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Checklist for NRIs Buying Property in India

Checklist for NRIs Buying Property in India

by Anushree Ghosh,

In the past few years, the drop in the Indian currency has made it cheaper for the Resident of India (NRIs) to invest in the country. The NRIs always found the Indian market lucrative and fruitful in multiple aspects. Due to the high rate of returns, emotional affinity towards one’s own country and as mentioned initially due to declining value of the rupee, and search for an attractive investment offer, NRIs often look for land purchasing deals in India. The main investments come from the countries like USA, UAE and Saudi Arabia. However, due to the restrictions imposed by the government on NRI investment in India, the NRIs prefer other countries over India to invest in real estate.

Here is a checklist for NRIs who are looking to buy property in India:

Reserve Bank of India: An NRI wanting to purchase an immovable property in India has the general permission from RBI to do so. The transaction is generally considered equivalent to an Indian investing in a property but with a few restrictions as mentioned below:

  • An NRI (or his successor) is authorized to repatriate the proceeds of the sale of fixed property in India only when the deal is of immovable property owned by him when he was a citizen of India. Or in a case where prior permission of Reserve Bank of India (RBI) has been obtained.
  • The applicable regulations under FEMA restrict foreign nationals from acquiring any immovable property in India, and a special permit is required from RBI for the same, except in the case where a foreign national has inherited an estate from a resident of India. Or in case the foreign national has leased a fixed property period not exceeding five years.
  •  Foreign nationals need special permission of RBI for transferring immovable property within India. And are allowed to transfer only when the immovable property is either Obtained by inheritance and with particular approval from RBI or was purchased with specific permission from RBI.

Home Loan: NRIs can apply for loans to the Indian banks and often there are special offers for them. However, there could be some conditions in those offers depending on the country where the NRI resides or have lived earlier. Also, the amount cannot be credited to the account of an NRI but to the seller’s or the developer’s account directly.

Property Type: All kinds of immovable properties can be purchased by NRIs other than plantation and agricultural properties or farmhouses. In some special cases, the RBI and the government can approve the purchase of such properties by NRIs.

PAN: It is important for the NRIs to have a PAN number for income tax returns and registration of the property. According to the rule of SEBI, any NRI not having PAN card cannot do the share trading by depository or broker.To apply for PAN card India, first, you need to visit: https://www.onlineservices.nsdl.com/paam/endUserRegisterContact.html

Number of Properties: There is no restriction on having any number of properties by an NRI in India.

Power of Attorney: As NRIs don’t live in India, they can give the Power of Attorney (POA) to anyone in India to take care of the property and to take decisions on their behalf. This POA should be signed by the NRI who has purchased the property in presence of the consulate officer or a notary and should be attested by them.

Taxation: The tax benefits for NRIs are almost equivalent to an Indian resident. If the property is sold in the first three years after purchasing it, then is it considered short-term capital gain, which is taxable.

 DTAA: The Double Taxation Avoidance Agreement(DTAA) is a tax agreement signed between India and over 80 other countries like Italy, US, UK, Singapore, Denmark, and Japan to name some. This agreement was implemented so that people can avoid paying double taxes.

The Confederation of Real Estate Developers Association of India (CREDAI) occasionally organizes workshops for the NRIs where they can assess various investment options in Indian properties and can discuss loan option from banks. This initiative by CREDAI makes it easier for the NRIs to make decisions on their investments in India.

With better and improved taxation policies and a favorable environment of ease of doing business, the government of India has reformed the investment mechanism to a great extent. NRIs too have started reviving their lost interest in the Indian real estate market. With all the conducive environment taking its shape, it appears that the NRIs would like to invest in the real estate market this festive season. However, for that to happen, do not forget to go through the checklists. Also, let us know how useful the information was in your overall investment procedure.

Anushree is a versatile writer, theatre actress with an immense passion for any form of art. Her blogs will take you through the different horizons of infracultural stories.

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