Home away from Home for NRIs in India
It’s no more a dream for the Non Resident Indians to get back to their roots, the government of India has introduced people friendly policies that have helped NRIs invest in properties in India. Yet there are some question that keeps on boggling their mind, here is the FAQ that will help you to sort out your query:
Who is an NRI?
A person who holds Indian Passport and is currently residing in some other nation and has stayed in that country for more than 180 days continuously is termed as NRI or Non Resident India.
Who is a PIO?
Person of Indian Origin (PIO) is those who hold a passport of the different nation have their roots in India i.e. their ancestors have been Indian up to the fourth generation, are termed as PIO or Person of Indian Origin. The present country of residence can be any nation barring Bangladesh, Bhutan, Nepal, Afghanistan, Iran, China and Sri Lanka.
Are NRIs eligible to buy property in India?
Yes NRIs and PIO can buy immovable property in India under the general permission of RBI, which includes residential and commercial property, but it does not include agricultural land, farmhouses and plantation property.
Is it required for NRIs to file documents to RBI post purchase of property?
No, under the general permission, It is not required to file documents to RBI.
How many properties an NRI can purchase?
There is no restriction on the number of residential and commercial property purchase for an NRI and PIO.
If a person buys the property when he/she was a resident of Inida, Can he continue to hold the property even after becoming NRI/PIO/
Yes, he/she can continue to hold the residential/commercial/farmhouses in India under the general permission of RBI.
Is home loan available in India for NRI and PIO?
Yes home loans are available to NRI and PIO.
Is a power of attorney required to purchase property in India?
If the buyer is not willing to travel to India, but wants the property under his/her name under such circumstances, he/she can assign POA or Power of Attorney to a close relative who is living in India to represent the buyer and sign on his behalf. The POA needs to be signed by the buyer in the presence of consulate officer or notary abroad who will also attest the same.
How to fund the property purchase?
If NRI or PIO is willing to buy property in India then he can get it done through the legitimate banking system, if he/she is the holder of Non-Resident Eternal (NRE) Rupee account of Non-Resident Ordinary (NRO) Rupee account in India, the person can issue the cheque from these accounts. If the NRI has money in Foreign Currency Non Resident account, then this deposit can also be used to buy property.
How to repatriate the funds?
Sole ownership of a property doesn’t make you eligible for paying tax till the time you have some rental income coming from it, but once you decide to sell the property, you get exposed to short and long term gain tax.
Short Term Gain tax - is applicable when the property in India is sold for a profit within three years of purchase. For example, if you bought a property worth 70 lac and sold it for 90 lac then the tax will be levied on 20 lac profit that falls under the income tax slab in India.
Long term capital gains tax – When the property is sold after three years of purchase. Here the seller also gets the benefit of indexation. The profit is taxed at 20.6% after indexation.