Non-resident Indians have always played an important role in the Indian real estate market. Their real estate purchase in India has been for investment purposes, emotional attachment to their country, and when planning to settle after retirement.
According to the Knight Frank Active Capital Report, Indian real estate is seeing a massive surge from both domestic and NRI buyers. According to the report, foreign investment in real estate in India increased from $3.2 billion in 2011 to $ 7.6 billion between 2014-16, recording a staggering 137% growth.
Additionally, NRI’s process of purchasing real estate in India has become completely hassle-free.
Here are few things NRI should know before making a real estate investment:
Few documents are required for those planning to invest in India,
- Power of attorney in the name of a person residing in India (who can carry legal and financial proceedings on your behalf)
- Taxpayer Number (PAN card)
- An NRE or NRO account to carry transactions with the builder
You are eligible to make a purchase if you are an NRI residing outside India, a Person of Indian Origin (PIO) who’s owned an Indian passport at any point, or someone whose father or grandfather was an Indian citizen according to the Constitution of India or the Citizens Act, 1955.
Since NRIs do not live in the country, it may not be possible for them to physically execute the purchase of the real estate. This means that the NRI can choose people close to them to act as their authorized agents, such as relatives, friends, and even colleagues, and can (legally) complete the transaction on their behalf.
The Reserve Bank of India has made it much easier for all NRIs to buy real estate in India through the Federal Emergency Management Agency (FEMA).
NRIs can apply for a mortgage. RBI is currently in the process of approving banks and other mortgage institutions, registering with the National Housing Bank, where NRI will be provided with mortgages to purchase residential real estate in India. All transactions must be done in Indian currency only.
The loan cannot be credited directly to NRI’s bank account. NRIs can only pay directly to the seller’s or developer’s bank account. However, you can repay the loan with the funds held in your NRO (Non-Resident Ordinary) / NRE (Non-Resident External) account or NRI’s FCNR (Fixed Deposit Foreign Currency Account) deposit.
Following is the taxation for the sale of capital assets,
- A: 20% Long Term Capital Gains (LTCG) tax
- B: Surcharge up to 37% of LTCG (Applicable as per the sale price slab)
- C: 4% Health and Education cess
- Total tax applicable as A+B+C
The Real Estate Regulatory Authority (RERA) has been a big factor in reviving the interests of the NRI community in investing in real estate in India. With RERA already implemented, Real Estate Developers are totally liable for completing the project without any repercussions.
As RERA is spread separately in all the Indian states, it makes it simpler for NRIs to monitor various project developments. Interested NRIs can check the project details on the websites of the authorities of different states.
- Check the approved master plan and construction commencement certificate granted by Municipal Corporation
- All residential and commercial projects need to be approved by the RERA of the respective state. Ask for the RERA number and verify it with the respective state’s RERA
- Prioritize direct builder buying instead of brokers or agencies to ensure that the price of the property and commitment is original
- In case of ready to move in property, check for the completion certificate
- Prefer to go with construction link payment or the full payment plan.
Urban Axis Infratech Limited, as a real estate enterprise, has built properties following all technical guidelines and set standards. We ensure to make your real estate investment journey convenient and simple. Your trust and money is in safe hands with Urban Axis.