Things NRIs Should Keep In Mind While Buying Property in India
Owning a house in India as an NRI can be very close to their hearts and also help them stay connected to their roots and culture. Hence it is not a wonder that a non-Indian resident wants to buy a property in India. The Indian real estate sector has really seen a price correction in recent years and now it is easier and more favorable to buy a property in India with favorable currency rates. Just because you moved to another country doesn’t mean that you stop buying residential property in India. NRI’s play a vital role in Indian real estate over the past years. Seeing all the rules and regulations involved in the process one might assume it is very difficult to buy a property as an NRI. The NRI investments in buying a property in India will rise by 12% in the near future costing up to 14.9 billion dollars. Moreover, NRIs can even apply for home loans to bridge their funding shortfall. This particular article will help you simplify the process and get a better understanding.
Property’s Nature
Apart from agricultural lands and farmhouses, an NRI can buy any immovable property in India. To invest in any agricultural land the NRI should get approval from the RBI and the government.
Taxation
The TDS (tax deducted at source) calculation takes place when an NRI sells a property in India. This is done at the rate of 20.6% on long-term capital gains and 30.9% on short-term capital gains. Selling a property within the time limit of 3 years then it is called short-term capital gain and selling the property after 3 years is called long-term capital gains where taxes are applicable. NRI buying property in India is even offered certain tax benefits.
Home Loan
Banks and housing finance companies registered with the National Housing Bank have been given permission by the RBI to offer loans to NRIs to buy a residential property in India.
The loans are sanctioned in Indian currency and are said to be repaid in Indian currency as well. The loans can be repaid using funds in an NRI’s NRO/NRE account or FCNR deposits. The loan amount however cannot be credited directly into the bank account of an NRI due to the rules and regulations.
Power Of Attorney (POA)
NRIs residing outside India have the opportunity to give their power of attorney (POA) to their friends or relatives to complete the process of property purchase in India. This means the NRI can choose someone who is close to them (i.e., friends or relatives) to complete the transaction on their behalf.
FEMA (Foreign Exchange Management Act)
Buying property in India has become a lot easier now for the NRI’s because of the foreign exchange act (FEMA) initiated by the Reserve Bank of India. An Indian-originated person or NRI as defined under FEMA is eligible to buy any immovable property in India other than agricultural land/plantation property. However, no person who is a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, or Bhutan is allowed to acquire or transfer any immovable property in India other than a lease that is not exceeding 5 years without prior permission from the Reserve Bank.
EMI and Forex
Monthly installments can be the easiest form of paying or repaying the loans. However, the changes in Forex exchange can affect the EMIs and add to your problems. It is always a better option to pay through rentals. As an NRI, you should make sure all your transactions are trouble-free. Real-estate investments as an NRI are very profitable investments and also help you stay connected to your homeland.
Verifications
It is absolutely necessary to do a mandatory back check of the builders before proceeding with anything. To do that one can always inspect their real estate company’s social media accounts or any other online platform. The direct transaction is highly recommended and try to avoid all forms of middlemen or brokers to completely avoid frauds and mishaps. Make a thorough background check done on the real estate developers, builders, and whoever is involved in the property that you are willing to buy. Also, make sure to have the required documents while buying any property. The basic essentials include an Indian passport or Overseas Citizen of India (OCI) card, PAN card, and power of attorney (POA) certificate.
A buyer in India can also purchase a property located in India from an NRI seller as well. But make sure you follow the correct rules and regulations to avoid conflict and financial problems. In the case of tax evasion, income tax authorities have the power to cease the bank accounts also. Hiring professional experts to deal with the law is highly essential as real estate agents sometimes don’t have complete knowledge of the law and regulation. Buying property in India as an NRI can be difficult and hard but with the above information, it can be a little trouble-free.
