NRIs Rights to Buy Property in India | Know Documentation, Eligibility, Guidelines:- Any non-resident Indian (NRI), who wants to buy property in India, ought to bear in mind of some bounded legal provisions concerning to buy or owning of immovable property in India beneath the Foreign Exchange Management Act (FEMA).
Here are some points that should be Known by an NRI to buy Property in India.
“An NRI or person of Indian origin (PIO), as defined in FEMA, can acquire by way of purchase, any immovable property in India, other than agricultural land/plantation property/farmhouse. This is under a general permit that has been given by the government of India. However, no person being a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan, shall acquire or transfer immovable property in India, other than lease, not exceeding five years, without prior permission of the Reserve Bank,”
-Amarjit Bakshi, managing director, Central Park.
Properties Where NRI can Invest:
A notification is issued for granting general permission to NRIs for the acquisition of certain immovable properties in India while not getting any specific permission from RBI.
The Non-Resident Indians are allowed to buy Commercial and Residential Properties.
NRIs are not allowed to Own any agriculture and plantation property in India. Since, it is very trendy to have a Farmhouse, but followed by existing rules, NRIs are not allowed to Purchase a farmhouse in India
Joint Ownership:
NRIs can buy a property as a single owner or they can joint with another NRI to own a property in India.
The Indian Resident or any other person who is not allowed to own a property in India is not permitted in joint membership with another NRI to buy a property in India.
Continuance of holding property, after becoming an NRI:
If a person has a property in India and became an NRI, such a person can resume to own that property in India. A person is also permitted to hold on to any agriculture or any other plantation property and Farmhouse after becoming an NRI.
Similarly, any NRI permit to sell, or give that immovable property to any person resident in India, or also allowed to transfer that property to any other NRI.
Financing Sources to Purchase Immovable property in India:
The payment for the acquisition of permitted property by an NRI will be created by a method of remittance through banking channels from abroad or from money lying in their NRE/NRO or FCNR account. This helps an NRI to Buy Property in India.
The source of finance for purchase of the permitted properties has to come only through banking networks hence the payment can’t be offered in the form of traveler's cheques or foreign currency.
NRIs are permitted to finance the purchase in Indian Rupees through Home loans.
The home loan can be granted by any Indian Employer for the NRI employee to purchase and financing of the property.
Power of attorney:
If an NRI wants to purchase an under-construction property, then the person will have to give power of attorney to their builder or a trusted associate.
Take advice from a lawyer to word the documents appropriately so that there is no chance of forgery and the investment made by a person is secured while the property is being developed.
NRIs are taxed, for-profit earned from investments in real estate Business:
An NRI can earn back from their investment in real estate business, in the form of rental income and short or long-term gain.
Rental Income:
The property asset in India is the way of the earn rental income. This income falls under the income accrued in India and is taxable, not taking residential status in the account.
Short-term capital gains
Short-term capital gains apply to the profit earned through the sale of a property, at intervals 2 years of its purchase.
This property capital gains are calculated as the difference between the sale proceeds and the cost of acquisition. As per the applicable slab rate, it is taxed for the NRI.
Long-term capital gains:
It is applicable when the property is held for more than two years, then, long term capital gains are taxed at 20 percent. However, unlike short-term capital gains, an exemption can be claimed under sections 54, 54F and 54 EC.
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