NRI
The Indian Real Estate sector has been a hot favourite of NRI investors. This is proven by the fact that India saw $13.1 bn investment from NRIs last year and is expected to grow by 12% this year. This growth can be attributed to the escalating demands for residential properties due to rapid urbanization and inflating disposable incomes of individuals. The Indian Economy is also showing resilience in the post- pandemic period showing ~4% YoY growth in home prices during Q1 2022.
Additionally, the Indian currency has consistently depreciated against the US dollar in 2022 so far. This, coupled with the capital value appreciation of real estate, rental yield and digitisation of the process adds up to the purchase of property by NRIs in India being a win-win situation for all NRI investors.
PROCEDURE FOR NRI TO BUY PROPERTY IN INDIA
For NRIs wanting to invest in real estate in India, the process is not as tedious as before. Apart from Person of Indian Origin (PIO), even those holding Overseas Citizenship of India (OCI) can buy a residential or commercial property in India. The leading financial institutions in the country provide home loan facility to the NRIs to fund their real estate purchase. The documents required for home loan include age proof, residence proof, educational qualification, income proof, employment proof, passport/OCI, bank statements, among other things. A NRI also needs to have a Power of Attorney (POA) determined, essentially authorise a representative in lieu of the NRI for the home loan processing.
Formalities required to be completed by NRIs/PIOs for purchasing residential immovable property in India
They are required to file a declaration in form IPI 7 with the Central Office of Reserve Bank at Mumbai within a period of 90 days from the date of purchase of immovable property or final payment of purchase consideration along with a certified copy of the document evidencing the transaction and bank certificate regarding the consideration paid.
Documents needed by NRIs to buy property in India
- PAN card (Permanent account number)
- OCI / PIO card (In case of OCI / PIO)
- Passport (In case of NRI)
- Passport size photographs
- Address proof
Another vital document required while processing an NRI home loan is the power of attorney (POA). The POA is important because, since the borrower is not based in India; the Home Finance Company would need a 'representative' 'in lieu of' the NRI to deal with and if needed. Although not obligatory, the POA is usually drawn on the NRI's parents/wife/children/ close relatives or friends. Another vital document required while processing an NRI home loan is the power of attorney (POA)
The documentation required to be submitted by the NRIs are different from the Resident Indians as they are required to submit additional documents, like copy of the passport and a copy of the works contract, etc. and of course, NRIs have to follow certain eligibility criteria in order to get Home Loans in India.
The documents needed for obtaining NRI home loans are Bank specific. General list of documents are as mentioned below:- Passport and Visa
- A copy of the appointment letter and contract from the company employing the applicant.
- The labour card/identity card (translated in English and countersigned by the consulate) if the person is employed in the Middle East Salary certificate (in English) specifying name, date of joining, designation and salary details.
- Bank Statements for the last six months
- Copy of valid passport showing VISA stamps
- Copy of valid visa / work permit / equivalent document supporting the NRI status of the proposed account holder
- Overseas Bank A/C for the last 3 months showing salary credits
- Latest contract copy evidencing Salary / Salary Certificate / Wage Slips
- Passport copy with valid visa stamp
- Brief profile of the applicant and business/ Trade license or equivalent document
- 6 months overseas bank account statement and NRE/ NRO account
- Computation of income, P&L account and B/Sheet for last 3 years certified by the C.A. / CPA or any other relevant authority as the case may be (or equivalent company accounts)
FAQ
An Indian Citizen who stays abroad for employment or is carrying on business or vocation outside India or stays abroad under circumstances indicating an intention for an non- resident Indian is an NRI. Person who is not resident in India for a period over 182 days is a non-resident Indian. Persons posted in U.N. organizations and officials deputed abroad by Central/State governments and Public Sector undertakings on temporary assignments are also treated as non-residents.
Under the provisions of Foreign Exchange Management Act a person of Indian origin is an individual (other than a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan) who at any time held an Indian passport, or he or his father or his grandfather was a citizen of India by virtue of the Constitution of India or Citizenship Act, 1955 (57 of 1955).
NRIs and PIOs do not require permission from RBI to acquire residential / commercial premises in India (other than agricultural land/farm house/plantation property).
The sale proceeds of immovable property other than agricultural land / farmhouse / plantation property can be remitted out of India on fulfillment of certain conditions.
Yes. NRIs can obtain loans. However repayment of loan should be made within a period not exceeding 15 years out of inward remittances or out of funds held in the borrower's NRE/FCNR/NRO accounts.
Reserve Bank permits Indian firms/companies to grant housing loans to their employees deputed abroad and holding Indian passports subject to certain conditions.
General permission has been granted by Reserve Bank to NRIs and PIOs to transfer by way of gift immovable property held by them in India to relatives and chartiable trusts/organisations subject to compliance of the condition the provisions of other applicable laws.
Yes. Reserve Bank has granted general permissions for letting out any immovable property in India. The rental income or proceeds of any such income are eligible for repatriation subject to payment of taxes and production of a certificate issued by a chartered accountant with the guidance of an Authorised Dealer such as a bank for completion of formalities.
The purchase consideration should be met either out of inward remittances in foreign exchange through normal banking channels or out of funds from NRE/FCNR/NRO accounts maintained with banks in India.
Applications for repatriation of sale proceeds are considered provided the sale takes place after three years from the date of final purchase deed from the date of payment of final installment of consideration amount, whichever is later.
Applications for necessary permission for remittance of sale proceeds should be made inform IPI 8 to the Central Office of Reserve Bank at Mumbai within 90 days of the sale of the property.