NRIs (Non-resident Indians) invest in India’s real estate to stay during their annual visits or generate a passive income. In the last few decades, they have invested in India more than ever. Both commercial and residential properties are the foremost choices for those seeking a return on investment and income.
If you’re one of those NRIs keen on India’s real estate, here are top 7 things to consider before making any investment. The government of India has devised many regulations and streamlined every process that you must follow. Let’s check out.
7 things NRIs must know before investing in India’s real estate
Find out what properties can NRI buy in India
Non-resident Indians can buy both residential and commercial properties in India following the FEMA (Foreign Exchange Management Act) rules. However, NRIs have been barred from purchasing agricultural land, farmhouses, or plantation properties. They can acquire such properties only through inheritance or when the RBI has specifically approved it.
So, it’s a wise idea to find out what properties you can invest in.
How you’re going to fund the property purchase
Once you’ve found out the type of property you can buy in India for example 2 BHK or 3 BHK apartments for sale in Lucknow or anywhere else, move to the funding option. Now, explore how you can fund this purchase. If you pay for the purchase from abroad, you need to remit the money in a non-resident external account. And from this NRE account, you can pay for the property. Also, ensure to have the bank statement as the payment proof. Using this proof, NRIs can transfer the sale proceeds back to their home country.
Find out the home loan possibilities
The RBI has set the limit for home loans for NRIs at the same level as for ordinary Indian citizens. It means they can also borrow up to 80% of the cost of the property. Also, the loan amount is disbursed, and repayment is made in the INR (Indian currency) only.
Once the home loan is approved, the amount is credited to the real estate business’ account. As far as the repayment is concerned, you can pay it via many means such as sending it through a relative’s account, rental income, or through inward remittance.
You can also pay it through an NRE, NRO, or FCNR account.
Find out about the new remittance tax
The cost of making an investment in India may increase for NRIs as the US excise tax charges about 3.5% per remittance. This charge is incurred by the sender.
So, if you plan to invest in India, you need to consider these costs. If you family member is a US citizen, then you can use the joint remittance benefit and reduce your burden.
Documents required for property investment in India
NRIs must keep important documents on hand when planning to India investment. These include: passport and OCI or PIO card, PAN card, proof of address for both Indian and overseas addresses, and power of attorney.
Explore the tax segment
To avoid tax liabilities, NRIs must deposit the tax as per the property’s sale amount. Even if they don’t file tax returns, they must practice it to keep away from hassles later. Even if the income is less than the taxable threshold, they must file the return to simplify tax compliance and calculations.
Choose a reputed real estate company
RBI and government rules have simplified the property purchase for NRIs in India. Developers have also gone global with overseas headquarters. So, you should choose a real estate company in India that has a good reputation among investors. Choose a city where there is immense job potential, international airport connectivity, and good infrastructure.
