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NRI Corner

A Comprehensive Guide for NRIs Buying Property in India

Investing in property back in India can be a rewarding venture for NRIs (Non-Resident Indians). However, it requires navigating some specific rules and understanding the process. Here’s a guide to help you get started:

NRIs and Persons of Indian Origin (PIOs) are allowed to purchase residential and commercial properties in India. However, certain restrictions apply to agricultural land, farmhouses, and plantations.

NRIs can buy:

    1. Residential properties (including apartments, villas, and individual houses)
    2. Commercial properties like office spaces, retail stores, etc.

They are not permitted to purchase:

    1. Agricultural land
    2. Farmhouses
    3. Plantation properties

Exceptions exist if the property is inherited or gifted.

NRIs can fund their property purchase through:

    1. Their savings
    2. Home loans from Indian banks, provided they meet the eligibility criteria.

 Loans for NRIs typically cover 80-85% of the property value, and the rest must be funded through the NRI’s resources.

To purchase property, NRIs must have:

    1. A valid passport (Indian or foreign)
    2. PAN card
    3. Proof of residence in the foreign country
    4. Power of Attorney (if you can’t be present during the transaction)

Banks may require additional documents for home loans.

All transactions should be conducted in Indian currency, through an NRI account such as:

    1. NRE (Non-Resident External) Account
    2. NRO (Non-Resident Ordinary) Account
    3. FCNR (Foreign Currency Non-Resident) Account

Direct remittances from abroad or transfers from these accounts are allowed for property purchases.

 

It will be NRI’s responsibility to comply with the Foreign Exchange Management Act, 1999 or statutory enactments or amendments thereof.

    1. NRIs must pay TDS (Tax Deducted at Source) on property purchases.
    2. Long-term capital gains tax applies if you sell the property after holding it for more than two years.
    3. NRIs can also claim deductions under Section 80C of the Income Tax Act, applicable to home loan repayments and principal payments.

It's crucial to:

    1.  Verify the property's title to ensure that the buyer gets the property with a clear and marketable title and free from reasonable doubts.
    2. Check the developer’s credibility and that all approvals are in place.
    3.  To ensure that the Real Estate Project is registered with the authority constituted under the RERA Act.
    4. Ensure the property complies with local zoning regulations and building codes.

Legal experts often advise conducting thorough due diligence, especially when purchasing from afar.

NRIs can repatriate the sale proceeds of property up to the amount they originally invested. This repatriation is subject to certain conditions and must comply with the Foreign Exchange Management Act (FEMA).

If you are unable to oversee the transaction personally, it’s advisable to give a trusted individual in India Power of Attorney to handle the process on your behalf.

    1. Always conduct your transactions through registered channels and avoid cash deals.
    2. Take into account the location, infrastructure, and future potential of the area you are investing in.
    3.  Be aware of all the costs involved, including registration fees, stamp duty, taxes/levies andother charges such as maintenance charges, legal charges, utility charges, Society membership charges, development charges, etc. 

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