The government of India has been seeking to boost investment opportunities in real estate sector as well as protect the investors, especially NRIs. The Foreign Exchange Management Act (FEMA) which falls under RBI (Reserve Bank of India) governs NRI Property Investments in India. It has laid down specific guidelines for the NRIs so as to ensure they follow the rules and regulations and can take advantage of opportunities provided by the government.
Primary requirements for NRI Property Investments in India
- To invest in any property in India, an NRI should possess an Indian passport.
- An NRI doesn’t need to take permission from the RBI to invest, transfer, dispose or be gifted with a property.
- If an NRI has a foreign passport, he/she can also acquire, transfer, dispose or inherit a property given that it is only for residential purposes.
- An NRI can inherit, receive a gift, or invest in any number of immovable residential and commercial properties in India.
- An NRI can neither invest nor obtain an agricultural land, a plantation land or farmhouse as a gift.
- If the NRI had invested in an agricultural land, a plantation land or farmhouse before he/she was an NRI, he/she can sell the property but only to a resident of India.
- An NRI can transfer or gift an immovable property to a resident Indian or another NRI.
- Before acquiring a property in India, an NRI should meet all the requirements and conditions of both the Income Tax Act, 1961 and FEMA.
- An NRI must possess all the relevant documents such as a PAN Card (Permanent Account Number), OCI/PIO card if any, valid Indian passport, proof of address, passport size photographs to buy any estate.
- An NRI can repatriate the sale proceeds and rental income to a foreign account of his/her choice after the deduction of the Income Tax, and the Capital Gains if he/she has bought the property through the NRE Account.
- The citizens of Pakistan, Afghanistan, Bangladesh, Iran, Sri Lanka, China, Nepal or Bhutan cannot procure or transfer property in India without taking permission from the Reserve Bank of India.
Important aspects an NRI should consider before Investing in India
An NRI should
- examine all the property documents especially the registered property title which one can obtain from the sub registrar’s office
- request for a clear property title and legally vetted property documents
- make sure that the property title belongs to the rightful owner and therefore, has the right to sell the property
- ensure that the property is free of any legal disputes
- ensure to check that the property doesn’t have any outstanding debts and obtain a no dues certificate
- procure a release letter from the bank if the estate has been used as a mortgage for a home loan
- ensure to verify that the property has been given the approvals and permits for construction from civic authorities
- attain the clearance under Urban Land (Ceiling and Regulation) Act, 1976 if required
- verify that the seller has the right to sell the property if he/she is buying it from a third part i.e. real estate dealer or promoter
- check if the quoted price of the asset is as per market value
- make sure no mortgage is outstanding on the property he/she wants to buy
With government promoting NRI Property Investments in India they have provided many benefits and flexibility in rules and regulations of foreign investments. This has given NRIs lot of advantages and opportunities to invest in property in India without much hassle.