Reach NRI Services

Can NRI Buy Property in India?

Can NRI Buy Property in India?

NRIs looking to buy a property anywhere in India should be clear about the legal provisions, including NRI property transactions and tax laws, pertaining to the ownership or purchase of immovable property in India under the Foreign Exchange Management Act (FEMA). NRIs can buy any number of property in India, and there are no restrictions as such. NRIs and Persons of Indian Origin (PIOs) are considered at par when it comes to investing in real estate properties in India. 

Types of property that NRIs can buy in India:

Indian citizens living outside the country are eligible to invest in land and buildings, providing the property they want to buy isn’t an arable or agri land, a farm house or a plantation property. An NRI neither needs the permission of the RBI for property investment in India, nor send any intimation or communication about the purchase to the RBI. The IT laws do not place any restriction on the number of residential or commercial properties that can be bought by an NRI. However, if an NRI needs to buy a plantation or farmhouse, he/she has to get the permission from the RBI, which will be dealt with on a case- to-base basis.

Documents needed for NRIs to purchase property in India:

There are a few documents required if you’re an NRI to purchase property in India: PAN card; a Passport or an Overseas Citizen of India (OCI) card or Person of Indian Origin (PIOs) card; a Power of attorney if you aren’t in India (to complete all the legal procedures required for property purchase); any proof of current address such as utility bills and passport size photo for the sale deed or purchase deed registration.

How can NRIs arrange fund for property purchase?

NRIs can arrange funds for property purchase through funds available in the NRI account or inward remittance. The NRI is required to open an account in any of the authorized Indian banks. NRIs can also provide post-dated cheques or go for Electronic Clearance Service (ECS) from their NRO, FCNR or NRE accounts. 

NRI home loans are also provided by several banks and Non-Banking Financial Companies (NBFCs). To avail of the opportunity, you are required to make a downpayment of minimum 20 percent of the property’s market value from your own sources. The bank will provide up to 80 percent of the market value of the property.

Documents needed for NRIs for home loans in India:

Photocopy of Visa & Indian Passport, OCI card, PIO card, appointment letter in employer’s letterhead, Work/employment permit, latest salary certificate (at least 6 months), latest IT returns, bank statement of the NRE/ NRO accounts (at least one year), Power of attorney (if needed) and local bureau report of the country where applicant is based.

Verify all the above documents by a proficient lawyer or CA before approaching any bank for loan. The seller must issue a certificate stating that there’s no lien attached to the proposed property for purchase.  In the case of a property jointly held, or if it’s an inherited property, ensure the title is cleared for the deed to be registered in the homeowner’s name. Ensure there aren’t any dues related to house tax, water or electricity bill.

Tax implications for NRIs purchasing property in India:

# NRI borrowers will be mandated to pay the required taxes: post-purchase annual property taxes, stamp duty,  registration fee, GST for property under construction.
# NRIs needs to pay 30 percent TDS (Tax Deducted at Source) for rental income; the FEMA rule comes into force for the remaining amount.
# In the case of an immovable property, the proceeds through property sales can be repatriated post-deduction of between 20 -30 percent TDS based on the capital gain (long-term or short term capital gain).If you’re an NRI, Reach NRI services, a professional NRI service provider including property management services, can take you easily through the process of NRI real estate investment in India, in addition to other legal and financial implications.