As per the guidelines given by the RBI, a nonresident Indian (NRI) has the privilege to purchase different types of properties in India. For them, buying a property in India is something that gives them a sense of belonging to this country, which is vital for their existence. There are several other reasons that an NRI can look into purchasing a property in India, but one of the most important reasons for them is to get homes at a low price, which is not possible abroad. They can also expect more returns on their investment if they get to purchase a few properties in India.
What provisions are there for NRIs to purchase property in India?
The government has made certain provisions for NRI to purchase property in India and these provisions are in line with the FEMA, or Foreign Exchange Management Act. FEMA rules are applied to those people of Indian origin as well as PIOs who make property investments.
The government of India has given general permission to NRIs and PIOs to buy residential and commercial properties in India, for which there is no need to take any kind of permission from the central bank or send any type of intimation or communication to the RBI in this regard.
As per the general permission that exists in present times, an NRI or PIO can choose to buy any number of commercial or residential properties in India, and the same is allowed by the income tax law as well.
What happens if an NRI is not able to come to India?
In case an NRI is not able to come to India, then the person who is given a valid power of attorney can process the related documents for the purchase of the property. Under the general permission granted by RBI, an NRI is not allowed to purchase any kind of agricultural land or plantation in India. They are not allowed to purchase any farmhouses, and if they wish to do so, they need to seek special permission from the RBI. However, the RBI can grant permission depending on what the scenario is, which may differ from case to case.
An NRI can choose to purchase the property as a single owner or jointly with another NRI. An Indian resident cannot become a joint holder of such a property, irrespective of the second holder’s contribution towards the purchase. If a person staying in India subsequently becomes an NRI, then they can continue to own the agricultural land, plantation property, or farmhouse that he or she owned before becoming an NRI. They can also give the property on rent, and whatever rent is received from such a property can be remitted once all the taxes have been paid on such a type of rent.
NRIs also have the liberty to sell or gift their property to any Indian resident. The property can be transferred or gifted provided it is not a farmhouse, plantation property or agricultural property.
NRIs can benefit from property management services:
Managing a real estate investment requires effort, and you can avoid this by hiring property management services. They can help with managing and maintaining the property, collecting the rent, filing the taxes and much more. A trustworthy person on their behalf can conduct all the transactions. All you must do is give them the PoA.
Other important know how’s for buying and selling a property in India:
An NRI can also take any number of loans to buy the properties in India and an NRI is liable to pay the required taxes, stamp duty, registration fees, post-purchase annual property taxes, and GST if the property is under construction. You can earn rental income from the property purchased in India at a 30% tax which will be deducted as TDS and the remaining amount will be repatriated according to the FEMA rules. If the NRI earns through the sale of the immovable property it can be repatriated after the deduction of 20 to 30 percent TDS is made according to what short term or long term capital gain.