Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs) have the opportunity to acquire residential or commercial property in India by way of gift. However, this acquisition is subject to specific guidelines and general permissions. Here’s a detailed explanation of the rules governing property acquisition by gift for NRI/PIO:
**1. Acquisition of Property by Gift: NRIs and PIOs can acquire residential and commercial properties in India by way of gift. The donor can be either an Indian resident or another NRI/PIO.
**2. General Permission: The acquisition of property by gift falls under the general permission category. This means that NRIs and PIOs do not need prior approval from the Reserve Bank of India (RBI) or any other authority for receiving property as a gift.
**3. Donor’s Relationship: The donor can be a close relative or any other person, whether residing in India or abroad. Close relatives include parents, spouse, children, or siblings. However, the relationship should be clearly established for legal documentation.
**4. Property Types: NRIs and PIOs can receive both residential and commercial properties as gifts. The type of property, such as apartments, houses, shops, or offices, is not restricted.
**5. Documents Required: To ensure a transparent and legal transaction, documentation is crucial. This includes a gift deed, which should be executed on non-judicial stamp paper. The deed should clearly state the donor, recipient, the property’s details, and the nature of the gift. Registration of the gift deed with the local sub-registrar is also advisable.
**6. Repatriation of Sale Proceeds: In case the gifted property is sold, the repatriation of sale proceeds may be subject to specific guidelines and restrictions, depending on the source of the funds used for the purchase. NRIs and PIOs should be aware of and follow RBI guidelines regarding repatriation.
**7. Tax Implications: While property received as a gift may not attract tax at the time of the gift, there could be potential tax implications, such as capital gains tax, when the property is sold. It’s essential to understand the relevant tax laws and obligations.
**8. Compliance with Foreign Exchange Management Act (FEMA): NRIs and PIOs must ensure that their property acquisition by gift complies with the Foreign Exchange Management Act (FEMA) regulations, which govern foreign exchange transactions.
It is advisable for NRIs and PIOs to consult with legal experts or property advisors who specialize in property transactions in India. They can provide guidance on the legal process of receiving a property gift, compliance with FEMA regulations, potential tax liabilities, and other important aspects of property acquisition by gift.
