NRI Manual

Non-Resident Indians (NRIs) who live in other countries put a lot of money into India’s real estate market. The main reason people invest in Indian real estate is to secure their future or make good money. Radical reforms like the Real Estate (Development and Regulation) Act and the Goods and Services Tax (GST) are making it more likely than ever before that NRIs will live in a transparent and accountable environment. This is shown by the fact that the number of homes sold to NRIs is going up, especially in Gurgaon, Noida, and Ghaziabad. If you are an NRI who wants to invest in India, Deal Acres will help you through the process step by step.

Contents

01. Here is the Property buying procedure for NRI in India:

• Physical inspection of the site
• Checklist of features of a house
• Giving Power of Attorney

02. Document Required for NRI homebuyers

03. Provisions and Rules

04. How to Pay for It

05. All about ownership rights

06. Tax Implications

07. Tips for Non-Resident Indian (NRI) Buyers

Before, it was hard, and took a lot of time for a Non-Resident Indian (NRI) to buy a home. But the Reserve Bank of India (RBI) has made it easier for an NRI to buy a home in India by putting out some rules.

An NRI who wants to buy a home in India faces a difficult task and often has to go through a complicated process. Since it usually requires a lot of money, it is smart to follow the steps in an organized way. As an NRI investor, you could go through this process on your own or hire an agent to do things like visiting the site, check the documents, register the property, etc. on your behalf. Before you buy a property, you should do your research, whether you do it on your own or hire a broker. Let’s look at some of the most important things an NRI should do before buying a home:

Taking an official site visit is one of the most important parts of buying a property for a Non-Resident Indian (NRI), since most decisions to buy are based on how the property looks. It can also help the buyer figure out if the property is real, how far it has come, how good it is, and what amenities it has. If the property is ready to move into, do a thorough walkthrough. If it is still being built, check the builder’s progress and past work. When NRI clients arrive in India, there are a number of real estate firms that set up site visits for them.

Before deciding on a property, you should think about a lot of things, like its location, type, size, quality of construction, and amenities. Check to see if a property is registered under RERA and if it is still being built. Also, make sure that the property hasn’t been changed from what was planned.

The last step in the process is to register the property. This may be the most important step. If an Non-Resident Indian (NRI) can’t go to India to sign a deal, they can give a Power of Attorney (POA) to a friend, family member, or colleague who is a lawyer and have the deal done and the property registered on their behalf. By giving the chosen person a “Special Power of Attorney,” they give that person permission to sign the agreements and other papers on their behalf.

• The Non-Resident Indian (NRI) has to sign the POA in front of the consulate officer of the Indian Embassy in the city and country where they live. They also have to attach a photo and thumb impression along with their signature. The POA can then be sent to India, where it will be decided. After the process of adjudication, the POA is ready to be used to buy any property in India.
• Make sure to make a POA for a specific transaction that stops being valid after that transaction is done. Please keep in mind that a general POA is a very broad document, and you shouldn’t give someone that much power unless you have to.
• If you want to buy a house that is still being built, the builder may ask you to sign a POA in their favour. This would make writing up documents a little bit easier and faster.

Documentation, or paperwork, is an important part of buying or selling real estate. For NRIs, getting a deal done requires a careful look at the documents. An NRI needs the following papers in order to buy a property in India:

Indian Passport

Non-Indian residents need an Indian passport to buy property in India.

Person of Indian Origin (PIO) Card

An NRI needs a PIO card if: They have a passport from a country other than India

They were born somewhere else, but their father or grandfather was an Indian citizen.

Overseas Citizenship of India (OCI) Card

A person needs an OCI card if they are not a citizen of India but are eligible to become one before or after partition.

(Please keep in mind that you can apply for these cards at the Indian embassy or consulate in the country where you live by showing the birth certificates of your parents as proof that you are an OCI or PIO.)

PAN (Permanent Account Number) card

A PAN card is usually needed when selling a property and applying for a tax exemption certificate after the sale. Also, the capital gains from selling the property would have to pay capital gains tax, which is added to the seller’s total income (NRI) while it is being taxed.

Registered Power of attorney

If you are not physically present at the registered office

Other

Passport-sized photos and address proof

Based on the general permission given by the RBI, a Non-Resident Indian (NRI) or a Person of Indian Origin (PIO) can buy any immovable property in India. whether it’s a home or a business, without needing to get specific permission from the RBI. This means that Indian citizens who have become NRIs for the purposes of FEMA can buy certain types of property in India without asking the RBI for permission. He or she is also not required to tell the RBI about any news or messages about this.

But the rules as they are now saying that an NRI can’t buy agricultural land, plantation property, or a farmhouse in India. If they want to buy one of these properties, they will have to get special permission from the RBI. The RBI will then look at the proposal and decide whether or not to approve it. Also, there is no limit on how many real estate properties an NRI or PIO can buy in India for personal or business use. A provision in the income tax laws also says that an NRI can buy as many properties as he or she wants. 

