NRI (Non-Resident Indian) homebuying in India is governed by specific provisions and regulations to ensure transparency and fairness in real estate transactions. Here are some key points to consider:
- Definition of NRI: An NRI is an Indian citizen who resides abroad for employment, business, or other purposes for an indefinite period.
- Property Types: NRIs are allowed to buy both residential and commercial properties in India. However, they are not permitted to buy agricultural land, plantation property, or farmland.
- Regulation Authority: The Reserve Bank of India (RBI) regulates and oversees NRI property transactions through the Foreign Exchange Management Act (FEMA).
- Purchase Modes: NRIs can purchase properties in India using funds from their NRE (Non-Residential External) or FCNR (Foreign Currency Non-Resident) accounts. These accounts allow them to hold foreign currency in Indian banks.
- Repatriation: NRIs are allowed to repatriate the sale proceeds of up to two residential properties without any restriction. However, the repatriation is subject to certain conditions, including the property having been held for at least three years.
- Taxation: NRIs are subject to the same taxation rules as Indian residents when it comes to property transactions. Capital gains tax and TDS (Tax Deducted at Source) are applicable on property sales. However, tax treaties between India and the country of residence of the NRI can influence the tax liabilities.
- Documentation: NRIs need to provide specific documents such as a valid passport, a PAN (Permanent Account Number) card, and relevant proofs of their NRI status to facilitate property transactions.
- Power of Attorney (PoA): NRIs often appoint a trusted person as their PoA holder to manage property-related tasks in India on their behalf. This person can facilitate property purchase, sale, and other transactions.
- Home Loans: NRIs are eligible to avail home loans from Indian financial institutions to purchase property. The loan process and eligibility criteria might vary slightly from those for resident Indians.
- Registration: Property registration in India is an essential step in the buying process. NRIs can be physically present during the registration process, or they can authorize their PoA holder to do so on their behalf.
- Verification: It’s crucial for NRIs to conduct due diligence before purchasing a property. Verifying the title of the property, ownership history, and any existing legal encumbrances is vital to avoid future complications.
- Prohibition on Gift: NRIs cannot gift properties to residents of India. They can only gift properties to other NRIs.
It’s important for NRIs to stay updated with the latest regulations and guidelines issued by the RBI and other relevant authorities before engaging in any property transaction in India. These regulations might evolve over time, so consulting legal experts or professionals with experience in NRI real estate transactions is advisable