There are two major reasons why NRIs buy properties in India. Either it is a way for them to invest their money or they just want to stay connected and own something in their homeland if they decide to come back.
Indian real estate has witnessed quite a boom from both domestic investors as well as NRIs. Moreover, the process of NRI buying property in India has become rather hassle-free and smooth. Still there’s a lot to consider for them before making an investment in the Indian real estate sector.
Listed below are some of the points NRIs should know before venturing into the property market:
Documents Needed Before Investing in India
Whoever is planning to invest in Indian real estate can take a sigh of relief as there are no perquisites of submitting ten kinds of documents. The process has become rather simplified. All they need for investing is address proof, a permanent account number (PAN) card, a passport, and a recent photograph while they are seeking a property where they can invest.
Essential FEMA Rules
Thanks to the Foreign Exchange Management Act (FEMA) of the Reserve Bank of India, the matters about property buying property have been simplified. As per FEMA, an NRI is eligible to buy any property in India other than a farmhouse, plantation property, or agricultural land. This permission has been granted to them by the Government of India.
The law prevents citizens from Afghanistan, Bhutan, Bangladesh, China, Iran, Nepal, Pakistan, or Sri Lanka to acquire or transfer immovable property in India. The only exception being a lease that does not exceed five years and that, too, from the permission of the Reserve Bank, for more update must visit inspireworlds ureadthis
Suitable Mode of Payment
If the NRIs do not have funds, they can apply for a home loan. The Reserve Bank of India has started to allow banks as well as housing finance institutions currently registered with the National Housing Bank to provide home loans for NRIs. This can help them to buy a residential property in India for sale in Mumbai, India.
A key consideration in this regard is that all the transactions have to be made in Indian currency. Also, the loan cannot be directly credited to the NRI’s bank account. Only the developer’s or the seller’s bank account can be used directly for disbursement. For repayment of the loan, funds from the NRIs NRO/NRE account or FCNR deposits can be used.
This is necessary. There are scammers everywhere. When you decide to invest in Indian real estate, make sure that the developer is trustworthy. Doing a background check is necessary. You can check online reviews as well through online forums and social media accounts of the real estate company.
Apart from this, try to connect with the existing customers online. This way, you will get an idea of their level of satisfaction regarding their investment.
Get Rid of Middlemen
Yes, do not involve the middlemen if you want to make sure that the price of the property and the commitment is authentic. Oftentimes, the middlemen are involved in the transactions and you end up spending a lot more. On the other hand, it is a wise option to directly purchase the property from a reliable and reputed builder that is known in the industry.
Power of Attorney for Buying Property
Since NRIs don’t reside in India, there might be some instances in the property buying process when the said person cannot be in India. However, POA (Power of Attorney) is there to help them out. This indicates that an NRI can ask someone close to them like a friend, relative, or colleague to complete the transaction on your behalf.
The tax benefits here are the same as they are for any other Indian resident. NRIs are entitled to all the tax benefits any regular Indian resident gets to enjoy. Also, if NRIs decide to buy the property of more than Rs. 50 lac, they will have to pay a withholding TDS at 1%.
Moreover, in case the property is declared as self-occupied or vacant, wealth tax shall be exempted as well. However, this rule is for the first property only. For vacant properties to be bought later on, they will have to pay the tax at the rate of 1% of the value and more than 30 lac.