Can NRIs buy real estate in India? YES! The RBI’s circular now allows Non-Resident Indians to purchase certain types of property. However, other types of property can also be purchased after obtaining special permits. 

NRIs buying real estate in India should understand the legal requirements for owning real estate within the country. According to the Foreign Exchange Management Act’s (FEMA) provisions, Person of Indian Origin (PIO) and NRIs are treated the same when investing in real estate in India. 

NRI investors do not need to request special permission from RBI, nor do they need to send communications or intimations regarding the RBI. The income tax law also allows NRIs to own any amount of residential or commercial real estate. NRIs can act as the sole owner or jointly purchase real estate with other NRIs. 

Property ownership after becoming NRI:

NRIs are also allowed to continue to hold any agricultural land, plantation property, or farmhouse they owned when they become an NRI, which they are not allowed to purchase otherwise after becoming an NRI. It depends on when you bought it. The rent received from such property can be remitted after appropriate Indian taxes have been paid on such rent. Similarly, any NRI real estate can be transferred or gifted to anyone living in India. 

Characteristics of NRI Investment in India:

• NRI cannot purchase agricultural land or plantation property in India. However, they can buy residential and commercial properties. If there is a reason behind scouting for agricultural land, the Reserve Bank of India (RBI) will review such interest on a case-to-case basis.
• There’s no limitation to the amount of home loan one may take to buy a property in India. If an NRI wants an agent to conduct transactions on your behalf, such as registering property, they must provide the agent with a Power of Attorney (PoA). The PoA holder represents the NRI by submitting a copy of the PoA to the relevant authority to sign.
• Like any other real estate purchase in India, NRI is responsible for paying the necessary taxes: stamp duty, registration fee, annual property tax after purchase, and even goods and services tax on property construction.

NRIs can also invest in real estate in India to earn rental income. They would be taxed at 30% via tax deducted at source (TDS), and the balance can be remitted to the country under FEMA regulations.

• In the case of proceeds earned through the sales of immovable properties, it can be repatriated after a reduction of between 20% and 30% TDS, depending on whether it is long-term or short-term capital gains.

What documents are needed before buying a property? 

Passport or OCI card:

An NRI must show their Indian passport. If they hold a foreign passport, they can purchase a property in India provided they have either of the cards, i.e., a PIO( person of Indian Origin) card or an OCI (Overseas Citizen of India) card.

PAN Card:

It is always mandatory for property-related transactions.

Power of attorney:

NRIs must give a power of attorney if they’re outside India for executing the purchase transaction. It must be noted that the NRIs will need a special power of attorney registered and notarized. Also, the POA must be signed by the NRI in the presence of a consulate officer or notary in their country of residence and also have to be attested by them.

Proof of Address

If you an NRI you need to submit the address proof of your current residence attested by the Indian Embassy in your country of residence.

Which property documents are required?

For a smooth purchase transaction and hassle-free ownership of a property, it is necessary to verify all the essential papers like:

• Title deed (in the seller’s name). Some states have specific paperwork that the NRIs need to be aware of. Approved plan
• Building permit
• Occupation certificate 
• Older title deeds (optional)
• Encumbrance certificate (updated)
• Share certificate (if it is a cooperative housing society)
• NOC from the society
• RERA registration (if applicable)

If these documents are in order, an NRI can prepare the sale agreement for purchasing the property.

What are the documents required for registration?

Except for the IDs (like passport or PAN card), an NRI will need to submit their recent address proof documents (like utility bills) and passport size photographs for the sale deed registration.

Funding and Financial Transactions

When buying a property in India, NRIs must carry out all transactions in Indian currency and through local banks. It means NRIs that want to invest in a property in India must have an NRI account in one of the authorized Indian banks.

What documents are needed for getting a home loan?

• Copy of Indian passport and visa
• In case an Indian passport is unavailable
• PIO Card if they hold a foreign passport
• OCI card if their parents are Indian citizens
• Work permit/employment contract/appointment letter of the country where they reside.
• Recent salary certificate / Pay slips for the past six months
• Recent income tax returns
• Bank statements of NRE and NRO account for the last year
• Bureau report of the country of residence
• Power of attorney in the format as given by the bank 

Tax Benefits:

NRIs are eligible for a major part of the tax benefits available to resident Indian buyers. If they sell the property they bought within three years; the earnings will then be taxed as it is deemed to be short-term capital gains. However, if the property is sold after three years, they can exercise the option of cutting down the long-term capital gains tax payable by buying another property.

NRIs must get all their documents verified by a competent lawyer to ensure they are in order. In addition, they should obtain a certificate from the seller stating that the property that is being purchased has is no lien attached to it. Lastly, NRIs must ensure that no bills or other dues with any authorities are to be cleared. The best ways to ensure that your property is safe and does not face legal complications and consequences is by hiring professional legal counsel to provide advice, oversee and maintain legal records.

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