Laws prevailing NRI realty investment in India
Special thanks to the new real estate rules of buying a property for non-resident Indians is much easier than before. Anyone with Indian passport can actually invest in the real estate in India providing the property is not plantation property, agricultural land or the farmhouse.
The most important considerations for the non-resident Indian invest in the real estate market in India by understanding the financial landscape. If the non-resident Indians is looking to invest in the Indian property, here are some things one need to remember before looking out for the properties:
If the non-resident Indians have an Indian passport, they don’t necessarily require any permission in advance to make an investment in property in India. Reserve Bank of India had made rules and regulations simple to attract the foreign investment. The realty transactions are governed by rules under Foreign Exchange Management Act.
Types of properties to invest in
There is no such restriction on property numbers than the non-resident Indians can invest in. A Person of Indian Origin or a Non-resident Indian can buy as many commercial as well as residential properties in Indian as they want. There are restrictions on foreign investment, however, when it comes to plantation property, farmhouse or an agricultural land. The properties are allowed in the case these are inherited or may be gifted to the non-resident Indian in question.
Power of attorney
If a non-resident Indian is buying an under-construction property, one will definitely have power to an attorney to the trusted associate and builder. Take the help of the lawyer to correctly word the document so that there is no clear chance of forgery as well as an investment is secured while the property is actually being developed.
Financial transactions and funding
For many investments of property in India, all transactions should be done appropriately in Indian currency through the banks in India. One of the compulsories to have is the non-resident Indian account in any authorized Indian bank.
Non-resident Indians can get the funding for buying if the paperwork is clean. There are various non-resident Indians’ home loan schemes which are available under the varied financial institutions in India. If one is getting the property funded ensure that you have a minimum of 20% of the property value to invest from the sources. One can take funding for a maximum of 80%of property value.
All the transactions should be carried through the Indian banking channels, so ensure to use the NRE/NRO account for the inward remittances. Also, issue the post-dated cheque or ECS from the Foreign Currency Non-resident Account, NRE or NRO.
Before approaching the ban for funding, check all the paperwork is cleaner and verified by the lawyer. Take the no-dues certificate from the seller if non-resident Indian buys property and buy property and it is inherited or held jointly, work to get title cleared. Also, make sure that there are not any pending bills or the dues with any joint authorities.
As the non-resident Indians can enjoy tax benefits that the Indian residents entitle to the property purchase. The non-resident Indians can claim for a deduction of Rs 1 lakh under Section 80C of the Income Tax Act, 1961. If you sell the property for the purchase of 3 years it is considered as the short-term capital gain and earnings through property taxable. If the property is sold after 3 years, one has the option of reducing the long-term capital gains tax by investing in any other property.
CREDAI continuously organizes exhibitions for the non-resident Indians where they help them to scan varied investment options as well as offer spot loans from the renowned banks. Easy investment options, as well as the reduction in the down payment value, are offered. Thus, it is important that one check all the offers from CREDAI before investing in the Indian real estate.