Process for NRIs to buy property in India

Are you an NRI or a Person of Indian Origin looking to purchase property in India? If yes, this blog is the right place. There are various things to know about real estate in India before you plan to purchase a property.

One must understand the different categories of property available in India and figure out which one they can purchase easily. Other important things to know about real estate are the property rates, tax process, and legal procedures for an NRI.

Can an NRI buy property in India?

Yes, a non-Indian national can buy real estate there. However, although you won't need any special licence to purchase commercial and residential real estate as an NRI, you cannot buy agricultural plots, farmhouses, or plantations.

However, even if it's agricultural land normally inaccessible to an NRI, you have the right to keep it if you buy it while still a resident of India and then leave the country.

What are the various types of property NRI buy in India?

You can buy almost all kinds of real estate in India as an NRI. Commercial and residential properties are acceptable for NRI and PIO buyers if the process adheres to FEMA (Foreign Exchange Management Act) guidelines. 

However, the main exception to that is purchasing agricultural land, farms, and related properties. You'd have to seek additional authorisation before purchasing, with approval on case-by-case grounds. Let us learn about the types of properties NRI can buy in India.

1. Residential Property

Houses and apartments are examples of residential properties. These could be single-family homes, townhouses, studio apartments, etc. Many individuals who invest in residential property and do not live in it intend to rent it out to others to profit from it.

2. Commercial Property

Commercial property is immovable property being used for business. Commercial property usually is a structure that houses businesses, profit-making land, and bigger residential rental homes.

What are the prerequisites for NRI to buy a property in India?

For an NRI to purchase property in India, there are specific prerequisites to check before they can carry out the purchasing process.

• NRIs must show their Indian passport and OCI card. You can buy property in India if you possess a PIO (Person of Indian Origin) card or an OCI (Overseas Citizen of India) card and a foreign passport.
• A PAN Card is required for all property transactions.
• Power of Attorney: NRIs must submit a Power of Attorney if they cannot complete the payment process in India. To execute a property transaction, you require an extraordinary power of attorney that is registered and notarised, not a general power of attorney.

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What are the documents required for NRI to buy a property in India?

The documents an NRI must provide to buy property in India are:

• Indian Passport or Overseas Citizen of India (OCI) card.
• Foreign Passport
• PAN card

If the NRI requires a home loan, they must provide the following documents:

• Copy of their Indian passport and visa
• Person of Indian origin(PIO)/OCI card
• Work permit/employment letter from their respective country
• Salary certificate
• Income tax returns (latest)
• Power of Attorney
• Bank statement of last year
• Bureau report of the current country of residence

What are the steps for NRI to buy a property in India?

After collecting all the documents, an NRI has to follow specific steps to buy any property in India. The steps to buying a property include:

1. First, obtain the services of a local attorney and notary.
2. Next, locate a realtor in the area where you want to buy.
3. If you aren't going to be in India at the time of the purchase, make arrangements for a power of attorney.
4. Next, find a home and agree on a price.
5. Your solicitor will carry out due diligence and compose a legal contract.
6. Finally, sign the sale agreement in person or through your representative.
7. Property purchase registration

How can an NRI get power of attorney to buy in India? 

An NRI can have the POA implemented in India at the sub-registrar's office. The POA, on the other hand, should be written on non-judicial stamp paper worth INR 100. In addition, two legal advisors and witnesses might be needed to carry out the task. All members must have valid identification and photographs. It takes 4-5 working days for the POA to show up after completing the deed.

According to the Indian Registration Act of 1908, the certification of the POA is not required. However, based on a Supreme Court of India ruling, registration of power of attorney is necessary if it is implemented to sell an immovable asset.

What are the ways by which NRI can fund money to buy property in India? 

NRI can pay for their property with inward money transfers or funds in an NRI account. They could also get a home loan.

1. Home Loan

One may obtain a home loan in India as an NRI. Banks, on the other hand, will set their qualifying conditions, indicating whether or not one can get a mortgage. For example, it may be determined by the property's type, value, location, and how one wants to use it.

2. Remitted funds

Deposit for a property can be made with funds remitted to India from foreign lands via normal banking channels or with the balance in an NRE, NRO, or FCNR account.

What is the tax implication for NRI in India?

In the hands of an NRI, revenue from a property in India is subject to taxation. The estimate of such income must therefore be the same as that of a resident. This property could be rented or empty. An NRI can use the standard exemption of 30%, subtract property taxes, and gain from a home loan interest deduction. The NRI is also eligible for a principal repayment deduction under Section 80C for NRI Taxation under the Indian Income Tax Act of 1961. The land tax and registration fees paid when purchasing a home are also deductible under Section 80C.

Once NRIs invest in some Indian assets, the income earned is taxed at 20%. However, if the NRI's only income during the fiscal year is the special investment income, and TDS has been debited, the NRI isn't obligated to file a tax return.

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Conclusion

Buying property in India for an NRI is an easy task. Once the property is shortlisted, an NRI only needs to gather the related documents and, most importantly, file for a power of attorney to purchase the property.

Adani Realty is an Adani Group real estate development company. They are actively developing commercial and residential properties in four cities: Ahmedabad, Gurugram, Mumbai, and Pune. The website provides the best properties in India, especially for NRIs wishing to invest in real estate soon!

Frequently Asked Questions

Q1 Do NRIs need a PAN card to buy property in India?

Yes, NRIs (Non-Resident Indians) must have a PAN (Permanent Account Number) card to buy property in India. The PAN card is a unique identification number issued by the Income Tax Department of India and is necessary for various financial transactions in the country, including purchasing a property.

Q2 Do NRI pay property tax in India?

Yes, NRIs (Non-Resident Indians) must pay property tax in India on any property they own. NRIs can pay property tax in India through their local municipal corporation or bank. In some cases, it may be possible for NRIs to arrange for property tax payments to be deducted automatically from their bank account.

Q3 Do NRI pay tax for buying a property?

Yes, NRIs (Non-Resident Indians) are required to pay taxes when buying property in India. The tax that NRIs are required to pay will depend on the type of property purchased and the applicable tax laws in the state where the property is located.

Q4 Can an NRI buy property in India without a physical presence?

Yes, NRIs (Non-Resident Indians) are allowed to buy property in India without physically being present. NRIs can complete the property purchase process remotely, either through a power of attorney or by authorising someone to act on their behalf.

Q5 Can an NRI buy property in India jointly with other Indian citizens?

NRIs (Non-Resident Indians) can buy property in India jointly with other Indian citizens. However, NRIs must enter a joint ownership agreement to purchase property with the other parties.