The Indian real estate market has always been a point of interest for Non-Resident Indians (NRIs) looking to invest back home. The flexibility of the Indian real estate laws has made it relatively easy for NRIs to buy property in India. However, there are specific guidelines and procedures that need to be followed to ensure a hassle-free experience. This article outlines the detailed process for NRIs to buy property in India.

Types of Property NRIs Can Buy

NRIs are allowed to buy most types of immovable properties in India, but there are certain restrictions:

1. Residential and Commercial Properties: NRIs are allowed to buy both residential and commercial properties without any restrictions on the number of properties they can own. This includes apartments, houses, shops, and office spaces.
2. Agricultural Land, Farmhouses, and Plantation Properties: NRIs are not permitted to purchase agricultural land, farmhouses, or plantation properties in India. However, they can inherit such properties from a relative.

Step-by-Step Procedure for NRIs to Buy Property in India

1. Determine Eligibility and Property Type: Before making a purchase, it’s crucial to ensure eligibility under Indian laws. NRIs can buy residential or commercial properties without any prior permission from the Reserve Bank of India (RBI). However, they cannot purchase agricultural land, farmhouses, or plantation properties unless inherited.
2. Arrange Financing for the Purchase:

• Own Funds: The funds for purchasing property should be in Indian Rupees (INR) and should come through normal banking channels. This can be from a Non-Resident External (NRE) account, Non-Resident Ordinary (NRO) account, or Foreign Currency Non-Resident (FCNR) account.
• Home Loans: NRIs can also avail of home loans from Indian banks. However, the repayment must be made in Indian Rupees and should be routed through their NRE, NRO, or FCNR accounts.

1. Choose a Reputable Real Estate Agent or Developer: Hiring a reliable real estate agent or developer is essential, especially for NRIs who are not residing in India. They can assist in property selection, negotiation, and completing legal formalities.
2. Verify Property Title and Conduct Due Diligence:

• It is important to verify the title deed to ensure that the property has a clear title and is free from legal disputes or encumbrances.
• Ensure all necessary approvals from local authorities (such as municipal corporation approvals, land-use permissions, etc.) are in place.
• Check for compliance with the Real Estate Regulatory Authority (RERA) guidelines if buying from a developer.

1. Execute the Sale Agreement:

• Once the property is finalized, a Sale Agreement is drawn up, which includes details like the sale price, advance payment, and the date of property possession.
• This document needs to be signed by both parties (the buyer and the seller) on non-judicial stamp paper, and an advance payment is usually made at this stage.

1. Pay Stamp Duty and Registration Fees: The buyer must pay stamp duty and registration fees, which vary from state to state in India. This is a legal requirement to register the property in the buyer’s name and involves submitting necessary documents at the local sub-registrar’s office.
2. Register the Sale Deed:

• The final sale deed is executed after the payment of stamp duty and registration charges. Both the buyer and seller, along with two witnesses, need to be present at the sub-registrar’s office to complete this process.
• The sale deed must be registered within four months from the date of execution.

1. Appoint a Power of Attorney (if required): If the NRI is not in India to complete the property transaction, they can appoint a Power of Attorney (PoA) to carry out the legal procedures on their behalf. This document should be notarized and apostilled in the country of residence and then registered in India.
2. Taxation Aspects:

• NRIs are subject to the same property taxes as resident Indians. However, when selling the property, they must comply with the Tax Deducted at Source (TDS) provisions under the Income Tax Act.
• NRIs must also be aware of capital gains tax implications. The gains are classified into short-term and long-term, depending on the holding period.

1. Repatriation of Sale Proceeds:
   • NRIs are allowed to repatriate the sale proceeds of property up to two residential properties, provided the foreign exchange is managed through their NRE or NRO accounts.
   • The amount to be repatriated cannot exceed the amount paid for the property in foreign exchange at the time of purchase.

Key Points to Consider

1. Legal Consultation: It is advisable to consult a legal expert to understand the legalities, documentation, and tax implications involved.
2. Stay Updated with RBI Guidelines: The Reserve Bank of India (RBI) guidelines for NRIs purchasing property are subject to change. Always ensure you have the most current information.
3. Thorough Documentation: Ensure all documents, including the sale deed, title deed, and payment receipts, are carefully preserved as proof of ownership and for future reference.

Conclusion

Buying property in India as an NRI involves following a clear set of guidelines and adhering to legal formalities. With the right planning, due diligence, and legal support, NRIs can smoothly navigate the process and make a sound investment in India’s growing real estate market.