NRI’s property buying guide.
We at vishraminfra always look forward to give our NRI brethren a chance to experience security and comfort of their home but we have to communicate to them, the steps involved in buying flats in Chennai.To begin with, we need to understand the definition of Non-Resident Indian. Since property purchases are governed by FEMA, we need to go by the definition of NRI as stated in FEMA. According to FEMA, an NRI is a citizen of India who is resident outside India.
Who can buy property in India?
When it comes to a non- agricultural land, Non-Resident Indians (NRIs) and Person of Indian Origin (PIOs) have no restrictions in buying a property. NRI is an Indian citizen who lives in abroad for an imprecise period of time and Person of Indian Origin (PIO) is a person of Indian origin who is not a citizen of India but a citizen of some other country. NRI’s are eligible to buy a property in India and PIOs are eligible to buy a property in India only if
1) The person held an Indian passport
2) Either of his/her parents or grandparents were Indian citizens
3) The person is married to an Indian citizen or a PIO
In this article NRI’s is referred to as both as a means to produce a simple understanding.
Yes, there are many available new apartments for NRIs and an NRI can buy a house in chennai or a commercial building in Chennai. Further, there is no limit on the number of residential or commercial properties that an NRI can purchase in India or the investment he/she can make in real estate in Chennai, Bangalore and other cities. There are exceptions to that clause. An NRI however cannot buy agricultural, plantation land or a farm house in India and he cannot acquire such property as a compliment. There are however no restrictions on inheriting such property.
Do you need Reserve Bank of India (RBI) permission?
Non-resident Indians holding Indian passport do not require any permission from RBI for acquiring Immovable Property for bonafide residential purposes as section 31 of FERA 1973 is not applicable to them.
Non-resident Indians holding Indian passport may pay the purchase consideration either by remittance of funds from abroad through normal banking channels or out of NRO Account or out of NRE Account or out of FCNR Account.
Will I be able to avail home loans?
Yes, the RBI allows NRIs to take home loans for buying property in India. You can also take a loan for repairs and renovations of your home. You can pay EMI’s in any one of the following ways:
1) By remitting the money from your foreign bank account through regular banking channels
2) By issuing post dated cheques or Electronic Clearance Service (ECS) from your NRE, NRO or FCNR account.
3) Out of the rental income that this property earns.
4) Cheques issued from your local relative’s bank account.
The most advantageous fact in buying a property in India is you can buy a property in India without even leaving your country of residence. You are allowed to appoint power of attorney to someone in India and they can sign the papers at the time of property possession and registration.
Repatriation of Funds
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 being abroad. At present NRIs are allowed to repatriate up to $1million per person each year. In case if you don’t have a PIO/ICO card, you can apply through Indian embassy and it can be obtained 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 to India then 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, Citi and others.