Big Reasons to Buy

1. Who is an NRI?

An NRI is any citizen of India who is not residing in India and has resided in India for less than 182 days in the preceding financial year. NRIs have professional or other commitments which require them to live outside India for an indefinite period of time. However, NRIs still have opportunities to buy real estate in India.

2. Who is a PIO?

A PIO is any citizen not of Pakistan or Bangladesh who has:

* At any time held an Indian passport
* Parents or grandparents who are citizens of India according to the Indian Constitution
* A spouse who is an Indian citizen or PIO (for the purpose of bank deposits)

A PIO can also buy real estate in India and invest in Indian properties.

3. Who is an OCI?

An OCI is a person who is a citizen of another country, but also:

* Held Indian citizenship at some point
* Was eligible for Indian citizenship at the time of the commencement of the Indian Constitution
* Belongs to a territory that became part of India after Independence

With NRI investment in India growing at a large rate, an OCI can also buy real estate in India.

4. Who can purchase property in India?

According to guidelines laid down by the RBI, the following can purchase property in India:

* A Non-Resident Indian (NRI)
* A PIO
* An OCI

All three categories are generally referred to as NRIs for the purpose of opening bank accounts, bank deposits, purchasing property, and other related purposes.

5. What property can NRIs buy?

The RBI allows NRIs to purchase immovable property in India, including:

* Residential property
* Commercial assets

However, NRIs are forbidden from purchasing:

* Agricultural land
* Plantations
* Farmhouses

NRIs looking to purchase these properties need to specially apply to the RBI for permission, and their case will be considered separately.

6. What documents do NRIs need for purchasing property?

While presenting documents to buy real estate in India, NRIs fall under two categories: salaried individuals and self-employed individuals.

7. What documents do salaried individuals need?

Salaried NRIs looking to invest and buy real estate in India should have:

* Indian passport
* PIO card/OCI card, if applicable
* PAN card
* Power of attorney documents
* Latest salary pay slips for the past 6 months
* Income tax returns for the last 2 years
* Copy of employment contract
* Appointment letter, if applicable
* Work permit, if applicable
* Bank statement for the past 1 year from an external bank account
* Bank statement for the last 1 year from an NRE/NRO account
* Address proof
* Credit report
* Property-related documents

8. What documents do self-employed individuals need?

NRIs who are self-employed and looking to buy real estate in India should have:

* Passport
* PIO/OCI card, if applicable
* Balance sheet of the company for the last 3 years
* Profit and loss accounts for the last 3 years
* Bank account statement of individual account for the last 6 months
* Bank account statement of company account for the last 6 months
* Income tax returns from the last 3 years
* Address proof
* Power of attorney documents
* Credit reports
* Property-related documents

9. What property documents do NRIs need?

NRIs investing in Indian real estate should possess:

* Title Deed
* Authorized building plan
* NOC from Electricity Supply, Pollution Control Board and Water Department
* Sale agreement between builder and previous owner, if applicable
* Possession letter from the builder
* Sale agreement
* Khata certificate and extracts
* Allotment letter
* Possession letter
* Encumbrance certificate, in case there was a previous buyer
* Occupancy certificate

10. What is a Power of Attorney?

NRIs who want to buy real estate in India need to appoint a Power of Attorney who can act on their behalf.

11. What are the different types of Power of Attorney?

There are three types of Power of Attorney for NRI investment in India:

* Special Power of Attorney: Has limited powers, usually restricted to a particular transaction.
* General Power of Attorney: Can act on behalf of an individual for a wide range of transactions.
* Durable Power of Attorney: Has continuing powers and can make decisions on behalf of an individual if they become incapacitated.

12. What functions can a Power of Attorney perform?

With regard to real estate investment in India, a Power of Attorney can:

* Mortgage, exchange, sell, lease and collect rent on behalf of an individual
* Manage and settle disputes
* Perform acts required by banks and insurance companies
* Enter into contracts and deal with bonds
* Sign documents

13. What are the steps for granting Power of Attorney?

The following steps need to be completed:

* Draft the Power of Attorney agreement on non-judicial stamp paper
* Visit the Sub-Registrar’s office with the legal representative and two witnesses
* Carry ID proof, two passport-size photographs, a copy of the Power of Attorney agreement and the original
* Signatures, photographs and fingerprints of both parties will be collected
* Visit the Sub-Registrar’s office again to collect the registered Power of Attorney agreement once completed

14. What are the guidelines for NRIs applying for a home loan?

If you are an NRI looking to buy real estate in India, loans can be made available. The guidelines include:

* The repayment period and loan amount are decided by the bank providing the loan
* The rate of interest is decided by the RBI or National Housing Bank
* The loan amount will not be credited to an NRE, FCNR or NRNR account
* Loan instalments will be paid through normal banking channels

15. What documents do NRIs need for a home loan?

NRIs applying for home loans should have:

* Copy of passport
* Copy of work visa
* Address proof, such as a utility bill, bank statement or lease agreement
* Salary statement for the last 6 months
* NRE/NRO bank account statement for the last 6 months
* Power of Attorney documents
* 2 passport-size photographs
* Copy of PAN card
* Documents applicable to salaried or self-employed individuals

16. Who should file income tax?

NRIs need to file income tax returns if:

* Their taxable income in India during that year was above ₹1.6 lakh
* They earned short-term or long-term capital gains from the sale of investments or assets, even if the income is below ₹1.6 lakh

17. Who is exempted from filing income tax?

For NRI investments in India, exemptions from filing income tax returns include:

* Long-term capital gains from equity shares or equity mutual funds
* Cases where tax has been deducted at source from income through investments and/or capital gains income

18. How can NRIs file income tax returns?

NRIs can file income tax returns in three ways:

* Give Power of Attorney to someone to file returns on their behalf
* Send their documents to an agent in India
* File income tax returns online

19. How is Capital Gains Tax calculated for NRIs?

For NRI investments in India, some assets that may be taxable under Capital Gains Tax include:

* House property
* Loans
* Buildings
* Jewellery

20. What is exempted under Capital Gains Tax?

Some assets or situations that may qualify for exemption include:

* Capital gains invested in NHAI bonds or Rural Electrification Corporation bonds
* Long-term capital gains from the sale of a house invested in buying another house, subject to applicable conditions

21. What guidelines has the RBI laid down for repatriation of funds?

If the property was purchased through foreign exchange sources, such as normal banking channels, an NRE debit account or an FCNR account, the amount repatriated cannot exceed the amount paid through those foreign exchange sources.

If the property was purchased with Indian rupees, NRIs can remit not more than USD 1 million per financial year from the balance held in an NRO account.

22. Can income from rent be repatriated?

Rental income from real estate in India can be repatriated after deduction of applicable tax. However, the amount repatriated cannot exceed the amount paid in foreign exchange for the property.

23. How is income from selling or renting property taxed for NRIs?

Acquiring property itself is not taxable for an NRI. However, the following may be subject to income tax:

* Income earned from the property through rent
* Annual value of the house if it is not the only residential property owned by the individual
* Capital gains from the sale of the property