NRIs Guide to Buying and Renting a Home in India
Procedure for nri to buy property in India , NRI property in India
An NRI or a Non-Resident Indian can easily buy property in India. With changing time, the procedure for NRI to buy property in India has become a hassle-free job and not at all time-consuming. A few things an NRI should keep in mind while investing is - what documents are needed, how to fund the purchase, how joint ownership works, taxes for NRI property in India, POA, and all the other services. Below are the points explained in detail.
1) Documentation that an NRI needs to buy property in India
All the NRI’s rejoice because there are not a lot of documents that you require, all you need is a is a valid passport, address proof, a Permanent Account Number (PAN card) and a recent photograph while looking for a property to invest.
2) How NRIs can pay for the property they purchase in India
An NRI who does not have the funds with them ready, currently, for them it is possible to get a home loan. With the help of RBI, they have now granted permission to banks and housing finance institutions that are registered with the National Housing Bank which will provide home loans for NRIs to buy residential property in India. All transactions have to be made in Indian currency, only. But there is one catch, the loan, however, cannot be credited directly to the bank account of an NRI. It shall be disbursed to either the seller’s or the developer’s bank account directly. The loan, however, can be repaid using funds in an NRI’s NRO(Non-Residential Ordinary) /NRE(Non-Resident External) account or FCNR (Fixed Deposit Foreign Currency account) deposits.
3) Joint ownership of property in India
Another thing made easier is an NRI can buy property in their own name or jointly with any other NRI’s. However, no person who is a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan, is allowed to acquire or transfer immovable property in India, other than lease, not exceeding five years, without prior permission from the Reserve Bank.
4) NRI property tax for Indian Property
NRIs and resident Indians have both have some different tax systems they are supposed to follow. So, NRIs who buy property have to deduct Income Tax at 1% if the value of the property is more than 50 lakhs and this amount has to be paid to the Income Tax Department. However, if you’re buying this property from a person who is also an NRI this rate is much higher. If the property is for self-use and is financed through a home loan, the interest paid on the loan is deductible from the NRI’s total taxable income.
5) POA For Buying Property in India
There can be occasions where the said person can’t be physically present in India to buy a property, POA(Power of Attorney) is there. What this means is that an NRI can choose someone close to them such as a relative, friend or even colleague and allow them (legally) to complete the transaction on your behalf. However, to get a valid POA you have to visit the Indian Embassy of the city and country where you are located.
In the end, being distantly involved in real estate related activities can put you in a situation to bear losses. Having agents engaged in today’s time is misleading and increases the overall cost of transactions. It is a wise decision to look for real estate developers who do not involve brokers.