NRI & PIO Services Overview

Under the Foreign Exchange Management (Non-Debt Instruments) Rules 2019 notified under FEMA 1999, an NRI (a citizen of India residing outside India as defined under Section 2(w) of FEMA 1999) and an OCI (Overseas Citizen of India cardholder under Section 7A of the Citizenship Act 1955) are broadly treated on par for purchasing immovable property — both may acquire residential and commercial property in India without RBI approval but cannot purchase agricultural land, farmhouse, or plantation property. A PIO (Person of Indian Origin) who does not hold an OCI card is now treated as a 'foreign national' for FEMA purposes following the Citizenship (Amendment) Act 2005, which discontinued the PIO card — new PIO cards are not issued, and existing PIO cardholders who have not converted to OCI must seek RBI approval for property purchases under FEMA Notification No. FEMA 21(R)/2018-RB. OCI cardholders may purchase property freely under Rule 28 of the NDI Rules 2019, making OCI conversion the strongly preferred route.

Rental income earned by an NRI from Indian property is taxable in India as 'Income from House Property' under Section 22 of the Income Tax Act 1961, with deductions available under Section 24 — 30% standard deduction on net annual value and actual interest paid on a home loan taken for the property. The tenant (whether resident or non-resident) must deduct TDS at 30% plus surcharge and cess under Section 195 of the Income Tax Act 1961 before making rent payments to an NRI landlord, and must obtain a TAN and deposit the TDS by the 7th of the following month. The NRI can claim benefit of a lower DTAA rate (if applicable) by submitting a TRC and Form 10F to the tenant. The NRI must file an Indian income tax return if gross income exceeds the basic exemption limit, and may claim credit for the TDS deducted. Non-deduction of TDS by the tenant makes the tenant liable to interest under Section 201(1A) at 1% per month for the period of non-deduction.

Yes — an NRI whose total Indian income (from property, NRO bank interest, capital gains, or any other Indian source) exceeds the basic exemption limit (₹2.5 lakh under the Income Tax Act 1961 for AY 2026-27, applicable to non-residents) must file a return of income in India. Under the Income Tax Act 1961, NRIs may opt for the special tax regime under Chapter XII-A (Sections 115C to 115I), which taxes investment income at a flat 20% and long-term capital gains at 10% without the benefit of indexation, but without requiring deductions to be claimed. Alternatively, NRIs may opt for the regular tax regime and claim DTAA benefits, deductions under Chapter VI-A, and indexation on capital gains. Long-term capital gains from listed equity mutual fund units are taxable at 12.5% under Section 112A of the Income Tax Act 1961 (for gains exceeding ₹1.25 lakh per year) for AY 2026-27 and are included in the return. The ITR forms applicable are ITR-2 (NRI with no business income) or ITR-3 (NRI with business income).

Inheritance of immovable property by an NRI or OCI from a resident Indian is governed by Indian succession law — the Hindu Succession Act 1956 for Hindus, Buddhists, Sikhs, and Jains; the Indian Succession Act 1925 for Christians, Parsis, and those without personal law; and the Muslim Personal Law for Muslims. The NRI or OCI may hold, transfer, or sell the inherited property under Rule 28(2) of the Foreign Exchange Management (Non-Debt Instruments) Rules 2019 without RBI approval even if the property is agricultural land (which they could not have purchased directly). Sale proceeds from inherited property must be credited to the NRO account, and repatriation abroad is permitted up to USD 1 million per financial year under the RBI's repatriation scheme for NRIs, subject to payment of applicable capital gains tax and submission of Form 15CA and Form 15CB. For amounts above USD 1 million, an application must be made to the Reserve Bank of India through the authorised dealer bank.

An NRI who has taxable income in India or is required to file a tax return must obtain a Permanent Account Number (PAN) under Section 139A of the Income Tax Act 1961, read with Rule 114 of the Income Tax Rules 1962. PAN application is made in Form 49A (for Indian citizens, including NRIs holding Indian passports) or Form 49AA (for foreign nationals including OCIs and PIOs with foreign passports) through NSDL or UTIITSL portals. Without a PAN, the withholding tax on payments to non-residents under Section 195 or Section 194A defaults to the higher of 20% or the DTAA rate under Section 206AA of the Income Tax Act 1961. OCIs and NRIs can apply for PAN online and submit documents (passport copy, overseas address proof) by courier to the NSDL processing centre in Pune — e-KYC using Aadhaar is not available for non-residents as Aadhaar enrolment requires physical presence in India. PAN is also mandatory for high-value banking transactions under Rule 114B of the Income Tax Rules 1962.