What can be better for an NRI than having a hand in the growth and prosperity of his motherland?
Perhaps nothing is better than it. It motivates NRIs to invest in India.
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NRIs buy property in India as
- It helps them to stay connected to their roots
- It is an investment opportunity
Investment decisions are generally guided by profit motives and regular returns besides sentiments for some.
Buying property in India always involves a good understanding of the market conditions and the current economic scenario in the country chosen for investment.
Still, the decision is not easy. There might be a series of questions/queries in mind before deciding to invest in India, like:
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Where can you invest?
NRIs can buy any immovable property, whether residential or commercial. No permission is required to be taken from the Government of India or RBI. There is no need to intimate RBI about this transaction. There is no restriction on the number of residential or commercial properties which NRI can buy.
However, special permission of RBI is required for buying agricultural land, plantation property or a farmhouse in India.
How to make the payment?
NRIs buying the property can make the payment
- By remitting through proper banking channels from abroad.
- By availing home loan for buying residential property, for the renovation of an existing property or construction on a plot– the loan amount will be transferred directly to the seller’s or developer’s bank account. The payment is made in Indian currency.
- By using funds in the NRE/NRO/FCNR accounts. Even housing loan if availed is repaid using funds from these accounts.
- No payment by travellers cheque or foreign currency
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What documents are required for buying a property?
Documentation part has become very easy to facilitate investment by NRIs. You need to have:
- A valid passport
- PAN card
- Latest photograph
Other documents that are prescribed by RBI from time to time.
Whether any loan is available for NRI for buying a property in India?
RBI has issued general permission to all banks to provide loan facility to the NRIs for purchase of property in India.
Generally, a home loan is availed for purchase of the residential property.
In case of purchasing a house, general precautions like the title is definite, and the property is free from all encumbrances etc. should be taken.
Can the property be purchased through power of attorney?
Property in India can indeed be purchased through a power of attorney if an NRI cannot be physically present in India. There is a proper prescribed procedure to authorize someone through the POA. It is routed through the office of Indian Embassy in the country of residence of NRI.
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Can a property be purchased jointly?
Yes. An NRI can buy a joint property with another NRI. But not with any person who is not authorized to invest in India.
There are no specific guidelines issued under FEMA for purchase of property by NRIs jointly with resident Indian. It depends upon case to case.
What are the taxation rules for NRIs buying property in India?
NRIs can earn income from investment in the property either in the form of rental income or capital gains. (Capital gain is income earned by sale of property in India). This income is taxable.
Under DTAA (Double Taxation Avoidance Agreements), an NRI can claim the tax credit in his country of residence, for taxes paid in India.
Tax benefits on purchase of the property are the same for both NRIs and resident Indian. Deduction of Rs 1.00 lac u/s 80C of the Income Tax Act as available to a resident is also available to an NRI.
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The income tax rate is 1% (TDS) of the value of the property if the value of the property bought is more than Rs 50 lacs. The rate is higher if the seller of the property is also NRI.
If NRI avails home loan to buy a property, the interest paid on loan is deductible from the taxable income.
Last but not least: Buying a property in India by NRI does no longer remain a difficult task. It has become lucrative to invest in India these days. RBI and FEMA guidelines and policies are supportive.
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