Are you a Non-Resident Indian (NRI) and want to invest in a property in India? Delhi, Noida, Greater Noida, Ghaziabad and Bangalore are among the top Investment Destinations for NRIs in India. However, there is a whole lot of ambiguity and confusions around the process of property purchase in India, especially for the NRIs. It is always a good idea to be clear about the things in the first place than regretting it afterwards. So here is a detailed explanation of all the whats, whys, hows and whens of investing in Indian real estate.
Who is termed as an NRI?
An NRI is a person who holds an Indian Passport and has stayed in another country for more than 180 days. Other terms like Person of Indian Origin (PIO) and Overseas Citizen of India (OCI) also exist.
What type of property can NRIs buy in India?
NRIs can buy any type of property in India except an agricultural or plantation property. However, they sure can inherit such land.
How can an NRI fund property purchase in India?
An NRI can simply fund his property purchase in India with the foreign currency brought to the country through legitimate banking channels. Another way is to hold an NRE or NRO account in India and make a payment by writing a cheque through that account. The foreign funds in NRIs FCNR account can also be used to make a property purchase in India.
Can NRIs get a home loan in India?
Yes. NRIs, OCIs and PIOs, all three can get easy home loans in India. Some lenders also ensure hassle free paperwork. But the country’s legislative restrictions are there, so you should consult an expert before going for a home loan in India. You also get certain tax benefits on the same. The interest paid on home loan upto 2 Lakh can be deducted from the income you earn for house property under section 24. You also get benefits under section 80C of the Income Tax Act.
What is Power of Attorney (POA)?
If the NRI investor cannot come to India in order to get the property registered in his name, he can exercise the Power of Attorney. He can give POA to a relative in India who will sign the papers on his behalf. A POA is issued abroad and is to be signed by both the parties in the present of a consulate officer.
What about the taxes?
Just owning a property in India does not make you liable for tax payment. You should have a rental income. However, if you sell the property within 3 years or after 3 years, you will be required to pay short term and long term capital gains on the profit earned, respectively. But if you invest the profit in another property within 6 months of the sale, the tax gets waived off.
If you have any more questions regarding investment in an Indian property, feel free to let us know by commenting in the box below.
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