What Rules do NRIs have to Follow to Invest In Real Estate in India?

With the decrease in the value of the “Rupee”, NRIs are more interested to invest in real estate in India. It is not as difficult for NRIs to invest in Indian properties as it was earlier. Previously, the NRIs had to run around the Reserve Bank of India (RBI) and Foreign Investment Promotion Board (FIPB) for approvals. But now, the rules fall under the Foreign Exchange Management Act (FEMA) and the paperwork has considerably reduced. Hence, the task has become easier, which is leading to more and more NRIs coming in to purchase properties in India.

Rules For NRI Investments in Indian Real Estate

 Adisesh Green City in Hoskote Bangalore provides some of the best properties for NRIs to purchase in India. Its 30 acres land in a non-polluted zone, surrounded by top MNC’s and automotives like Honda, Mahindra, Volvo and Benz makes it the perfect place for investment.

Though there is less paper work and approvals required, there are still many rules to be followed, which are as under.

·        A citizen of India, that is an NRI who holds an Indian passport, need not need any approvals. Also, PIOs need not require approvals, unless they are citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan.

·        The buyer needs to submit some documents for purchasing the property that include PAN card, address proof, passport size photographs along with passport in case of an NRI and an OCI/PIO in case of an OCI/PIO.

·        They can make their payments either by transferring funds to India through regular banking channels or by debit to any of their non-resident bank accounts like Non-Resident Rupee (NRE) or Non-Resident Ordinary Rupee (NRO) or Foreign Currency Non-Resident (FCNR). But, they need to pay only in Indian rupees. No other forms of currency or Traveller’s Cheques are applicable.

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·        NRIs can take a home loan for purchasing a property in India upto 80% of the total property value. The remaining amount needs to be funded by the NRIs themselves. The loan can be granted to them on the same criteria as those to resident Indians. The only difference is that a resident Indian can claim a deduction only up to Rs 1.5 lakhs for home loan interest. But, there are no limits for an NRI to claim deductions. The loan, however, needs to be paid back in Indian Rupees only.

·        NRIs do not have any restrictions on the number of residential or commercial properties that they buy. But, they are not allowed to purchase any kind of agricultural land, plantation property or farm house. They can only have possession of such properties if the owners of such lands want to gift these properties to them or if they possess them through inheritance.

·        Repatriating the money that is made through real estate investments requires permission from the Reserve Bank of India. It should fulfill the terms and conditions of the bank and prove that the property was taken into possession in conformity with the foreign exchange law in force at the time of possession.