Background

NRI GUIDE

Buying a property is undeniably one of the greatest dreams of any Indian. So it doesn’t matter in which part of the world you live in; a home is simply a must in India. And the Indian laws have made this a fairly easy job. The Reserve Bank of India governs such transactions and they fall under the purview of the Foreign Exchange Management Act.

Now let us understand the rules for NRI’s to buy a property in India

Yes, NRI can buy both a residential property and a commercial property in India. There is no limit on the number of properties an NRI can purchase in India. However, NRI cannot buy agricultural land or a farm house in India. He cannot even acquire such property as a gift.
We do only what we are great on. If we tackle a project you can be 100% sure that it will be delivered right on time, within the set budget limits and at the top level. We get all our liabilities insured, including third-party liabilities, thus indemnifying our clients against all risks.
Yellow Hats is a leading developer of A-grade commercial, industrial and residential projects in USA. Since its foundation the company has doubled its turnover year on year, with its staff numbers swelling accordingly.
We do only what we are great on. If we tackle a project you can be 100% sure that it will be delivered right on time, within the set budget limits and at the top level. We get all our liabilities insured, including third-party liabilities, thus indemnifying our clients against all risks.
We do only what we are great on. If we tackle a project you can be 100% sure that it will be delivered right on time, within the set budget limits and at the top level. We get all our liabilities insured, including third-party liabilities, thus indemnifying our clients against all risks.
We do only what we are great on. If we tackle a project you can be 100% sure that it will be delivered right on time, within the set budget limits and at the top level. We get all our liabilities insured, including third-party liabilities, thus indemnifying our clients against all risks.
We do only what we are great on. If we tackle a project you can be 100% sure that it will be delivered right on time, within the set budget limits and at the top level. We get all our liabilities insured, including third-party liabilities, thus indemnifying our clients against all risks.
We do only what we are great on. If we tackle a project you can be 100% sure that it will be delivered right on time, within the set budget limits and at the top level. We get all our liabilities insured, including third-party liabilities, thus indemnifying our clients against all risks.
RBI permission is not required to buy residential or commercial property.
Payment for the property can be made by funds remitted to India from abroad through regular banking or through the balance in the FCNR, NRE or NRO account.
According to the Indian Income Tax Act, if a resident or NRI owns more than one property, only one of them will be deemed as self-occupied and there will be no income tax on such property. Whether you rent out the property or not, it will be deemed as rented property. If you have not given the second property on rent, you will have to calculate deemed rental income on the second property and pay the tax thereof.
Now, the Income Tax Act does not specify if either or both these properties must be situated only in India. Let us say you are an NRI residing in USA. You own a house in USA. You also own a property in India. Even if you do not rent the property in India, you would have to pay the income tax in India.

Most definitely. The RBI allows NRIs to take home loans for buying property in India. You can also take a loan for repairs and renovations of your home. You can pay the EMIs in any one of the following ways:

  • By remitting the money from your foreign bank account through regular banking channels
  • By issuing postdated cheques or ECS from your NRE, NRO or FCNR Account
  • Out of the rental income that this property earns
  • Cheques issued from your local relative's bank account
Under section 24 of the Income Tax Act, the interest on home loan is deductible from the income from house property to the extent of Rs 1.5 lakh per annum. Further, up to Rs 1 lakh of principle repayment can be deducted under section 80C (subject to an overall limit of Rs 1 lakh of that section). This interest can be deducted from rental income. In case of self-occupied property discussed earlier, your rental income will be zero but you can still claim a deduction of interest of up to Rs 1.5 lakh. In such a case, you would have a loss from house property.
The loss can be set off against income from other sources like interest income, capital gains etc. If the loss is not completely exhausted in a particular year, it can be carried forward for 8 years. That is, you can show the loss in your tax returns for the next 8 years and off-set it against other income. But once carried forward, the loss can be set off only against income from house property.
Yes, in fact experts recommend that you give a PoA to a person resident in India so that he or she may complete formalities such as registration, possession, execution of agreement of sale etc. A PoA can be given to execute all contracts, deeds, mortgages, lease, sell and all matters relating to managing the property. However, at any given time, it would be better to give a specific power of attorney to any person, restricted only to a single action such as only purchase or only for lease. The power of attorney should be executed on a stamp paper or as per the requirement of the country where the PoA is executed. You must then get the PoA attested by any authorized official of the Indian Embassy/Consulate/Trade commissioner in that country.
Many times, when NRIs purchase properties, developers demand a PoA in their favour. You may choose not to give this PoA but it would lead to delays since all documents would have to be mailed to your foreign address. Giving a specific PoA would be a better option.