NRIs Buying Property in India | Benefits & Guidelines for Real Estate Investment

NRI investment in Indian real estate has consistently contributed to the sector's growth. With the strengthening of the property market, NRIs are increasingly viewing India as a profitable destination for real estate investment.

If you are an NRI considering purchasing property in India, the timing couldn't be better. Favorable market conditions and supportive government policies make it an ideal time to invest. Read on to explore the key benefits and guidelines for NRIs buying property in India.

Benefits of Buying Property in India as NRI

NRIs can make profitable real estate investments in India for personal use or long-term returns, provided they conduct proper research and follow regulatory guidelines.

Property's Eligibility

Except for agricultural land, farmhouses, and plantation properties, NRIs are eligible to purchase any type of immovable property in India. To buy agricultural land or similar assets, prior approval from the Reserve Bank of India (RBI) and the Government of India is required.

For residential or commercial properties, no special permissions are needed. However, payments must be made in Indian Rupees through funds transferred via standard banking channels such as NRO/NRE accounts. As per the Foreign Exchange Management Act (FEMA) and RBI guidelines, these funds must be maintained in a non-resident account.

There are no restrictions on the number of residential or commercial properties an NRI can own in India.

Taxation Benefits

NRIs investing in Indian real estate are subject to the same tax rules as resident Indians under Section 80C of the Income Tax Act, 1961. If NRI real estate buyers declare that the property they have purchased is for their personal use, there is no income tax liability. However, rental income from leased properties is taxable.

If an NRI owns more than two properties, only one can be declared as self-occupied; the others are considered as deemed to be let out and are subject to tax accordingly.

Home Loan Facility

The RBI permits banks and housing finance companies registered with the National Housing Bank to offer home loans to NRIs for purchasing residential property in India. These loans are sanctioned and repaid in Indian Rupees.

As per regulations, the loan amount cannot be credited directly to the NRI's account. Instead, it must be disbursed to the seller or builder's account. Repayment can be made through NRO/NRE accounts or via FCNR deposits.

Loan eligibility depends on documentation, income proof, and creditworthiness.

Power of Attorney (PoA)

NRIs who live outside of India have the option of granting a power of attorney (PoA) to a friend or family who can then finish the purchasing of a property in India on their behalf. A power of attorney can either be generic or explicit on the rights that can be exercised by your agent. NRIs buying property in India must note that the PoA must be issued only for specific transactions related to the said property. This document otherwise can grant unlimited powers to the holder, which could be detrimental to the benefits of the issuer. Hence, if you want to make a real estate investment in India through a power of attorney, then you must exercise due caution.

Conclusion

Since the real estate market in India is currently showing strong signs of growth and profitability, NRIs have found that investing in the country's real estate may be quite rewarding. To boost foreign investment in India and encourage investments from NRI, the Indian government has also made reforms to the country's real estate industry.

If you're an NRI planning to buy property in India, the information above will help you make informed decisions. For further assistance, you may consult trusted developers like Adani Realty to guide you through the process.