Indian real estate is one of the most attractive investment destinations, especially for Non-Resident Indians (NRIs). The total NRI investment in primary Indian real estate in the top 8 significant cities will reach about USD 11.5 billion in 2017, according to Square Yards, an investment advisory firm for real estate. The NRI investment sentiment has improved significantly in India due to the progressive regulatory reforms and ease of the NRI investment process.
There is considerable optimism among long-distance buyers following the passage of the Real Estate Regulation Act (RERA), which creates a robust grievance redressal system that protects the interests of buyers. Building companies will now be held responsible for delays, misleading advertisements, and substandard construction quality, among other things.
The RERA is a godsend for NRI investors who cannot monitor their investments in India. It is a major problem in the real estate industry when projects are delayed. This is often because funds collected from one project are diverted to another, or sometimes for unrelated purposes. The RERA requires builders to keep 70% of the funds collected in an escrow account for each project. When construction of the project progresses, funds are released from the escrow account, preventing monetary misuse
In a favourable market for real estate in Jodhpur purchases, NRIs need to familiarize themselves with the policies, reforms and laws governing NRI real estate investment in India. Following are a few critical laws that one should keep in mind while going through this process:
Ease Of Buying
In the Foreign Exchange Management Act (FEMA) framework, RBI has made it easier for NRIs to purchase properties. Foreign Investment Paper Board approval is no longer required, unlike in the past. An Indian passport is needed to buy a property in the country.
Property Type
NRIs can purchase office and residential properties in India. Furthermore, NRIs are not restricted to buying a certain number of properties in India. However, agricultural land, farmhouses, and plantations are not allowed to be purchased. A person can own one of these only through inheritance or gifting.
Power of Attorney
Now, NRIs do not have to be physically present to transact real estate. It is only necessary for the investment process to be simplified to have a power of attorney (POA). You may need to provide a POA authorization to a developer for ease of documentation in the case of under-construction properties. An NRI can also sign a power of attorney with a relative or a known Indian resident to handle all real estate in Jodhpur transactions on their behalf, such as registration, sale, etc. Nevertheless, care should be taken to ensure that any POA prepared by a legal expert is vetted or prepared by a legal expert.
Loans/Funding
An NRI must ensure that all the paperwork is up to date, accurate and in compliance with the law to secure funding for a real estate transaction in India. Also, NRIs must keep accounts with an authorized Indian bank and deal exclusively in Indian rupees.
The Indian financial sector offers several home loans schemes for NRIs. The RBI has set forth a set of guidelines for NRIs seeking funding for property purchases that stipulate that at least 20 per cent of the property’s value must come from personal resources and a bank or other financial institution can finance the remaining 80 per cent.
In addition, these transactions must be carried out through the Indian banking channel as far as inward remittances are concerned, using an NRO/NRE account. Alternatively, one may opt for post-dated cheques or Electronic Clearing Services (ECS) from the NRE, NRO, or Foreign Currency Non-Resident (FCNR) accounts.
Selling
An NRI can sell any of their properties – whether commercial or residential. The same as in the case of purchasing land, NRIs should ensure that the buyer is an Indian resident when selling or gifting agricultural land, farmhouses, or plantations.
Tax Benefits
NRIs can avail of tax benefits similar to those citizens enjoy when purchasing a home in India. Following Section 80C of the Income Tax Act, 1961, they can claim a deduction of INR 1 lakh. A 30% deduction against rent is also available to NRIs, including discounts on stamp duty, registration, and municipal taxes. A resident can also take advantage of these benefits. Nevertheless, NRIs must pay 1 percent TDS if the property value is over INR 50 lakh. A capital gain tax is also charged on the property sale.
Wealth tax exemption is available to NRIs whose properties are unoccupied and claimed for self-use. To avoid the wealth tax, they must rent the property for at least 300 days a year. For the first property, the buyer has to pay a wealth tax at 1% of its value over 30 lakhs, but he or she does not have to pay it for multiple properties.
NRIs should now consider investing in the Indian real estate market because it is one of the fastest-growing economies, especially with one of the best tax policies and a wide range of properties to choose from