There is good news for all non-resident Indian (NRI), if you are planning to buy a property in India, then you should not worry but just be aware of certain legal provisions pertaining to the purchase or owning of an immovable property in India under the Foreign Exchange Management Act (FEMA). While India’s real estate sector has seen a price correction in the recent past, so buying property in India has become more lucrative with favourable currency rates.
Moreover, NRIs and persons of Indian origin (PIOs) are treated at par, for the purpose of investment in real estate. Banksdirect.in has
List of few properties which an NRI can purchase in India:
- Nature of property: NRIs can buy all sorts of immovable properties in India other than agricultural land, farm house and plantation property. To acquire agricultural land/plantation property/farm house in India, they have to get approval from the RBI and the government.
- Taxation: When an NRI sells a property in India, TDS (tax deducted at source) calculation is done at the rate of 20.6 percent on long-term capital gains and 30.9 percent on short-term capital gains. However, the final taxation rate is similar for NRIs and resident Indians. If an NRI has a lower tax slab applicable to him, he can apply for a refund of the TDS by filing their income tax return.
- Home loan: The RBI has given a general permission to banks and housing finance companies registered with the National Housing Bank to provide loans to NRIs for buying residential property in India. Sanctioned in Indian currency, the loan has to be repaid using the same currency. However, the loan amount, according to the regulations, cannot be credited directly to the bank account of an NRI and has to be disbursed to either the seller’s or the developer’s account. The loan can be repaid using funds in an NRI’s NRO/NRE account or FCNR deposits.
- Power of attorney (PoA): As they live outside, NRIs have an option to give PoA to their friends or relatives to complete the property purchase process in India. The PoA can be general or specific about the rights your representative can exercise.
- Repatriation of funds back to the foreign country: An NRI or Person of Indian origin (PIO) may repatriate the proceeds from the sale of immovable property in India on the conditions mentioned below:
The property must have been purchased in accordance with the FEMA directives, applicable at the time of purchase.
The amount repatriated cannot exceed the original amount paid for the property, if the property was acquired in foreign exchange remitted through normal banking channels or out of funds held in an FCNR (B) account.