Why NRIs should Invest

Why NRIs should invest in India

Benefits for Non Resident Indian investors:

✔ Taxation policy in India post 2000 A.D has been changed to support NRI so that they can easily invest in India.
✔ Provisions are made under various routes so as to pave way for foreign investors in India.
✔ Loans are provided to NRI against deposit schemes to construct homes in India.
✔ With advancement in technology, mode of transaction has leaped a step ahead through demat accounts, internet banking facility etc.

Funding the Purchase:

Lenders in India will be more than happy to fund your project provided you meet their eligibility criteria and property papers are clean. It is always advisable to get the property papers verified by a lawyer before going ahead and finalizing the deal. Also a no due certificate should be obtained from the authorities to cross check that all the bills like water, electricity etc. are completely paid.

For new constructions, land title should be clear and the builder should have all the permissions from related authorities for the construction purposes.

Also, not to forget, only a graduate NRI can avail home loans in India.

As indicated by RBI standards, a most extreme of 80% of the estimation of property can be financed by a financial institution. Rest has to come from the NRIs personal resources. Indian financial institutions give loans in rupees so the same needs to be repaid in rupees only.

Since all transactions must happen through the banking channel, repayment has to be done by inward remittances. You can directly get the money remitted from NRO/NRE account in India or issue post-dated cheques or Electronic Clearance Service (ECS) from your NRE, NRO or Foreign Currency Non Resident (FCNR) account.

In case you let out the property you can use the rent to repay the loan as well. Cheques issued from a relative’s local account can also be used to make the loan payments.

Passing the PoA:

If you are buying an under-construction property, your developer may ask for a power of attorney (PoA) favouring them. This is not unusual and would make documentation work slightly easier and quicker.

A PoA can be given to execute any contracts, deeds as well as mortgage, lease or even sell. So make sure the kind of authority you are giving to the person through the PoA. Just get it worded properly by a professional lawyer you trust.

Also, if and when you want to dispose the property, it is a good idea to have a PoA to be a resident India who may be able to act on your behalf to complete formalities such as registration, possession, execution of agreement of sale, etc.

Regulations on Sale of Property by NRIs:

Under the FEMA rules, if you are an NRI, you can sell any residential or commercial property you have bought or inherited to anyone you want. If you have any inherited agricultural property, plantation or farm house, you have to search for a resident Indian to buy it. However, you are allowed to gift them to another NRI or the person of Indian origin. There are some specific RBI guidelines on the repatriation of sale proceeds which need to be adhered to.

Also, it must be noted that an NRI cannot repatriate proceeds of more than two properties.

Tax implications:

A property is also a good tax saving tool for both residents and non-residents. The benefits for a non-residential Indian (NRI) are very similar to the tax benefits of a resident Indian.

An NRI is entitled to all tax benefits related to purchase of property that a resident Indian is. So, you can claim one lakh rupees deduction under 80C.

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