Guidelines For NRIs For Purchasing A Property In India

As a Non-Resident Indian (NRI), you might consider investing in real estate in India due to the ongoing development in this sector. Learn all you need to know about NRI property investments, including how to acquire property in India, from this comprehensive article.

Key Requirements for Purchase of Property for an NRI in India

Documents

NRIs need to provide some documents, including the most recent W-2 form and tax return, as well as copies of the Indian passport and visa, work permit, and pay slips from the last six months. The title deed, NOC from the society, etc., related to the property you wish to purchase must also be submitted.

Special Power of Attorney

Since NRIs already live outside of India, they can appoint a trusted friend or family member to act on their behalf by giving them power of attorney. However, to finalise the purchase of the property, they must be located in India. Depending on the situation, a power of attorney can be either generic or particular.

Power of Attorney implies allowing someone to act on your behalf in a legal transaction in India when you cannot do so yourself since you're currently located outside the country. If you want to avoid any problems while buying a house, you need to get the PoA form notarised. If you plan to use a home loan to finance the purchase of a house, you will almost certainly need to have a Power of Attorney drawn out. A citizen of India who is a permanent resident must be given the PoA.

NRE and NRO accounts

NRIs must keep money in two accounts in India: NRE and NRO. International earnings can be transferred to India with an NRE (Non-Resident External) account. Its interest earnings are not subject to taxation. The Non-Resident Ordinary (NRO) account allows you to handle your funds conveniently and easily. With this account, you can deposit the money to purchase real estate in India.

Things to Remember for NRIs Buying Property in India

There are a few factors Non-Resident Indians (NRIs) should bear in mind while purchasing real estate in India. You must read all the local laws and requirements that pertain to the purchase of a property by Non-Resident Indians. Here are a few considerations to keep in mind before finalising the purchase.

Nature of Property

Non-Resident Indians (NRIs) can purchase only some type of property in India, as it is against the law for NRIs to buy farmland, a farmhouse, or any other agricultural property. NRIs buying farmland or rural homes in India require permission from the Reserve Bank of India and the government.

Taxation

TDS (Tax Deducted at Source) is calculated at a rate of 20.6% when an NRI sells an Indian property. Long-term capital gains will be considered for this purpose. Profits from investments held for less than a year will be taxed at a rate of 30.9%. The TDS can be refunded to an NRI if his tax bracket is lower than the one used to calculate it.

Taking Home Loan

The Reserve Bank of India has authorised financial institutions to open accounts with the National Housing Bank. They provide home loans to Non-Resident Indians in India. Loan payments must be made in INR. There are a few conditions regarding these loans:

• The loan will not be credited to an NRI's bank account.
• Funds will be sent to the account of the seller or the developer.
• NRIs can also use funds from their FCNR account or NRO/NRE account to repay the loan.
• Remember to buy the house bearing FEMA rules in mind.
• Your FCNR account, foreign currency, or bank aid can all be used to pay for the property.

Return on Investment

The rate of return will be different for various types of real estate. A 3-5% return on investment is expected in the luxury and ultra-luxury home market. The average return on investment for commercial real estate is roughly 10% to 12%.

=> Read Also:- Advantages and Disadvantages of the RERA Act

Conclusion

It might be difficult for Non-Resident Indians to buy a new home in India, but they can purchase several business and residential properties. Contact Adani Realty if you are an NRI interested in purchasing, investing, or selling real estate in India.

FAQ

Q. Can NRIs purchase agricultural property in India?

Ans. Non-Resident Indians cannot buy farmland, plantation property, or a farmhouse in India due to the Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2018. However, the RBI may approve an NRI's application to invest in agricultural property under certain conditions.

Q. Is it a good time for NRIs to invest in the Indian real estate market?

Ans. Unlike the stock market, the Indian real estate market is stable. While sales dropped after the 2020 Coronavirus pandemic, the market has recovered thanks to rising demand for "move-in ready" homes. But it will most likely require additional time to reach a more significant level. Meanwhile, a growing number of people living abroad are thinking about buying a home.