Nothing makes Indians feel more secure as owning real estate do. It is precisely why NRIs continue to pour their dollar savings in Indian property markets. The lure of relatively cheap home prices and pull of emotions makes non-resident Indians a significant contributor to the profits of Indian real estate developers. We want to keep you informed and have prepared a checklist of laws, rules and general guidelines for NRIs looking to buy or sell property in India.
1. Permission- RBI has issued a notification granting a general permission to NRIs for purchase of immovable properties (Read more ) in India eliminating the need to obtain any special approvals.
2. Number of properties- There is absolutely no restriction on the number of immovable properties an NRI or a PIO may purchase for either residential or commercial purposes.
3. PAN- Make sure you have a PAN number. It will be required to file income return if you get rental income from the property. It is also needed at the time of registering the property.
4. Home loan- NRIs are eligible to take home loan from an Indian lender for buying a property in the country. It is easily available and often comes with special schemes from multinational banks. However, different lenders may have restrictions on the countries they are allowed to deal with.
5. Tax treatment- The mere acquisition of property does not attract income tax. However, any income accruing from the ownership of it, in the form of rent or capital gains (short term or long term) arising on the sale of this house is taxable in the hands of the owner.
6. Repatriation- Although no additional permissions are required to buy a property, it needs the prior approval of RBI to repatriate the sale proceeds. Please note that this is in case you have acquired this property by way of purchase. However, in case the property sold was acquired by way of inheritance or out of a rupee fund, an NRI can remit a sum equivalent to $1 million per financial year. Remittances exceeding the permitted amount require permission from RBI.
7. DTAA- NRIs also benefit from India’s Double Tax Avoidance Agreements (DTAA) with many countries such as UAE, USA, etc., making it efficient to set off taxes paid in one country against the other.
8. Power of Attorney- An NRI can execute a POA from abroad in the name of a close relative or friend residing in India in case he/she cannot come down to complete the formalities. The Power of Attorney will enable the person to become a signatory for the purposes of purchase and registration in his/her absence. This POA has to be signed by the person (who is giving the power) in presence of the consulate officer or a notary based in the resident country and it will have to be attested by them.
Edited by Nikhil Narayan Sivadas