Non-resident Indians have played a significant role in the Indian real estate market. They generally buy properties in India for investment purposes or out of pure emotional connection to the country and if they plan to settle back, once they retire.According to Knight Frank’s Active Capital report Indian real estate has seen a massive surge from domestic as well as NRIs. According to the report foreign investments in Indian realty rocketed from USD 3.2 bn during 2011-13 to USD 7.6 bn during 2014-16 recording a staggering growth of 137%.
It is only expected to grow, according to an ASSOCHAM report in 2014. NRI property investment is expected to surge by 35% with interest coming in from NRI property buyers residing in the Middle Est, the US, Singapore, Australia, UK, Canada and South Africa. They have shown inclination towards high-end residential and commercial properties in Bangalore, Ahmedabad, Pune, Goa and Chennai.
What all documents do NRI require before investing in India?
For all those who are planning to invest can rejoice as there are not a lot of documents required, all they need is a passport, address proof, a permanent account number (PAN card) and a recent photograph while looking for a property to invest in.
Though there are no complex maze of approvals required, here are the rules and guidelines NRI investors have to follow when investing in property in India:
1.Land type:
NRIs are allowed to purchase any number of immovable property, both residential and commercial, which is neither agricultural land, plantation property nor a farm house. Ownership of any such property (agricultural land, farm house and plantation property) is possible for the NRIs only when it’s been gifted or inherited.
2.Mode of payment:
Investment in real estate by way of purchase should be necessarily made through regular banking channels. The purchase could also be by way of debit to the Non-Resident (External) Rupee Account Scheme (NRE Account) / Non-Resident Ordinary Rupee Account (NRO Account) / Foreign Currency (Non Resident) Account (Banks) Scheme (FCNR Account) held by the NRI/ OCI in India.
3.No rules governing inheritance:
RBI has no rules to govern any sort of inheritance or gift of immovable property to NRIs. RBI does not restrict the leasing or renting of the property acquired by an NRI.
4.Repatriation of rental income:
Rental income can be repatriated freely from India without taking any specific permission.
5.Taxation: Every property investment will come with stamp duty and registration charges. Apart from these two, property buyers also need to take the service tax into account. This tax depends on the property being purchased. In the case of an under construction property, a service tax of 12.36% on 25% of the total price for apartments up to 2,000 square feet and 30% for bigger apartments will need to be paid.
