NRI’s Guide to Buy Properties in India

Table of Content

With the growing real estate trends, it appears good to invest in real estate, particularly for non-resident Indians (NRIs) looking to purchase properties in India. India’s real estate industry has drawn NRIs throughout the years because of its strong infrastructure, vibrant economic growth, and alluring investment rewards. However, investing in real estate can sometimes become difficult owing to market and economic developments. This guide will help you navigate through those struggles to make your property transaction a cakewalk.

Types of Properties NRIs Can Invest In

NRIs in India can invest in a wide range of properties, from residential to commercial. However, for quicker completion of the acquisition process, NRIs must familiarize themselves with India’s property ownership laws and rules and adhere to any restrictions imposed by state or municipal governments on NRI property acquisitions. Some of the different types of properties in which NRIs can invest are,

• NRIs can buy residential real estate for their own use or as an investment, including homes, buildings, bungalows, flats, villas, farmhouses, etc. The overall number of residential properties that NRIs can buy is unrestricted.
• NRIs are permitted by the Indian government to invest in a range of commercial real estate, including offices, warehouses, retail establishments, and industrial facilities. These properties can be used for commercial purposes or rented out as a source of income.
• It is legally forbidden for non-resident Indians (NRIs) to acquire agricultural land in India. NRIs who inherit agricultural land, however, are exempt from some restrictions. They can also buy agricultural land if they meet specific criteria set by the RBI (Reserve Bank of India).
• With previous Reserve Bank of India (RBI) clearance, non-resident Indians (NRIs) purchasing real estate in India are permitted to hold plantation assets, such as tea or coffee farms.

How Can NRI Own a Property in India?

Compared to Indian residents, NRI property purchasers are subject to different regulations. Even if the procedure may take longer than for Indian citizens,

There are a few options for non-resident Indians (NRIs) to become property owners in India.

Power of Attorney

A power of Attorney is a legal document that is issued to an individual by the property owner entitling the individual to act on his behalf with regard to the property during his absence. With NRI residents, the power of attorney must be signed by the NRIs in front of a legal official. A power of attorney is considered an effective way to buy and sell property with ease. However, the power of attorney must be signed by the NRIs in front of  a legal official.

Joint Ownership

An NRI can purchase a property under joint ownership just like any other Indian resident. The term joint ownership is used when the property is owned by more than an individual buyer. Any co-owner may assign to any other individual his or her portion of the property (as specified in the legal document). Joint ownership has various rights like possession of the property, use of the property, and authority to dispose of the property.

Document Checklist to Buy Properties in India for an NRI

Documents Required to Buy Properties

NRIs need to provide the following paperwork in order to get a property loan:

• A copy of the Indian visa and passport
• If your parents are Indian nationals and you have a foreign passport or an OCI card, in the event that an Indian passport is not available
• Your nation of residence’s work visa, job contract, or appointment letter
• Payslips and the most recent salary certificate for the last six months
• Most recent income tax returns
• NRE (non-resident external) and NRO (non-resident ordinary) account bank statements for the previous 12 months
• Nation of Residence Bureau report
• In the event that you are not in India to complete the purchase transaction, a power of attorney in the format supplied by the bank

Documents to Verify Before Buying Properties

Make sure you examine and confirm all the necessary documents for a seamless transaction and a hassle-free ownership experience.  

• Title deed (in the name of the seller). There are some documents that you must be aware of in certain states. For instance, you should verify that the seller’s e-Khata is in effect for property taxes if you intend to purchase real estate in Bengaluru.
• Plan approval
• Permit for construction
• Certificate of occupancy (if the building is ready)
• Older title deeds, if applicable
• Updated certificate of encumbrance
• Certificate of share ownership (if it’s a cooperative housing association)
• The society’s NOC for RERA registration, if any
• You can start drafting the selling agreement for the home purchase if this paperwork is in order.

Step-by-Step Guide for NRIs to Buy Properties in India

Step 1: The first and foremost step in buying properties in India for NRIs is deciding on the type of property they want to invest in. The documentation and regulations vary based on the type of property, so it is better to decide that ahead.

Step 2: Selecting the right financing options is one of the curcial steps. NRIs can opt for self-finance and housing loans.

Step 3: Financing trusted real estate agents or verified websites is essential to making the property transaction smooth and simple.

Step 4: Do extensive research and choose possible homes based on personal preferences and financial constraints. In addition, a number of elements should be taken into account, including the location, amenities, ease of access to essential services, potential for appreciation, etc.

Step 5: Make sure the property is authentic and free of valid complaints before completing a transaction. A qualified legal expert might be hired to confirm the property documents for this.

 Step 6: Both the buyer and the seller must sign a sales contract once all verifications have been finished. This displays the terms and conditions of the sale, along with the date of possession and the payment plan.

Step 7: One essential legal step is property registration. The necessary paperwork must be signed at the sub-registrar’s office by the buyer and the seller. Once this is done, the occupancy certificate can be obtained.

Tax Implications for NRIs Buying Properties in India

You must understand the tax ramifications if you are an NRI looking to buy real estate in India.

• An NRI purchasing real estate in India is liable to 20% TDS (Tax Deducted at Source) under the Income Tax Act of 1961.
• The overall worth of the property, which includes parking, amenities, and other fees, is used to compute the TDS.
• The TDS rate is 1%, nevertheless, if the property is worth less than Rs. 50 lakhs.
• You can apply for a certificate of lesser deduction or exemption from TDS if you’re an NRI purchasing real estate in India.

Frequently Asked Questions

1. How many properties can NRIs buy in India?

NRIs can buy any number of properties they like without any restrictions. However, buying agricultural land, plantations, and farmhouses is prohibited for NRI homebuyers in India.

2. Is it possible for an NRI to buy properties in India without POA?

Yes, NRIs can buy properties in India without POA. For this, they have to do all the procedures themselves. However, they can purchase all types of properties.

3. Is it okay for an NRI to buy a property in India without being physically present?

Yes, NRIs can buy a property in India without physical presence. The property purchase can be done by individuals with power of attorney who can act on their behalf during their absence.

4. Can NRI purchase agricultural land in India?

Under specific restrictions and guidelines, non-resident Indians (NRIs) are permitted to own agricultural land in India. To guarantee compliance, it’s critical to understand the precise regulations controlling NRI agricultural land transactions.

5. Can NRIs obtain home loans to buy properties in India?

Yes, NRIs can get house loans in India, but different lenders may have different requirements. NRIs are often required to have a reliable source of income and a clean credit history. Additionally, they have to provide the required paperwork, such as passports, identification cards, proof of income, and verification of foreign addresses.