Are you an NRI thinking of buying Property in India ?
We made it easy to follow simple steps to understand the procedure.
Being an NRI, you can buy a residential or commercial property in India.
For that purpose, a Notarised PoA has to be submitted, along with the payment of the applicable property tax.
The tax benefits are also applicable as per the Government regulations.
Home loan facilities are available through NRE or NRO accounts and repay EMIs in INR.
Resting back in our Motherland cherishing the Golden years of life post retirement is the dream of many NRIs.
To materialise this dream, you can have your own home following few simple steps including the loan facility available to the NRI.
Let’s put some light on the details of this topic.
The Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) regulated in 2018, specifying that an NRI can buy property in India that excluded the land involved with agricultural activities like farmhouses, agricultural land, and plantations.
1. No restrictions in number of properties an NRI can purchase in India.
2. A capital amount must be held, equivalent to the purchase amount of the property in an NRI account, that includes the sums received through inward remittances.
Requirements for purchasing property by an NRI in India:-
1. Copy of your Indian Passport.
3. Work permit of the country of residence.
4. latest income tax returns and payslip for the last six months.
5. property specific documents such as the title deed, NOC from society.
Power of Attorney:-
Special Power of Attorney is provided to an individual on the behalf of the NRI, who carry out the property deal in India.
Thus, a notarised Power of Attorney (PoA) has to be generated.
This is specifically necessary if you are opting for home loan so must assign the PoA a resident Indian citizen.
The NRE and NRO accounts :-
1. You should preferably maintain NRE and NRO accounts in India if you are an NRI.
2. You can transfer foreign income to India via an NRE account (Non-Resident External). It is tax-free for you to receive interest income from it.
3. You can manage your sources of income from India by using the NRO Account (Non-Resident Ordinary). To purchase real estate in India, you may also transfer foreign dollars into this account.
Taking housing Loan for an NRI :-
1. An Indian Bank can provide housing loan to an NRI. bank sanctions the loan in Indian currency, and you must repay it in INR as well.
2. The lender credits the loan amount directly into the account of the seller or property developer and not into your bank account. You can easily repay the loan EMIs through either an NRO or an NRE account or even through FNCR deposits.
Taxation on NRI properties in India:-
1. Upon buying the property, you need to pay the necessary property taxes in India.
2. Stamp duties and registration fees are also applicable.
3. If you choose to rent out your property, you need to pay taxes on the rental income received from it while filing your tax returns in India.
4. If you later decide to sell your property, you must pay taxes on it as well.
5. The tax benefits are also applicable. For instance, if you buy the property through a loan, you can avail of income deductions of INR 150,000 and INR 200,000 per annum on the principal loan amount and the interest repayment component.
Having a real estate property is a wise decision on a longer run, that proves beneficial in many aspects.
Frequently Asked Questions (FAQs) –
- What are the Documents required to buy real estate ?
- Passport and/or OCI card: NRIs must show their Indian passport. If you hold a foreign passport, you can buy property in India provided you have a PIO (Persons of Indian Origin) card or an OCI (Overseas Citizen of India) card.
- PAN Card: This is mandatory for property transactions.
- Power of attorney: NRIs must provide a power of attorney in case they’re not in India for executing the purchase transaction. (Please note that you will need a special power of attorney which is registered and notarized and not a general power of attorney to execute a property transaction).
- How to execute a Power Of Attorney (POA)?
A power of attorney authorizes another person residing in India to complete the property transaction on your behalf. This POA needs to be signed by you in the presence of a consulate officer or notary in your country of residence. It will also have to be attested by them.
- How to fund your property purchase?
NRIs can fund their property purchases through inward remittances or through funds in a non-resident account. They can also take a home loan.
- What documents do you need to get a home loan?
To get a home loan, NRIs must furnish the following documents:-
- Copy of Indian passport and visa In case an Indian passport in unavailable PIO card if you hold a foreign passport OCI card if your parents are citizens of India.
- Work permit / employment contract / appointment letter of your country of residence
- Latest salary certificate / Payslips for the last six months.
- Latest income tax returns.
- Bank statement of NRE and NRO accounts for the last 1 year.
Bureau report of country of residence Power of attorney in the format provided by the bank (in case you are not in India for executing the purchase transaction)
- Which property documents should you ask for?
For a smooth transaction and a hassle-free ownership experience, make sure you check and verify all the essential papers. Title deed (in the seller’s name). Some states have specific paperwork that you need to be aware of. For example, if you are planning to buy property in Bengaluru, you must check for e-Khata (in the seller’s name) for property taxes.
- Approved plan
- Building permit
- Occupation certificate (in case it is a ready building)
- Older title deeds, if any Updated encumbrance certificate Share certificate (in case it is a cooperative housing society)
- NOC from the society RERA registration (if applicable) If these documents are in order, then you can proceed to prepare the sale agreement for purchasing the property.
- What are the documents required for registration ?
- PAN Card.
- Current address proof documents (like utility bills) and passport size photographs for the sale deed registration.
- Did you know that NRIs can register property from abroad?
- NRIs can register property from abroad, they must have complete information to make the right decision. If you fail to adhere to the said rules and regulations, you are sure to land up in legal trouble or pay huge fines.
- To ensure that your property transaction is hassle-free, you can consult a real-estate advocate in India. Keeping these documents with you will make the process simpler and faster, making your property buying experience a smooth one.
- How To do online registration of property ?
- Technology advancements have made the process of registering property easier over time. The online property registration has proven to be immensely beneficial as it reduces the need for mediators. However, automation has not entirely replaced manual paperwork.
- In some jurisdictions, submitting an application to the appropriate authority—the Sub-Divisional Magistrate or the Sub-Registrar of that district—is still necessary.
- What are The basic steps you’ll take in buying a property in India as an NRI ?
- Hire a local lawyer.
- Choose a real estate agent in the area where you want to purchase.
- If you won’t be in India for the purchase, set up a power of attorney.
- Find a property and determine a sale price.
- Your lawyer will carry out due diligence checks and create a sale agreement.
- Sign the sale agreement in person or through your representative.
- How is Registration of the property to purchase done ?
- To register a sale deed or transfer deed, you must pay stamp duty, and the necessary fee. You must also record the relevant paperwork with the local authorities.
- Finally, the authorised signatories for the seller, buyer and two witnesses are needed to finish the registration process. These signatories must have proof of identities, such as an Aadhar Card, PAN Card, or any other government-issued document.
- Finally, the property card, original paperwork, and evidence of stamp duty payment must be submitted to the sub-registrar.
- How Can NRI’s Issue Power Of Attorney To Purchase A Property In India ?
- NRIs need not be physically present in India to complete all the paperwork. NRIs can register property from abroad by issuing power of attorney to trusted family members to act on their behalf during the purchasing and the registration process.
- While the process can vary from nation to nation, in general you need two witnesses present to sign your Power of Attorney along with your OCI/PIO card and two recent passport-sized pictures.
- What Documents Are Needed By An NRI To Buy Real Estate In India?
- Photocopy of each owner’s residence proof, such as a passport, Aadhar card, driver’s licence, electoral commission card, etc., or any other government-issued identification.
- Each owner’s two passport-size photos.
- Photocopy of each owner’s PAN card or Form No. 60 of the Income Tax Rules.
- Photocopy of the possession certificate.
- The Overseas Citizenship of India Card that is issued by the Indian Consulate in the nation where the NRI resides. The NRIs must provide the payment information for the property purchased with supporting documentation and indicate it in the conveyance deed’s reception clause. Furthermore, if the NRIs do not have any of the above-mentioned cards, they must seek permission from the respective district collector to register the property.