The real-estate sector in India is booming and investing in the same is a profitable venture being explored by the NRIs as well. But, there are a few things every NRI must know before buying a property in India.
Details NRIs need to know before buying a property in India:
- An NRI buying an immovable property in India needs to bear in mind that he/she can’t make a payment in foreign currency. They are bound to make the purchase using Indian currency, i.e. the Rupee, and it has to be channelled through funds received in the country by banks.
- The funds have to be sustained in a non-resident account under regulations laid by the Reserve Bank of India (RBI) and the Foreign Exchange Management Act (FEMA).
- Good news! There is no restriction on the number of immovable properties an NRI can purchase in India.
- Bad News! NRIs cannot buy agricultural land, farmhouse and plantation property. However, to acquire the above-mentioned properties in India, NRIs need approval from the Reserve Bank of India and the government.
- An NRI is taxed through TDS (tax deducted at source) at the rate of 20.6 per cent on long-term capital gains and 30.9 per cent on short-term capital gains while selling property in India. Though, the final taxation rate for NRIs and resident Indians is similar.
- Indian banks and housing finance companies registered with the National Housing Bank have been permitted by the RBI to provide loans to NRIs in order to buy residential property in India.
- The loan is sanctioned and has to be paid back in Indian currency.
- NRIs have been given an option of giving a PoA to their friends/relatives etc., to initiate the process of property purchase in India.