Tips for NRIs planning to gift their property in India

When compared to Indian citizens, there are several additional steps for an NRI when gifting a property located in India.

Just like anyone who owns property in India, non-resident Indians, too, are free to give their property to others. Like Indian citizens, they will be liable to pay stamp duty and registration charges to complete the formal arrangement, giving the property transfer legal validity; as long as the property cost is over Rs 100, which it invariably is.

What are the things NRIs have to take care of when gifting a property in India?

Under the current Indian law, prior approval from the Reserve Bank of India (RBI) is required for an NRI to gift India property. In a recent ruling, the Supreme Court reiterated the rules in this regard.

‘The requirement specified in Section 31 (of the Foreign Exchange Regulation Act, 1973) is mandatory and, therefore, (a) contract or (an) agreement, including the gift, pertaining to the transfer of immovable property of a foreign national, without previous general or special permission of the RBI, would be unenforceable in law,’ the SC said in a ruling in 2021.

‘The prior permission of the RBI is mandatory and any subsequent permission cannot be granted by the RBI. Transactions carried out without the RBI’s permission are opposed to public policy and, thus, unlawful,’ it added.

Stamp duty on gifting for an NRI

Some states allow rebates if the property is gifted to a relative. This means the stamp duty and registration charges are either fully exempted or partially levied against gifting to a non-relative.

Relatives in the legally defined list are:

• Father
• Mother
• Stepmother
• Spouse
• Siblings
• Children
• Child’s spouse
• Stepsister and stepbrother
• Stepchildren
• Grandparents
• Grandchildren
• Grandchild’s spouse
• Siblings’ spouse

All other relatives are considered non-relatives as per the legal definition.