As per RBI regulations, a non-resident Indian (NRI) may purchase some types of real estate, while others may need special approval. A non-resident Indian who wants to purchase real estate property in India is able to do so.
However, his real estate investment must be made in accordance with the Foreign Exchange Management Act’s rules (FEMA). People of Indian descent who invest in real estate are subject to the same FEMA regulations (PIOs).
An OCI (overseas citizen of India) is a non-resident citizen who resides outside of India but whose parents and grandparents were born in India.
Properties: PIOs And NRIs May Invest In India
NRIs and PIOs are now generally permitted by the Reserve Bank of India (RBI) to purchase any type of residential or commercial property in India. They do not need to ask the central bank for any special approval, nor are they required to inform the RBI in any way.
An NRI or PIO is permitted to purchase an unlimited number of residential or commercial properties under the current general licences. An NRI or PIO may possess as many homes or businesses as they like under the income tax legislation.
Any individual who has been issued a legal power of attorney can execute the purchase-related documents in the event that the NRI is unable to go to India. An NRI is not permitted to purchase any plantation or agricultural land in India under the RBI’s general approval.
NRIs are therefore unable to buy farms in India under the laws. As a result, an NRI who wishes to buy a farm or plantation must ask the RBI for a specific permit, which the RBI will evaluate in a special case.
What NRIs Investing In India Need To Know
- An NRI cannot purchase plantations or agricultural land in India. They can, however, purchase both business and residential properties. The Reserve Bank of India (RBI) will evaluate such interest on a case-by-case basis if there is a rationale for looking for agricultural land.
- Giving someone a power of attorney is necessary if you want to authorize them to act on your behalf in certain situations, such as registering a property (POA). By presenting a copy of the POA to the relevant authorities, the POA holder signs on behalf of the NRI.
- An NRI who purchases real estate in India is responsible for paying all applicable taxes, including stamp duty, registration fees, annual property taxes after the sale, and even GST in the instance of a property that is still under construction.
- You can invest in real estate in India to generate a rental income. The remaining income could be repatriated in accordance with FEMA regulations, but you would be subject to tax deduction at source (TDS) at a rate of 30%.
- Revenues from the sale of an immovable property may be repatriated after a 20% to 30% TDS reduction, depending on whether there was a long-term or short-term capital gain.
- You are allowed to acquire an unlimited number of house loans to purchase properties in India.
The Properties That NRIs Can Buy In India And The Methods Of Payment
The NRI must use funds in his NRE/NRO or FCNR account, or pay through a banking channel with remittances from overseas, to purchase permissible immovable assets in India. You must understand that foreign currency cannot be tendered in India as the funds for this purpose must come from only authorized sources, including banking channels.
NRIs are even permitted to use a home loan in Indian rupees to fund the acquisition of a residential or commercial property. For the purpose of financing the property, the NRI has to contact a housing finance firm or a bank to offer a home loan.
Regarding EMI payments for repaying the home loan obtained in Indian rupees in India, the same may be accomplished either through direct repatriation from overseas or using funds available to the NRI’s credit in NRE/NRO/FCNR accounts. In addition to the sources mentioned above, the home loan may also be repaid using the rent collected from the property or funds deposited into the borrower’s account from a relative’s account.
The Documents Required For Hassle-Free Property Buying In India
- Title deed in respect of the seller
- Approved Building plans
- Building license
- Certificate of occupation (in case it is a ready to move building)
- Any older title deeds
- Current burden certificate (if any)
- Share registration (in case it is a cooperative housing society)
- The society’s RERA registration NOC
- You can move on with creating the selling agreement for purchasing the property if these papers are in order.
The Following Documents Are Required For NRIs To Apply For A Home Loan
- Indian passport and visa copies
- If an Indian passport is not accessible, you can obtain an OCI card if your parents are Indian nationals, and you can have a PIO card if you have a foreign passport.
- work authorization, a job offers, or an appointment letter from your country of residence
- Most recent pay stubs or wage certificates for the previous six months
- Most recently filed tax returns
- NRE and NRO accounts’ bank statements over the last 12 months
- Legal authority (in case you are not in India to execute the purchase transaction)