For all those who are planning to invest can rejoice as there are not a lot of documents required, all they need is a passport, address proof, a permanent account number (PAN card) and a recent photograph while looking for a property to invest in.
The Reserve Bank Of India has made buying property in India a lot easier for all the NRIs with their Foreign Exchange Management Act (FEMA). “An NRI or person of Indian origin (PIO), as defined under FEMA, are eligible to acquire by way of purchase, any immovable property in India other than agricultural land/plantation property or a farmhouse. This is under general permission that has been given by the government of India. However, no person who is a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan, is allowed to acquire or transfer immovable property in India, other than lease, not exceeding five years, without prior permission from the Reserve Bank,” says Amarjit Bakshi, managing director, Central Park.
Any NRI who doesn’t have funds ready with them, they can still apply for a home loan. RBI have now started granting permission to banks and housing finance institution that are currently registered with the National Housing bank which will then provide home loans for NRIs to buy residential property in India. One thing that NRIs needs to give paramount importance is that all transactions have to be made in Indian currency only.
However, there is a catch, the loan cannot be credited directly to the bank account of an NRI. It can only be disbursed to either the seller’s or the developer’s bank account directly. The loan, however, can be repaid using funds in an NRI’s NRO(Non-Residential Ordinary) /NRE(Non-Resident External) account or FCNR (Fixed Deposit Foreign Currency account) deposits.
What an NRI needs to do is eliminate the middlemen to ensure that the price of the property and commitment is pure and original. Whereas, it is wise to directly purchase the property from a trusted and reputed builder who has built an empire over the years.
When it comes to tax benefits, they are pretty similar to any resident of India. Any NRI is entitled to all the same tax benefits as a resident Indian. In addition to that, NRIs have to pay a withholding TDS at the rate of 1% if they decide on buying a property worth more than Rs 50 lakh.
They will be exempted from wealth tax if the property is vacant and declared as ‘self-occupied’. Else they will have to rent it out for at least 300 days a year to avoid paying wealth tax. This rule is only for the first property only. For subsequent vacant properties, they will have to pay the tax at the rate of 1% the value (net of outstanding loans) more than Rs 30 lakh.
NRIs should do a mandatory backcheck of the builder by inspecting the social media accounts of the real estate company and other online forums.
For all those who are planning to invest can rejoice as there are not a lot of documents required, all they need is a passport, address proof, a permanent account number (PAN card) and a recent photograph while looking for a property to invest in.
The Reserve Bank Of India has made buying property in India a lot easier for all the NRIs with their Foreign Exchange Management Act (FEMA). “An NRI or person of Indian origin (PIO), as defined under FEMA, are eligible to acquire by way of purchase, any immovable property in India other than agricultural land/plantation property or a farmhouse. This is under general permission that has been given by the government of India. However, no person who is a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan, is allowed to acquire or transfer immovable property in India, other than lease, not exceeding five years, without prior permission from the Reserve Bank,” says Amarjit Bakshi, managing director, Central Park.
Any NRI who doesn’t have funds ready with them, they can still apply for a home loan. RBI have now started granting permission to banks and housing finance institution that are currently registered with the National Housing bank which will then provide home loans for NRIs to buy residential property in India. One thing that NRIs needs to give paramount importance is that all transactions have to be made in Indian currency only.
However, there is a catch, the loan cannot be credited directly to the bank account of an NRI. It can only be disbursed to either the seller’s or the developer’s bank account directly. The loan, however, can be repaid using funds in an NRI’s NRO(Non-Residential Ordinary) /NRE(Non-Resident External) account or FCNR (Fixed Deposit Foreign Currency account) deposits.
What an NRI needs to do is eliminate the middlemen to ensure that the price of the property and commitment is pure and original. Whereas, it is wise to directly purchase the property from a trusted and reputed builder who has built an empire over the years.
When it comes to tax benefits, they are pretty similar to any resident of India. Any NRI is entitled to all the same tax benefits as a resident Indian. In addition to that, NRIs have to pay a withholding TDS at the rate of 1% if they decide on buying a property worth more than Rs 50 lakh.
They will be exempted from wealth tax if the property is vacant and declared as ‘self-occupied’. Else they will have to rent it out for at least 300 days a year to avoid paying wealth tax. This rule is only for the first property only. For subsequent vacant properties, they will have to pay the tax at the rate of 1% the value (net of outstanding loans) more than Rs 30 lakh.
NRIs should do a mandatory backcheck of the builder by inspecting the social media accounts of the real estate company and other online forums.
No NRI’s do not require any permission to acquire any immovable property in India other than agricultural / plantation property or a farm house.
No NRI’s do not require any permission to transfer any immovable property in India. Permission is required only in the case of transferring of agricultural or plantation property or farm house to another citizen of India NRI or PIO.
Reserve Bank has granted general permission to foreign citizens of Indian origin, whether resident in India or abroad, to purchase immovable property other than agricultural land/farm house/plantation property, in India. They are, therefore, not required to obtain separate permission of Reserve Bank or file any declaration.