRI Investment in India
Can I invest in real estate in India? YES
Can I acquire agricultural land / plantation property /
Is there any restriction on the number of residential /
commercial properties I can purchase?
Can I acquire immovable property by way of gift /
Can I sell / gift my residential / commercial property?
Can I repatriate the sale proceeds from India?
What can be the source of funding?
Can I mortgage my property?
YES (The property can only be commercial or residential in
nature. Prior approval required from the RBI (Reserve Bank of
India) for citizens of Pakistan, Bangladesh, Sri Lanka,
Afghanistan, China, Iran, Nepal and Bhutan)
YES (No prior approval is required from the RBI for loans
from authorised dealers in India; approval is required if the
loan is from a bank abroad)
Properties can be purchased using inward remittances from
anywhere outside of India or through funds maintained in NRI
bank accounts in India.
YES but with certain pre-conditions
• Repatriated amount cannot exceed the amount you
originally paid for purchase;
• Repatriation of sale proceeds is restricted to a maximum
of two properties;
• Repatriating proceeds from residential investments in the
form of dividends is not allowed;
• Repatriation limit is US$1 million per financial year.
Investment by an NRI in India is always welcomed and the Reserve Bank of India has granted general
permission to foreign citizens of Indian Origin (NRIs) whether resident in India or abroad, to purchase
immovable property in India. According to this general permission, the NRI needs to file a Form IPI 7
declaration with the central office of the Reserve Bank of India (RBI) within 90 days of the date of purchase
of immovable property or final payment of a purchase consideration along with a certified copy of the
documents verifying the transaction and a bank certificate showing the consideration paid. There is no
restriction on the number of properties an NRI can buy in India.
Frequently Asked Questions
2 I Colliers International
Besides purchase considerations, investing in Indian property also attracts a few other costs including:
• Legal costs – When purchasing property, you
need to pay charges such as stamp duty,
registration charges, legal charges and
mortgage related costs such as processing and
valuation fees, etc.
• Property Taxes – Yearly property tax needs to
be paid. Generally, the property tax on rented
property is more than the self-owned
• Brokerage – Generally, there is no brokerage
fee if you are buying an under-construction
property; however, if you are buying / selling /
renting a ready to move in property, you need to
pay 2 to 4% as brokerage or solicitor fee.
• Maintenance Cost – Yearly maintenance costs
for painting, cleaning, repairs, etc. to maintain
the property need to be paid. In addition, an
agent may need to be hired to manage and look
after the property in your absence.
Taking Out a Loan for Buying Property
Getting financing from financial institutions is quite easy in India. For NRI investors, various Indian banks offer
special home loan schemes. Loans can be made against the property being purchased by keeping it with bank as
mortgage. The repayment of a loan can be done through inward remittance through a banking channel. The
maximum loan to value ratio can be 80%. However, it is advisable to consider a loan-to-value ratio of 60% for the
purpose of financial planning to avoid any financial crunch at the time of purchase. One can take a fixed or floating
rate loan which varies between 9.5 and 12%, depending on the financial institution chosen.
TAXES ON PURCHASING REAL ESTATE
TAXES ON HOLDING REAL ESTATE
APPLICABLE TO PURCHASER / SELLER
Based on market value
4%-8% CHARGEABLE ON: All types
EXEMPTION: 1%-2% less as rebate if
property registered under a woman’s
CAPITAL GAINS TAX
Based on sales capital gains
10%-20% CHARGEABLE ON: Property
sold after 3 years
10%-30% CHARGEABLE ON: Property
sold within 3 years
EXEMPTION: A Captial gains tax
exemption is available if the proceeds
are reinvested in another residential
property or a government bond held
for at least three years.
CHARGEABLE ON: Under Construction
12.36% on 25% of the total purchase
price if property cash is less than 1
12.36% on 30% of the total purchase
price if property cash more than 1
corer or having area above 2,000
Based on services rendered by the
developer in the course of construction
TAX DEDUCATED AT SOURCE
Based on transacted price
1% CHARGEABLE ON: Property sold
TAX ON RENTAL INCOME
Based on taxable rental income
AS PER THE INDIVIDUAL TAX SLAB
WHICH RANGE FROM 10%-30% AS
CHARGEABLE ON: Second property
even if it is not rented out
Based on annual rent
TOGETHER WITH MUNICIPAL TAX
PAYABLE BY OWNER
For Residential Services, please contact:
National Director I email: firstname.lastname@example.org
For Research related queries, please contact:
Surabhi Arora MRICS
Associate Director I email: email@example.com
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