The Government has granted some leniency towards the NRIs and PIOs in matters of real estate investment. This came as a welcome move for the said buyer groups as many of them were quite enthusiastic about holding real estate back in their country of origin. However, a majority of these buyers remain poorly informed about the procedure, the implications, etc. when it comes to purchasing Indian property. The NRI guide to buying property in India consists of a lot of reformed stipulations.
It is crucial for NRIs and PIOs to understand the real estate purchase process stipulations for them. The procedure for NRI to buy property in India grants them the opportunity to invest in both residential as well as commercial real estate. The fortuitous happenstance for them is that they can hold as many real estate and commercial real estate units as they please.
However, they are still prevented from holding even a single unity of agricultural land, farmhouse or plantation land unit. Ownership of any of these types of property is only allowed when the land parcel is gifted or inherited.
All monetary transactions for NRIs and PIOs are required to be carried out via applicable banking channels with an NRI account. Another saving grace for the NRIs by the RBI is that they can apply for financial loans up to 80% of the price of the real estate unit in question.
Indian institutions only lend in INR. An NRI buyer can temporarily transfer the Power of Attorney to anyone in the country to handle the agreement for the sale, sale deed, and lease and even conduct transactions.
Loan policies for NRIs
NRIs can avail NRI loans from most of the major banks in India. They can have these loans transacted by any relative or friend or trusted person in India who has acquired the POA from the NRI. There are some documents required for NRI to buy property in India. Some of these documents must be submitted to the bank in order to complete the transaction.
Full set of documents required for NRI to buy property in India
NRIs require passport copies and visa copies are required for all the POA documents submitted by the NRI applicant. A copy of their current appointment later which comprises of their joining date, their salary certificate, role details, previous appointment details, last three months’ salary slip, etc. need to be submitted. Some banks require the POA holder to be a residing Indian.
NRI buying property in India tax implications
For an NRI buying property in India TDS is at 1% if the value of the property is more than Rs.50 Lacs. The rate of deduction is significantly higher if the purchase is being made from another non-resident. The balance amount after the tax deduction must be then paid to the seller. The income tax department receives the taxes along with a Challan 26QB fill.
Taxes are applicable on the financial gains when a property is being sold. The tax deduction in such a situation can be controlled by making certain investments.