The FEMA investment rules for NRIs in Indian real estate have always remained a touchy subject among the said buyer group members. The FERA laws have left a bitter taste in their mouth owing to the arduous process NRIs had to go through to purchase land in India, However, the present FEMA laws have loosened up since. Therefore, knowing the following commercial real estate rules for NRIS may offer any prospective real estate purchaser some leeway when buying land.
Applicable provisions for commercial real estate rules
The present FEMA laws state that NRIs no longer require explicit RBI permissions in order to purchase some specific types of immovable assets in India. This makes the market ripe for the picking for NRI investment in real estate companies:
Types of properties available to NRIs
The FEMA laws only allow for certain types of properties to be made directly purchasable to NRIs. NRIs have the explicit right to purchase any kind of residential property or commercial property they so desire in India. The present commercial real estate rules as ordained by FEMA state that NRIs can own as many residential real estate properties they want without having to intimate the RBI. However, they are strictly prohibited from partaking in any agricultural real estate. This means NRIs cannot own any farmland or plantation. Even the farmhouses which are popular among NRI real estate enthusiasts are off the table.
Financial sourcing policies for NRIs when purchasing immovable property in India
NRI investment in real estate business in India can be paid via banking channels from abroad. NRIs can also mobilize funds from their NRE/NRO or FCNR accounts in such transactions. However, Procedure for NRI to buy property in India permits usage of legitimate banking channels only. Any options of availing property in lieu of foreign currency or traveler’s cheque are not possible. NRIs have the option for purchasing property with Indian currency as well provided any party such as their employer agrees to be their financer for the deal.
NRIs can opt to pay for a loan from abroad if the purchase is made in Indian rupees. They can utilize funds from their NRE or NRO or FCNR accounts as well. Deposit cash in FCNR or NRE accounts can be utilized as well up to the mark of Rs 100 crore. An excellent alternative method of financing for the loan can be the rent received from the property itself.
Joint ownership privileges
Regardless of whether they are partaking in the transaction process or not, a secondary party cannot be allowed to hold co-ownership of property if they are Non-residents of India. An NRI can only make an NRI or any resident customers a joint owner of a property.
Ownership of land post-NRI status
It is interesting to note that recent NRI status holders are allowed to hold any kind of land they previously owned when they were residents in India. This includes agricultural and plantation properties. However, once they reach their NRI status they can only purchase the types of land NRIs are allowed to purchase. For an NRI buying property in India tax implications are next to negligible.