(Image source from: Moneycontrol.com)

No matter how the real estate market in India behaves, Non-Resident Indians for good and all prefer a place back in India, not merely for investment return but similarly to remain rooted in their country of origin.

Earlier, NRIs (like most other buyers and investors) had every reason to be wary of the Indian real estate market, but then the present game-changing policies such as Goods and Services Tax (GST) and Real Estate Regulatory Authority (RERA) have now boosted credence, transparency and smooth-running property-buying process for NRIs.

This has begun fueling new NRI investments into the Indian property market.

With Indian real estate over again turning out to be an attractive proposition, NRIs who are keen on buying a home in India need to qualify themselves for making the best-possible property purchase decisions.

This includes understanding the regulations and processes related to Indian real estate purchase by NRIs and also being aware of what they can reasonably expect from such investments.

No Special permission

An NRI buying an immovable property in India does not require any special permission.

However, the payment should be made in Indian currency, through funds received in the country by means of normal banking channels. These funds have to be kept up in a non-resident account under the Foreign Exchange Management Act (FEMA) and the Reserve Bank of India (RBI) regulations. There are also no restrictions on the number of immovable properties that an NRI may purchase, either residential or commercial.

NRI investments into the property market are treated as good as with investment made by resident Indians, but for some exceptions:

Taxation

When an NRI sells a property in India, the Tax Deducted at Source (TDS) 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 tax rate is similar for resident Indians and NRIs. 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.

Nature of Property

NRIs can purchase all types of immovable properties in India other than agricultural land, farmhouse, and plantation property.

To acquire agricultural land/plantation property/farm house in India, they have to get approval from the RBI and the government.

Housing Loan

The RBI has given 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, according to the regulations, the loan amount 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 Non-Resident Ordinary (NRO)/ Non-Resident External (NRE) account or Foreign Currency Non-Resident (FCNR) deposits.

Power of Attorney (PoA)

As NRIs lives overseas, they have an option to give PoA to their networks to complete the property purchase procedure in India.

The PoA can be general or specific about the rights your representative can exercise.

Repatriation of Funds Back to the Foreign Country

There are certain guidelines for repatriation of funds from the sale of immovable property in India on the conditions mentioned below:

-The amount repatriated cannot be more than 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.

-The property must have been acquired in accordance with the FEMA directives, applicable at the time of purchase.

-Sowmya Sangam