Non-Resident Indians (NRIs) have always found real estate an attractive investment option. Their attraction comes not just from the financial aspects, but also from their intense desire to have a connection to their roots. The reasons for NRI investments in India could be many, and vary from providing a better lifestyle for the family to attaining a return on the investment.
Over the past few years, though investment in India has increased significantly, we have seen the hesitation in the process by the NRIs. The government of our country has implemented RERA, GST and Benami Transactions (Prohibition) Act to help remove this uncertainty.
But before understanding how the steps taken by the government will help increase NRI Investment in India, it is important to know what affects the decision of the NRIs. Specifically, what is it that concerns them about investing in India?
Common concerns that affect NRI Investments in India
The underlying concerns of the NRIs investing in the country are as follows:
- The unclear (obscuring) nature of the real estate sector
- Lack of information regarding property matters
- No concept of diligence in implementation
- Untimely delivery of the projects by developers
- Lack of follow-ups by the developers
- Fraud in both the construction and the documentation
- Delay in legal, confirmed possession
These problems have acted as a deterrent for the NRIs to reduce their investments in the country.
Can we count on steps such as RERA, GST or Benami Transactions (Prohibitions) Act to address the concerns mentioned above. As an assurance, one can say that the rules and regulations that have been laid down under these Acts have most certainly taken care some of the issues.
Initiatives were adopted by the government to increase NRI Investments in India
RERA (Real Estate Regulation Act)
- RERA was implemented with the aim of ensuring that the real estate sector becomes transparent, corruption free and the rule breaker could be held accountable.
- The provisions of this Act will make sure that the buyer is well protected, there is no delay or untimely delivery of the projects, and no one can commit fraud.
- Along with it has been ensured that there is a speedy grievance redressal system.
GST (Goods and Services Tax)
- GST is the biggest tax reform introduced in India. Its aim is to eliminate the difference in the indirect taxes that apply to different states.
- The benefit of GST for the real estate sector is that it will provide clarity on tax-credits and ultimately reduce the price of properties.
Benami Transactions (Prohibition) Act
- The Act provides an efficient administration for the prevention of benami transactions.
- The Act has given powers to the specified authorities to seize the benami properties provisionally.
- Under this law, if an individual is found guilty of possessing Benami Property by the court, he will be held accountable with imprisonment for a term that may vary from one year to seven years and shall be fined (which may extend to 25 percent of the fair market value of the assets.
For NRIs, the investment opportunities have significantly improved with the GST, RERA, Benami Act, and other initiatives being taken by the government like demonetization. These measures have promoted transparency and a corruption free system. NRI Investments in India are one of the major contributions in the Indian economy. The liberalization of rules under FEMA along with the various steps taken by the authorities is helping in boosting it.