Once you have made up your mind to sell your property, you need to decide whether you want to visit India to sell your property or you want someone else on your behalf to sell your property in India. In case your relative or a friend or a broker/advocate can do the same for you, it will be done through a Power of Attorney for sale of the property. POA can be executed from abroad also.
Who can buy the property if the seller is NRI?
NRI can sell any residential/commercial property in India. Buyer can be an NRI or a resident Indian, but in case of agriculture property, the buyer can be a resident Indian only, although NRI can acquire agriculture land through inheritance.
Which property can be sold?
The property acquired by NRI by way of purchase/gift/inheritance, all can be sold.
General precautions and safeguards for every seller:
1. Ensure that you have a clear title – Title means you have the legal ownership of the property and the right to sell the same. The title is ensured by possessing the relevant document showing the ownership with the seller. Title verification is crucial to provide the hassle-free sale of the property.
2. Relevant documents in possession – NRI must possess a valid passport as identity proof and a PAN card.
Buyers through their attorneys insist for the documents which establish the ownership of the seller and to ensure that the seller has all the relevant documents in possession to facilitate a smooth sale of the property.
Some of the documents are Sale deed, land records, tax receipts, Mother deed, Encumbrance Certificate, Building Approval plan, Completion certificate, Letter of allotment, Society documents etc.
3. Approval of local bodies: Local bodies/Municipal Corporations which have jurisdiction over the area where the property is located, issue occupation certificate and approved building plan. These are also relevant documents as property with buildings erected without approval from local bodies is considered as a property with the latent defect which can jeopardise the selling plans of the seller.
4. Tax implications – There are certain tax implications for selling property in India. If the property is sold within three years of acquiring it, profits earned are considered as short-term capital gain and taxed as per the slab rate. If the property is sold after three years of acquisition, the profits are long-term capital gains and taxed at a flat rate of 20% after indexation. Owners can claim exemptions in case of long-term capital gains. Buyer deducts TDS.
5. Repatriation – NRIs can repatriate the sale proceeds to the country of their residence subject to conditions. The sale proceeds shall not exceed US dollar 1 million in a financial year. Repatriation is done through official dealers/NRE/NRO accounts. Permission of RBI is required if the property sold was inherited from a person resident outside India.
6. General tips for sale: Seller must ensure that there is:
- Proper valuation of the property
- Correct pricing as per Market trends
- Effective Advertisement of sale
Hiring a lawyer for selling the property to avoid disputes and litigations and to ensure proper documentation
7. Hiring a lawyer to prepare a sale deed – The last leg of the sale process is preparation a sale deed/Agreement to sell. A good advocate well versed with the property matters must be engaged to prepare this vital document which evidences the sale of the property. Sale deed has to be registered as per the applicable laws of registration.
8. Legal Advice for sale of property: NRI must be guided by a legal expert for sale in India so that he is saved from fraudulent property dealers and sale is made appropriately with proper documentation.
Reserve Bank of India issues guidelines for acquisition/sale/tax/repatriation in case of property matters of NRIs under the name Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, which are amended from time to time.