Indian real estate is slowly and steadily gaining its foothold after a slump of almost five years. If you are a NRI and is contemplating to invest in some property back in India, the time is just the right. However, the road to the realty investment in India is not that smooth and is filled with many ifs and buts.
Be it investment purposes or emotional connect or for settling back once they retire, NRIs usually look forward to buy property in India. In fact, they have been a significant segment of investors over past many years in Indian realty. However, there are some important point to consider when it comes to NRI investment in Indian real estate:
- NRIs cannot acquire or buy agricultural land, plantation property, or a farm house.
- A person of Indian origin (PIO) but a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan, cannot acquire or transfer immovable property in India, other than lease, not exceeding five years, without prior permission of the Reserve Bank.
- When it comes to making the payments, NRIs can make payment only out of:
Ø Funds remitted to India through normal banking channel.
Ø Funds held in NRE/ FCNR (B) / NRO account maintained in India.
- No payment can be made either by traveller’s cheque or by foreign currency notes.
- No payment can be made outside India.
- The rental income earned from a property asset in India, falls under the income accrued in India and is taxable for NRIs as well, irrespective of residential status.
- If the property owned by a NRI is sold off within two years of its purchase, the capital gain taxed as per the applicable slab rate for the NRI.
- If an NRI opts for an under-construction property, they may have to give a power of attorney to a trusted associate, for completing the deal.
- Under KYC norms NRI must submit passport copy and relevant pages of passport having name, photo, date of birth and address and copy of PAN should be submitted. Overseas address is mandatory.