Buying a home is a dream of every person, even if they are living abroad. Especially in case of NRIs, they always look forward to own a home in their native country. All thanks to the Indian laws that have made this dream achievable year by year. NRIs can make the transactions for buying a property in India under the governance of RBI and purview of Foreign Exchange Management Act (FEMA).
Who can buy property in India?
Indians those are settled in the foreign countries for business, employment or some other reasons are known as NRIs. Not only the living status of a person defines the NRI but also the Tax status whether the person is filing the tax as per Income Tax Act or not. Indian residents are required to spend 182 days in India during the financial year or 365 days in four consecutive years. Failing to match these criteria declares the person as Non-Resident Indian. Both the Residents and Non-Resident Indians can buy or own a property in India.
Next, PIO or Person of Indian Origin can buy a property in India. These are the people who were born in India, or had ancestral connections in India, holding a passport in a country apart from China, Nepal, Bhutan, Bangladesh, Afghanistan, Pakistan and Sri Lanka, provided they had ever held an Indian passport. The government of India has issued special PIOs card for the Person of Indian Origin with lifetime validity.
Types of property an NRI can buy
Legally, NRIs or PIOs can buy any number of properties in India from the ranges of residential or commercial properties. There is no restriction on the location basis selection as well. However, they are, unfortunately, not allowed to purchase properties related to agriculture, plantation or farmhouses. Where RBI is making a pathway to investment flow in India by giving permission to NRIs for buying ‘n’ number of properties in the country, the government has strictly placed a prohibition on buying farmhouses, agricultural or plantation lands in order.
NRIs can take the benefit of earning rental income on the properties owned back in India upon fulfilling the tax criteria. Since agricultural and farmhouses are the lands of high revenue generation, the cash so earned by this may flow out of India to their NRO accounts disturbing the Indian economy. It is, probably, for this reason, the RBI has restricted the purchase of agricultural and farmhouse lands by the NRIs.
How can an NRI or PIO buy or own a Property in India?
As the government is in favour of the NRIs for investing in Indian real estate, they can buy an under-construction, fully accomplished projects or second property in India without taking special permission from the RBI. Builders and developers have made the purchasing procedure easier for the NRIs by appearing digitally. Thankfully technologies have always supported the situation and even today, developers have their projects available for a virtual tour. The NRIs now do not have to travel down to India time and again for checking the site physically, documentation formalities or making the payment. All the procedures can be done online at the developers or the agents’ site.
However, there are certain parameters that an NRI must understand and follow before buying a property in India. An NRI must have thorough check not only on the property but also the location, developer and the tax benefits.
Further, NRIs can assign anybody from their family, friend or relative in India with the power of attorney. The assigned one can further take the procedure of buying a property in India on behalf of the NRI owner.