NRI’s Property Buying Guide
Vishram Infra always believes in building not just for domestic customers but to NRIs as well. Non-resident Indians (NRIs) residing across the globe always have an urge for investing in a property in their homeland or buy a property for their loved ones living in India. There are certain guidelines that NRIs must adhere to and understand before buying a property.
We have listed them out here for your convenience and understanding. First and foremost, understand the definition of NRI. Property purchases by NRIs are governed by FEMA. According to FEMA, an NRI is an Indian citizen residing outside India for an imprecise duration and Person of Indian Origin (PIOs) is not an Indian citizen and is a citizen of another country but has family roots in India. An NRI or a PIO become eligible to buy property in India only if they satisfy certain conditions.
- The person holds an Indian passport.
- Either of his/her parents or grandparents were Indian citizens.
- The person is married to an Indian citizen or a PIO.
[Hereafter, NRI is used to refer to both NRIs and PIOs].
INRIs can buy residential or commercial properties in Chennai; there is no limit as to the number of properties to buy in India or the investment he/she can make in real estate in Chennai, Bangalore, and other cities.
The exceptions to this clause are: NRIs cannot buy agricultural, plantation land or a farmhouse in India and cannot acquire such property as a compliment. Nevertheless, there are no restrictions in inheriting such property.
NRIs holding Indian passport do not require any permission from RBI for acquiring immovable property for bona fide residential purposes, as section 31 of FERA 1973 does not apply to such individuals. Such individuals may execute the purchase either by transferring funds from abroad via banking channels or from an NRO or NRE or an FCNR account.
RBI allows NRIs to avail home loans, for buying property in India or for repairs and renovations of home. One can pay the EMIs in any one of the following ways:
- By remitting the money from the foreign bank account through regular banking channels.
- By issuing post dated cheques or Electronic Clearance Service (ECS) from NRE, NRO or FCNR account.
- Out of the rental income the property earns.
- Bank cheques issued from a local relative.
NRIs can provide Power of Attorney to any of the family members to do the purchase in India on their behalf. One can appoint a family member who can sign the property papers at the time of registration and possession.
Repatriation of funds from the rental income and eventual sale of the property is the final step involved in buying a property in India while residing abroad. At present NRIs can repatriate up to $1million per person each year. In case if he/she does not have a PIO/ICO card, one can apply through the Indian embassy, which is provided in 7 days. Capital gain taxes are applicable at the time of sale and are considered long-term after 36 months of ownership, ending up in a significant tax break. It is to be noted that if the tax is paid in India, the income is not subject to tax in the residence country with proof of payment. Rental income must be credited to an NRO account maintained by an Indian Bank. HSBC, Citibank, and others.
