Living abroad as a Non-Resident Indian (NRI), you may contemplate returning to India during your later years. But, are NRIs allowed to invest in property back home? According to the regulations stipulated in the Foreign Exchange Management Act (FEMA) and the directives from the Reserve Bank of India (RBI), NRIs have the eligibility to purchase both residential and commercial properties in India. Additionally, NRIs can avail themselves of home loans for these acquisitions. This article provides comprehensive insights into NRI property investments, detailing the process of purchasing property in India for NRIs.
Types of properties NRIs can purchase in India
NRIs can purchase both residential and commercial properties in India. But can the NRI buy agricultural land in India as well? No. NRIs cannot buy agricultural land, farmhouses, and plantation properties in India. Further, there is no limitation on the number of properties NRIs can purchase.
Requirements for purchase of property by an NRI in India
There are various requirements that you need to fulfil before buying a property in India as a non-resident Indian.
1) Permissions
Since NRIs have been permitted to buy property in India, you don’t need any special permission from the government or RBI for the purchase of property in India other than agricultural land/farmhouse/plantation property.
2) Ownership
The ownership of the property can be in the name of NRI independently. But can NRI buy property jointly with resident Indians? Further, the NRIs can also purchase the property jointly with a resident Indian or another NRI. If an NRI already had a property in India and became an NRI afterwards, such an NRI can continue holding property in his/her name.
3) Documents
There are certain documents required for NRIs to buy property in India. These include a copy of your visa and Indian passport, the latest income tax returns, the work permit of your country of residence, and your payslip for the last 6 months. Apart from this, you also need to submit important property-specific documents like NOC from the concerned society of residence, title deeds, etc.
4) Power of attorney
Granting power of attorney to someone means authorising such a person to carry out the property deal on your behalf while you are outside India. You need to ensure that you have a valid notarised power of attorney to ensure no obstacles during the purchase of the property. If you are purchasing property through home loans, then most lenders insist on power of attorney. You shall assign the power of attorney to a resident Indian.
5) Payment
For buying a property in India, NRIs need to make payments in Indian currency only. Paying in the currency of your resident foreign country for purchasing property in India is not permissible. For this purpose, NRIs can open a Non-Resident External Account (NRE), a Non-Resident Ordinary Account (NRO) or a Foreign Currency Non-Resident Account (FCNR) as per the regulations of the RBI.
6) Loan
NRIs can also opt for loans to buy a property, just like resident Indians. Most banks and financial institutions provide loans to NRIs for purchasing property without any hassle. The loan terms may also vary across different cities and lenders.
7) Taxes and charges
It is important to understand the tax implications for NRIs buying property in India. The income generated from the property in India is taxable in India even though the property is registered in the name of an NRI. The rental income shall be taxable at 30% TDS. In the case of the sale of the property, the TDS shall be deducted at 20% in the case of long-term capital gains, whereas the TDS on short-term capital gains shall be applicable at the tax rate applicable to the NRI. Other charges, like GST, stamp duty charges, registration charges, etc. shall be applicable as per the prevailing laws.
Selecting the right lender
If you are an NRI willing to buy a property or home in India, then selecting the right lender becomes important. Axis Bank is a pioneering lending institution that allows you to get property at affordable interest rates, with assured transparent processing and flexible terms. The processing fees are minimal, and you can choose the most suitable tenure between 1 year to 25 years. Apply for an Axis Bank NRI Property Loan now!
Also Read: Eligibility, types, & meaning of Non-resident Indian (NRI) Account
FAQs
Q: How can I buy property as an NRI?
A: As an NRI, you don’t need any separate permission from the government or RBI to buy property in India. You can buy the property just like a resident in India. FEMA and RBI guidelines for NRI buying property in India should be adhered to.
Q: What is the tax on NRIs buying property in India?
A: The registration charges, stamp duty, and other charges are applicable as per the prevailing laws. Further, the rental income from property held by NRIs shall be subject to TDS at 30%. The long-term capital gains shall be subject to 20% TDS whereas the short-term capital gains shall be subject to tax at the rate applicable to NRI.
Q: How much land can the NRI buy in India?
A: There is no limit on the number of properties NRIs can buy in India. However, NRIs cannot buy agricultural land, farmhouses and plantations in India.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision
