NRI CORNER

Benefits for Non-Resident Indian Investors:

Since 2000, India’s tax laws have been adjusted to favor NRI’s, making it easier for them to invest in the country.

Provisions are provided through various channels to facilitate foreign investment in India.

NRI’s are given loans based on deposit plans when building a home in India.

Technology has advanced, allowing for more convenient ways to transact, such as demat accounts and online banking.

Finance the Purchase:

If you match their eligibility requirements and your property documents are in order, Indian lenders will be more than ready to fund your project. Having a lawyer verify the property documents before completing the transaction is generally a good idea. It is also advised, to get a no-dues certificate from the authorities to confirm that all outstanding bills, including electricity, water, and other utilities, have been paid in full.

When building a new structure, the builder must have a clear land title and the necessary licensing from relevant authorities.

Not to be overlooked, housing loans in India are only available to NRI graduates.

Please check Notification No. FEMA 21 /2000-RB dated May 3, 2000, by clicking the link below.

A financial institution may finance up to 80% of the estimated value of property, according to RBI rules. The NRI’s funds must provide the remaining funds. Loans from Indian financial institutions must only be repaid in rupees because they are issued in that currency.

Repayment must be made through inward remittances since all transactions must go via the banking channel. In India, you have the option to receive money straight from your NRO/NRE account, issue postdated checks, or use Electronic Clearance Service (ECS) to transfer funds from your NRE, NRO, or Foreign Currency Non-Resident (FCNR) account.

If you rent out the property, you can also use the money from the loan repayment. You can also pay-back the loan with checks drawn on a local account belonging to a relative.

Getting the PoA passed:

If you are buying an under-construction property, your developer may request a power of attorney (PoA) in their favor. This is a common occurrence and could facilitate and expedite the process of documentation.

Any kind of contract, deed, mortgage, lease, or even sale can be carried out with a power of attorney. Thus, be cautious about the level of Power you are granting the individual via the PoA. Just get it properly drafted by a reputable, experienced attorney.

Additionally, it is a good idea to have a Power of Attorney (PoA) who is an Indian resident in case you decide to sell the property. This person may help you with the necessary formalities, like registration, possession, agreement of sale execution, etc.

Regulations on Sale of Property by NRI’s:

If you are an NRI, you can sell any residential or commercial property you have purchased or inherited to anybody you wish, according to FEMA regulations. If you have any inherited agricultural property, plantation, or farm house, you must look for a resident Indian to purchase it. You are, nevertheless, permitted to give them to another NRI or an individual of Indian descent. Several specific RBI requirements regarding the repatriation of sale proceeds must be followed.

Also, it should be emphasized that an NRI cannot repatriate the proceeds of more than two properties.

Tax implications:

A property is also an effective tax-cutting strategy for both inhabitants and non-residents. The tax advantages enjoyed by resident Indians and non-residential Indians (NRI’s) are strikingly comparable.

An NRI is eligible to all tax benefits applicable to the purchase of property that a resident Indian is. Thus, you are eligible to deduct one lakh rupees under section 80C.