If you are an NRI (non-resident Indian) and want to buy a property in India, the process is simple and easy. RBI has made it possible for you to get a home loan if you don’t have enough money to buy a property in India. An NRI can get a loan against any real estate from any nationalized bank or housing finance institution registered with the National Housing Bank (NHB) at attractive interest rates. All transactions would be done in Indian currency.

The NRI is allowed to get a home loan for up to 80% of the price of the property. He has to put down at least 20% of the property’s value on his own. An NRI can get a loan for more than just buying a house. They can also use the money to fix up or improve their current home.

Eligibility

You have to be at least 25 years old. At the time the loan is paid off, the borrower can be no older than 60 years old or the age of retirement, whichever comes first.

If the applicant is getting paid, he or she should have lived abroad for at least a year. If he or she is self-employed, he or she must have lived in a foreign country for at least three years.

Home loans and loans for home improvements can last up to 20 years. The longest term for a land loan is 10 years.

Documents Needed:

• Latest passport-sized photo of each applicant
• Copies of the applicant’s valid passport and visa
• Copy of the first applicant’s PAN card or Form 60
• Self-attested proof of residence for each applicant

Repayment

The approved loan amount would be sent straight to the bank account of either the seller or the developer. An NRI can easily pay back the loan amount with money from their NRO (Non-Resident Ordinary)/NRE (Non-Resident External) account or FCNR (Fixed Deposit Foreign Currency account) deposits.

The way to pay back a home loan is also easy. You have to pay back the loan in equal monthly payments (EMIs). If you want to pay off the loan early, you can pay off parts of it for free during the loan’s term. If the loan was paid off early, a two percent fee would be added to the amount still owed.

Power of attorney and joint ownership (POA)

An NRI can purchase a property in joint ownership just like any other Indian citizen. When more than one person owns a piece of property, this is called “joint ownership.” A legal deed says that each co-owner can give his or her share of the property to anyone else.

With joint ownership come rights and responsibilities. The following rights belong to a co-owner:

• Right to possess the property,
• Right to use the property and,
• Right to sell off the property

An NRI can buy a property in his or her own name or with another NRI. Note that a person who lives in India or who is not allowed to invest in real estate in India cannot be made a joint owner of the property.

There is no rule in FEMA about buying an immovable property with someone who lives in India. But as a general rule, an NRI can buy a home in India if they have close relatives there.

Power of Attorney

A power of attorney (PoA) is a legal document in which a property owner appoints another person to act on his behalf while he is away. Because they don’t live in the country, NRIs find it hard to sell a property.

Whether you were buying or selling a home, you had to fill out paperwork, write an agreement to sell, sign a sale deed, and register the property. The POA is thought to be the best tool for a property owner who lives or works outside of the country. When this happens, an NRI is always told to give a power of attorney (POA) to a close relative who lives in India so that person can handle all the legal paperwork for the property. The NRI must sign the POA in front of a lawyer or other legal official.

When buying property in any part of the Indian Territory, an NRI has to pay the same stamp duty and registration fee as any other Indian resident.

If an NRI buys a property in India from an Indian resident whose value is more than Rs 50 lakh, the NRI will have 1% of his or her income tax taken out. The Income Tax Department should get the money that was taken out.

Except for leasing, no one from Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, or Bhutan can buy or sell real estate in India. The government says that a lease agreement can’t be longer than five years unless RBI says it can.

Foreigners who were not born in India and live outside of India can’t buy real estate in India unless they inherit it from someone who lived there. Such homebuyers can’t sell the property without permission from RBI.

What kind of real estate can an NRI buy?

NRIs are free to buy as many residential or commercial properties as they want. But India’s constitution says that NRIs can’t invest in agricultural land or a farmhouse in their own name. These traits can only be passed down.

Funding: The payment can be made with money sent to India from abroad through regular banking channels. NRIs can also buy property in India with money from their Non-Resident External (NRE), Non-Resident Ordinary (NRO), or Foreign Currency Non-Resident (FCNR) accounts.

Repatriation of capital gains: The NRI community can bring back its original investment in foreign exchange value for either a home or a business. But the money made from these transactions has to be put back into the Indian real estate market. Also, NRIs can send money from the sale of up to two residential properties outside of India without getting permission from the Reserve Bank of India (RBI). For the third property purchase and any after that, the approval of the top bank is needed.

Home loans: A non-resident Indian (NRI) can get a home loan in India under the same rules as an Indian citizen. The interest rate and length of the loan vary in a few ways. Most of the time, the interest rate on a home loan is higher for a non-Indian resident than for an Indian resident. A resident can get a loan for up to 30 years, but an NRI can only get a loan for between 5 and 20 years. Before you can apply for a loan, you have to meet certain requirements, such as the following:

• The NRI must be at least 18 years old
• Should have a valid Indian passport
• Should have worked abroad for at least two years.
• Should have a reliable source of income and a valid work permit

Repayment of Loans: An NRI can only pay back a loan with money sent from abroad through their NRE or NRO accounts. The only currency that can be used to pay back the loan in the Indian rupee. No other currency can be used.

Disclaimer: The opinions shown above are mainly for informational reasons and are based on market research. Deal Acres is not responsible for any actions made as a result of relying on the provided material and makes no representations as to its accuracy, completeness, or reliability.