According to ASSOCHAM (The Associated Chambers of Commerce of India) reports, NRI dealing or dealing in Indian Real Estate is expected to surge by 35%. A huge inclination is being reflected towards high-end residential and commercial properties from the property buyers residing in Australia, Canada, US, Middle East, Singapore, and South Africa.
Huge investment and deals in real estate by the NRIs have been reported in NCR properties. The later was just an initiative towards NRIs investment in Indian real estate. While dealing in Indian Real Estate, NRIs are provided by quick guidelines to follow attain successful deals through smooth process.
No approval is required for holding Indian passport by NRIs for dealing in Indian property. Similarly, the NRIs under general permission category or Persons of Indian Origin needs no approval provided they are not the citizen of countries like Sri Lanka Bangladesh, China, Iran, Nepal, China, Bhutan, or Pakistan.
Any sale proceeds that an NRI receives from the sale of property in India require the permission from RBI for the purpose of repatriation. To allow such repatriations, it is generally observed if the property was acquired in accordance with foreign exchange law in force at the time of property acquisition.
NRIs can make the payment for investment purposes by debiting their Non Resident External (NRE) or Non Resident Ordinary (NRO) accounts or Foreign Currency Non- Resident deposits (FCNR) account. For any property acquisition in India, payments can also be made by the funds received in India by the way of inward remittance through normal banking channels by the way of inward remittances. However, no payment via traveller’s check and foreign currency cash shall be permitted.
The charges like stamp duty and registration are mandate with every property purchase in India by NRIs. Depending upon the property purchased, buyers also need to pay out service tax. A service tax of 12.36 % on 25% of the total price of the property up to 2,000 square feet is required to be paid. In case the size of apartment is greater than 2,000 square feet, 30% of the total price shall be required to be paid.
Stamp duty on properties in India varies from state to state for ready-to-move apartments. However, the slabs are different for different category of individuals. For women, 4% of the property value shall be charged as stamp duty, while in case of joint ownership – 6% tax shall be charged if the owner is a male. Besides, 1% tax shall be charged as registration fee on all the real estate transactions.
Up to 80% off the total value of property purchased can be financed by private or public financial institutions. The amount of loan that has to be borrowed to buy a property and its repayment has to be done in Indian currency (INR) only.
In case of gift or inheritance of immovable property to NRIs, no specific guidelines have been provided by the government of India. Similarly, if an NRI wishes to lease or rent his inherited property, no specific guideline has been laid in that context as well.
Type of Land
For both commercial and residential properties, no cap has been levied by the government on the number of acquisitions provided it should not be an agricultural land, farm house or a plantation property. These specific properties in India can only be acquired by NRIs in case of gift or inheritance.
With the introduction of automatic routes by Indian government, paperwork has been reduced to a great extent and the process of property acquisition by NRIs get simpler. All the rules pertaining to property acquisition by NRIs gets covered under Foreign Exchange Management Act (FEMA).