2. NRI Definition and general
Who is a NRI?
Non Resident Indian (NRI) is a citizen of India, who
stays abroad for employment/carrying on business or
vocation outside India or stays abroad under
circumstances indicating an intention for an uncertain
duration of stay abroad is a non-resident. Non-
resident foreign citizens of Indian Origin are treated
at par with Non Resident Indian (NRIs)
NRIs have always been opportunistic in terms of investment avenues and
returns. The government regularly comes up with new schemes to attract
more and more investments from abroad. Real estate is one of the sectors
which always grabs the attention of non-residents.
Reserve Bank of India has also given permission to all non-residents who
possess Indian passports as well as people of Indian origin to put their
money in the real estate sector (residential as well as commercial property).
The number of NRIs investing in real estate is increasing fast as the value of
the rupee is depreciating and real estate offers better returns. A place in the
homeland usually gives a sentimental support and sense of security, which is
the other reason of investment in real estate by NRIs.
The RBI along with the Foreign Exchange Management Act (FEMA) has
become lenient in terms of rules and regulations for non-residents who are
looking for an investment in real estate. They are not only simplifying the
rules but also providing the benefit of repatriation of the capital involved.
The government is planning some investment growth activities through their
investment promotional council, to create an environment appropriate for
non-residents to put money.
4. Smart City Projects Offer Great
Upside for NRI Investors
In the previous year’s budget, the finance minister
had announced an allocation of Rs. 7060 Crore for
development of 100 new smart cities.The possibility
of impressive returns in such projects continues to
offer a great investment option for nonresident
Indians. Since most of these big ticket projects are
being initiated in collaboration with international
realty developers, there are lesser chances of
impending delays and projects are more likely to
finish in time.What’s more various smart city
projects on which work is currently underway are
already reaping good rewards with impressive
returns of 10 to 15 percent in less than one year.
5. HOW CAN NRIS INVEST IN REAL
ESTATE?According to the regulations of FEMA and RBI, an NRI is
permitted to make specific investment in real estate. A NRI is
allowed to do the following investments in property:
1. Any immovable property can be purchased by an NRI in India
other than any agricultural land, farm house and plantation
2. He can get any immovable property as mentioned above by
gift from Indian resident, Indian citizen residing outside India
or person of Indian origin.
3. Obtain any property by inheritance.
4. He can transfer immovable property to any resident of India
5. He can transfer any agricultural land, farm house or
plantation land to any resident of India by gift.
6. He can also transfer his residential or commercial property
by means of gift to any person either residing in India or
abroad or person of Indian origin.
6. Source of Finance
NRIs consider financial institutions as an easy option
available in India for purchasing any property. At the
same time financial institutions consider NRIs as
their potential clients. Financial institutions provide
home loans easily, efficiently and sooner to such
people as they are very much prompt at the time of
repayment. Furthermore, the repayment can readily
be done by inward remittance through the proper
banking channel. If someone is already getting
income in India from sources like rent or dividend,
he/she can directly repay the loan as well.
7. Now RBI has also predetermined these norms in home loans for non-
residents who are looking forward to buying any property:
1. A maximum of 80 per cent amount is financed by the financial
institution. The rest should be given by the NRI.
2. The remittance of the amount for down payment can be done from
the place of residence by normal banking channels, i.e.,
NRO/NRE account in India.
3. The NRI has to repay his principal amount as well as interest part
from that similar channel only.
8. Documents required for
A copy of your passport and visa.
Salary certificate in English, specifying name, date of joining, designation
and salary details.
Both domestic (NRE/NRO/FCNR) and international bank statements for
the last six months.
If you are not available in India when the application form is submitted,
then a General Power of Attorney duly attested by the Indian consulate in
your resident country needs to be submitted. If you will be in India then
the Power of Attorney can be locally notarized.
A copy of your appointment letter as well as contract.
In case you are employed in the merchant navy, you need to submit a copy
of your CDC as well as your contract slip with Income details.
Passport size photographs
9. Tax implications for NRIs
looking for property in India
An NRI has to shell out stamp duty as well as registration fees at
the time of purchase. He is entitled to avail all sorts of benefits at
par with Indian residents on the interest paid for the home loan.
However, the tax process becomes full of twists and turns if the
property is leased.
As the amount of income received from such action comes under
the head of income from property, therefore, standard deduction is
applicable as per the standard slab. In this case, the NRI will have
to pay the applicable tax if he is residing in the country where
worldwide income is taxable unless the country has Double Tax
Avoidance Agreement with India.
The special advantage for an NRI is the amount which is paid for
the interest of home loan is deductible from NRI's taxable income
without any upper limit. The NRI is legally responsible for the
payment of capital gains tax as prescribed under the Income Tax
Act, in case he sells off the property.
10. Expert’s check list for an Authentic
Milestone Gold Infrastructure (P) Ltd. has been always in favour of these
NRI policies. Ms. Priyanka Tyagi, Director at Milestone cautiously adds,
“Real Estate Investments are very lucrative but NRIs need to pay extra
attention to the loopholes and drawback in the policies to avoid legal
inconveniences” Following are a few points which Ms. Priyanka elaborates
to have a hassle free transaction:
1. Property Name: The name of property ought to be clear from problems and
therefore the vendor ought to have the specified right to sell it, particularly
if it's inherited or any joint property.
2. NDC: Without fail check if there is no outstanding electricity/water bills or
the other authority dues unfinished with the property. Take a no dues
certificate from the vendor at time of purchase.
3. Bank Release Letter: it's always good to require the bank release letter from
the concerned bank, if the property had been mortgaged as security in any
form of loan.
4. Permits: In terms of construction, the property of sale must have all
approvals and permits from the civic authorities