Introduction of Policies to Encourage Foreign Direct Investment (FDI)
India is one of the most favoured destinations for FDI in Asia. The Indian government and other regulatory bodies have newly introduced policies to encourage foreign direct investment in India, particularly in the real estate sector! FDI inflows in India have consistently increased since 2014-15, at $595.25 billion.
The Two FDI Routes in India that You Must Know About
Two FDI routes in India are designed to safeguard India's security and national interests. These routes are the automatic route and the government route. The former lets foreign investors invest in India without prior approval from Indian authorities. They are required to only notify the RBI, the institution that manages the monetary aspects of foreign investments in India. The government route is for sectors that involve national security or have specific regulations.
Introduction of Gross Services Tax (GST)
The introduction of Gross Services Tax has increased the transparency in the system for Indian and non-Indian investors alike. The introduction of e-invoicing, e-way bills, data analytics, and audits have increased transparency and accountability. Hence, it is a highly appropriate time for investing in the real estate market in India.
Indexation Benefits under the Income Tax Act of India
The Income Tax Act is the holy grail for investors in India. Ownership of immovable properties for 2 years is considered a long-term capital asset. An indexation benefit can be availed with simplified taxation at 20%. Under sections 80C and 80TTA of the Income Tax Act, NRI investors in residential properties can avail tax deductions on their properties they have owned for 2 years.
Let us now look at some FAQs.
FAQs
What properties are permissible for purchase for NRIs in India?
NRIs can legally purchase both commercial and residential real estate in India. However, they cannot buy agricultural property, farmhouses or plantation homes in India
Can NRIs own an unlimited number of legally permissible properties in India?
Yes, there are no restrictions on the number of properties NRIs can own in India.
What is the (RERA) Real Estate Regulatory Authority's Compliance that NRIs must adhere to to purchase properties in India?
NRIs must present a copy of their passport, necessarily with the pages that include their name, photograph, DOB, and address. They must also submit a copy of their (PAN) Permanent Account Number Card. Lastly, a non-Indian address, their permanent address outside India, is also required.
What are the loan options that NRIs can avail for the purchase of properties in India?
For an NRI to avail of a loan for a residential property in India, the NRI must be between the ages of 21 and 60 or have attained the age of retirement (which one comes first) at the time of the loan's maturity. Usually, as a rule of thumb, it may be considered that the individual applying for the loan has a minimum annual income of ₹60 lakh; however, this amount is likely to vary from banking institution to banking institution and from country to country.
What taxation considerations apply for NRI-owned immovable properties in India?
As someone with a plan for buying a house in Mumbai, you must know the taxation considerations. The taxation uniformly applies to Indian and Non-Resident Indian-owned properties earning any income from these properties. Parcels that exceed the fundamental exemption limits and capital gains on real estate investments are applicable for this. The path followed by the payment via rent on an NRI-owned property is like so- the rent is credited to the owner's NRO or NRE account post deduction of taxes and is then transferred. It must be noted that the interest on an NRO account is taxed as per any other property owned by a resident Indian. An NRE account, on the other hand, is exempt from taxes.
Final Words
As India's financial capital, Mumbai has been a hot destination among NRI Investors for many years. This also involves the government's push towards increasing FDI in India- RBI has eased regulations simplifying the investment process for foreign investors. If you plan for buying a house in Mumbai, you must acquaint yourself with sections 80C and 80TTA of the Income Act as well.
Let our experts help you answer your questions
Let our experts help you answer your questions
In the real estate dynamic, picking between a 2 BHK and a 3 BHK home is similar to organising an ensemble of ventures. Every choice presents its own unique advantages and disadvantages thereby making the choice between them a confusing task. To make your task easier, we have curated this detailed blog to help you choose between 2 BHK to 3 BHK as per your requirements. So, without further ado, let’s dive straight into the blog.
Vastu is an ancient Indian system of architecture and design that aims to create harmony between humans and nature by balancing the five elements - earth, water, fire, air and space.
Kicking off 2024 on a high, Mumbai’s real estate market is set to experience a reported 5% increase in its residential sector. Nevertheless, Premium properties continue to be a huge draw among homebuyers, courtesy of an increased standard of living among Mumbaikars. Flats in the commercial capital come in all shapes and sizes, from studios to affluent penthouses.