A Complete Checklist For NRIs Buying Property in India

FEMA Guidelines

Under the Foreign Exchange Management Act (FEMA) guidelines, Indians residing abroad, NRIs, Persons of Indian Origin (PIO) and Overseas Citizens of India (OCI) are permitted to purchase property in India. However, they cannot buy agricultural land, plantation property, or farmhouse estates. As an NRI, you can invest in land, houses, flats, apartments, and commercial properties.

All payments made by NRIs or PIOs towards buying a property in India must be made in the Indian Rupee. Payment through foreign exchange, traveller's cheque, or any other mode is prohibited. Therefore, all payments for the property must come from their NRI/NRO/NRE accounts.

As an NRI, you can invest in and own up to one residential property for self-occupation. Even if you cannot reside in the property due to your work abroad, no taxable rental income is involved in owning such property. However, if you buy a second property, your estimated rental income will be taxable even if you do not rent or lease the property.

Home Loan Eligibility

As a non-resident Indian, you can apply for a home loan with any registered bank, trusted NBFC, or housing finance company in India. Your loan approval may depend on a number of factors, including your country of residence, your income, credit score, age, loan amount, tenor etc.

The documents you may require for a home loan include the following -

• Passport with stamped resident visa or Overseas Citizenship of India (OCI)/PIO card
• Aadhaar Card
• Appointment Letter or Employment Contract
• Bank statements indicating salary credit for at least six months
• NRE or NRO bank account statements for six months
• Credit report

Partnering With Top Developers

NRIs buy property in India for one of two reasons – to buy a residential property, hoping to return sometime in the future or for the use of the family, or as an investment option with an intent to sell when the value of the property appreciates. In both cases, it is important to invest with trusted developers who have a track record of delivering high-quality projects on time. Blox is a revolutionary online platform that helps you search for, and shortlist verified RERA-registered listings from top developers. You can also take a virtual tour of the projects you may be interested in before you decide on one. Blox offers end-to-end online homebuying support at zero brokerage.

Document Checklist

Documents you will need to buy a property in India - 

• Your passport or OCI or PIO card
• Proof of Indian address or overseas residential address
• PAN Card
• Power of Attorney made through the Indian Embassy (if you are not physically present for the property. registration)
• Loan sanction documents
• Photographs

Documents that you must obtain from the developer or seller

• Title deed 
• Land records or documents such as land patta
• Mutation documents (transfer of ownership records), if applicable
• NOC (if applicable)
• Updated Encumbrance Certificate
• Tax payment receipts
• Seller's ID and PAN card

Other documents needed

• Approved building plans and permits
• RERA registration certificate
• Land reconveyance certificate
• Allotment letter
• Completion certificate
• Occupancy certificate
• Possession letter
• Sale Deed

There may be other documents required when an NRI buys property in India. It is a good idea to consult a legal expert who specialises in real estate law to be clear about these requirements.

Tax Implications

As a non-resident Indian, it is important for you to understand the tax implications related to purchasing and selling a property in the country, as well as the exemptions you can potentially take advantage of.

• If you are an NRI, any rental or lease income from your property is taxable. The deemed income from your second property is also taxable, but in both cases, you can claim an exemption of up to 30 per cent towards maintenance and repair of your property. 
• You can claim a tax deduction towards the home loan principal repayment under Section 80C. Additionally, you can claim tax deductions on stamp duty and registration charges. The interest paid on the home loans is also exempt from taxes (up to INR 2 lakhs).
• Under Sections 54, 54F and 54EC, if your only income in India is from real estate or other investments where TDS has already been deducted, filing tax returns in the country is not mandatory. 

Any property you own for 24 months or less is subject to short-term capital gain tax, and anything over 24 months is taxable as long-term capital gains and attracts a tax levy of 20 per cent plus surcharge and cess. You can avail of some exemptions if you reinvest the capital gains in specific bonds or other real estate properties. 

If you are an NRI, buying property in India presents a great opportunity to benefit from the flourishing market and excellent projects currently available. If you have any doubts or concerns, you can seek assistance from a Blox relationship manager.