Buying Property In India - Rules For Foreign Nationals

Rules For Foreign National of Indian origin to Buy Property in India

India is developing rapidly and has much to offer. As a result, real estate values are increasingly coveted in investment. People living outside the country, in particular, are looking into the rules as to who can and cannot buy a property in India. Those who emigrated from the country to citizenship in the United States, for example, may wonder what the rules would be for them to buy property in India. According to this law, a person residing outside India may hold property in India if it was acquired from a resident of India or the property was inherited from someone who was a resident. The law states that people who are not residents of India and not of Indian origin are not allowed to own property in the country.

Obligation of Residence

According to Buying Association, a foreign national must be a resident of India for 183 days in a fiscal year to be allowed to purchase a property. This can be difficult because a tourist visa lasts 180 days. Foreign nationals cannot find a way around the requirement of residency through the operation of a registered Indian company, according to Buy Association. It is also illegal to try to become a common property owner in India with someone who does qualify.

NRI 

Non-Resident Indians (NRI) can purchase property in India without a residence. NRIs have an Indian passport and nationality, even if they have emigrated from the country.  This inclusion has fueled much of the real estate boom in India. The non-resident Indians (NRI) is very interested in buying property in India due to the drop in the value of rupee in the world market and the emotional connection they have with the country they belong to.

While buying a property in India, the NRIs must comply with the rules established by the Constitution of India under the Currency Administration Act (FEMA). According to rules of FEMA, an NRI can own residential and commercial properties throughout India, and there is no restriction on properties if you want to own plenty of properties. However, the rules restrict NRIs to own agricultural land, farmlands and plantations in India, and they can only purchase if it is endowed or inherited.

The development of NRI investment in real estate in India has encouraged Indian financial institutions to present and finance the purchase of properties. NRIs can contact investors to finance the purchase of their property in India. Due to the high returns on investment in the real estate sector, the lenders will be more than happy to finance the purchase. However, all property documents must be in place to be considered eligible for funding. It is always recommended that a lawyer.

Check the documents before moving on. One must ensure that there is no pending invoice that must be paid to the author and that the property has never been under the mortgage. There is an interesting fact that only NRI graduates meet the criteria to take advantage of mortgage loans in India. According to RBI regulations, a financial institution in India can finance up to 80% of the value of the property and the rest must come from the personal resources of the NRI.

As banks and other financial institutions in India grant loans in rupees, they must be repaid in the same currency. Also, since all transactions must be made through banking channels, the refund must be made through incoming transfers. An NRI can obtain the money directly remitted from the NRE / NRO account in India, by issuing checks with a later date or through the Electronic Settlement Service (ECS). An NRI can be requested to provide a Power of Attorney (PoA) from the developer that favours them, in case of buying a property under construction.

This makes the documentation process fast and easy. You can implement any contract, mortgage, lease or even sale. Therefore, before issuing the PoA, it is always essential to consult a professional lawyer. Granting the PoA to a resident Indian can be a great help to the NRI at the time of disposing of the property since the resident Indian will be able to act on behalf of the owner to complete the procedures such as registration, possession, execution of the Sale agreement, and so on.

Under FEMA rules, an NRI can sell any residential or commercial property to any Indian in the world that has been purchased or inherited. However, in the case of agricultural properties, plantations or inherited agricultural haciendas, an NRI must find an Indian resident to buy them. In addition to the FEMA rules, it also includes some specific RBI guidelines on the repatriation of the property sale that must be followed in real estate transactions in India.

Based on rules, if someone wants to repatriate, they must come in foreign currency from a bank account abroad, an NRE or FCNR account. The other condition for repatriation is that it cannot exceed the amount of currency must have to pay through banking channels while buying the property. Also, consider that an NRI cannot repatriate for more than two properties. A property is an excellent tool for both resident Indians and non-residents. Along with high rents and returns, an NRI can also have tax savings by investing in the Indian real estate market.

What Documents Should NRI Submit To Get A Home Loan?

The salaried NRI can apply for a home loan with submitting relevant documents to financial institutions. The required document to get a home loan includes two photographs and address proof of the applicant and co-applicant like Utility bills or driving license, past six months bank statements of Non-Resident External (NRE) Account and NRO (Non-Resident Ordinary) account in India.

You should have the same account in which your salary is credited and have to submit the copies of salary statements of your employer, copies of sanction letters of loans obtained in India and abroad, and self-declaration of residential status. An NRI who wants to apply for a home loan should have to contain all these documents and proofs to get a home loan.

Properties Purchase in India for NRI

Non-Resident Indian can buy a house or apartment in Hyderabad, India by submitting all the relevant documents. To purchase such properties, they could not need RBI permission. NRI should contain a valid passport with PIO/OCI card, address proof, PAN (permanent account number in India) and photographs to acquire a residential or commercial property in India. They cannot buy an agricultural or farmland or plantation property in India, but they can inherit them.

Can NRIs, PIOs & OCIs Purchase Property?

Reserve Bank of India given permission for NRIs, PIOs & OCIs that they can buy immovable property in India without any restrictions. With this permission, the NRIs, PIOs & OCIs can purchase only the residential and commercial property in India. It will not include purchasing properties in India like agricultural land, plantation property or a farmhouse.

Non-Resident Indian (NRI)

NRI is a citizen of India holding an Indian passport, who has temporarily immigrated to another country (for six months or more) for education, work, residence, or any other purpose.

Person of Indian Origin (PIO)

A PIO either was or had ancestors who were born in India or other nations of Indian ancestry. A PIO is not an Indian citizen and is the citizen of another country. He/she was probably once a citizen of India, and later became the citizen of another country.

Overseas Citizenship of India (OCI)

An OCI might have been eligible to become a citizen of India on 26th January 1950, or belongs to a territory that became part of India after 15th August 1947. This foreign national’s children and grandchildren are eligible for registration as OCI. The citizen of Pakistan or Bangladesh will not be suitable for OCI status.

Joint Ownership of the Properties

The NRI can buy a property either in a single name or jointly with any other NRI. It is to be considered that a resident Indian who is not allowed to buy the property in India cannot be made a joint owner in such property though the second named person might not contribute any currency towards the property.

Continuation of the Property Ownership

Many people are bothered about their owned properties in India who have gone outside India for doing jobs in. But an individual who is taken jobs outside India can live tension free. Because there are no restrictions to them to continue their ownership for their property in India as NRI. They can also own agricultural land, plantation and farmlands in India. The permission of RBI is also not required for NRI to sell the property, which he owned when he became an NRI without taking any permission from RBI. An NRI can get the money from outside India after paying required taxes from rent.

Payment Procedure to Buy a Property in India

The NRI can buy a property in India without any restrictions from RBI. They can take required home loans from banks and housing financing institutions. They have to buy the property through Indian currency only. NRI cannot credit the money directly to his bank account; it will be paid directly to the bank account of the seller’s or the developer. Through the NRI’s NRO(Non-Residential Ordinary) /NRE(Non-Resident External) account or FCNR (Fixed Deposit Foreign Currency account) deposits the loan can be repaid.

The NRI can transfer the money through authorised banking channels from abroad if he wants to pay the full or half amount to buy a property in India. The money payment through Traveler’s cheque or foreign currency is not acceptable. An NRI can purchase the residential property in their own name or can buy with any other NRI jointly. It is also noted that they cannot buy a property in joint ownership with the resident of India or with those who are otherwise not allowed to buy property in India.

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By: Shailaja K