Investing in real estate has always been a popular choice for people looking to diversify their portfolios while securing long-term financial stability. For Non-Resident Indians (NRIs) or NRI in general, the desire to invest in their home country often arises, sparking questions about whether they can buy and sell properties in India. This comprehensive buyer’s guide aims to address these queries and provide valuable insights into the legalities, regulations, and processes involved in real estate transactions for NRIs in India.
Understanding NRI Status
To determine the eligibility of NRIs to buy and sell properties in India, it is crucial to define the term NRI. An NRI is an Indian citizen living outside the country or has gone abroad for professional, education or other purposes and intends to stay there for a long time.
Can NRI Sell Property in India?
Yes, Non-Resident Indians (NRIs) are permitted to sell properties in India. NRIs can sell residential and commercial properties that they own in India, subject to the necessary legal requirements and regulations.
It is also important for the NRIs to comply with the applicable tax laws and regulations related to property transactions in India. They may also need to fulfil any obligations related to capital gains tax and repatriation of funds. Thus, it is highly recommended that NRIs seek professional guidance from legal or financial experts. It will help transpire a smooth property selling process.
Buying Property in India as an NRI
Types of Properties
NRIs can purchase residential and commercial properties in India, subject to certain conditions and restrictions. Agricultural land, farmhouses, and plantation properties, however, generally cannot be acquired by NRIs.
Funding the Purchase
NRIs can finance property purchases through funds remitted to India through regular banking channels, including NRE (Non-Residential External) or FCNR (Foreign Currency Non-Resident) accounts. They can also avail of home loans from Indian financial institutions, provided they meet the necessary criteria.
Documentation and Legal Requirements
When it comes to documentation, the NRIs need to have certain documents. These include –
- A valid passport,
- PAN (Permanent Account Number) card,
- OCI (Overseas Citizen of India) card, or
- PIO (Person of Indian Origin) card
Power of Attorney (POA)
NRIs usually trust representatives in India through a Power of Attorney to handle property-related matters on their behalf. The legal arrangement allows the representative to sign documents and complete property transactions.
Selling Property in India
Capital Gains Tax
For the unversed, NRIs are subject to capital gains tax that incurs on selling properties in India. Long-term capital gains are taxed at a lower rate than short-term gains.
Repatriation of Funds
NRIs can also repatriate the funds earned from selling properties in India. These are subject to certain restrictions as well as compliance with FEMA regulations.
NRI Legal Considerations
Title Verification
Before purchasing any property, NRIs must conduct a thorough title verification to ensure the property is free from encumbrances or legal disputes. Engaging the services of a reputable lawyer or a title verification agency is advisable to ensure a smooth and secure transaction.
Taxation and Compliance
NRIs must comply with Indian tax laws and fulfil their obligations by paying property taxes, stamp duty, and other levies as applicable. It is essential to stay updated on any amendments or changes in tax regulations that may impact property ownership and transactions.
Can NRI Sell Agricultural Land in India?
No, an NRI cannot sell agricultural land. The buying and selling of agricultural land are only restricted to Indian citizens. NRIs can only sell residential and commercial properties in India as per the given guidelines.
Restrictions or Requirements for NRIs to Selling Inherited Property in India?
When it comes to an NRI selling inherited property in India, certain restrictions and requirements need to be considered. Here are the key points to keep in mind:
NRI Eligibility Criteria
As an NRI, you are eligible to sell inherited property in India. The sale can be executed by following the necessary legal procedures and fulfilling the requirements set by the authorities.
Documentation
It is important that you have all the essential documents related to the inherited property, such as the will, and succession certificate, along with any other legal documents that establish your right to sell the property.
Tax Implications
Selling an inherited property might attract capital gains. The tax liability depends on multiple factors, including the holding period of the property and the cost of acquisition.
Compliance with FEMA Regulations
Ensure that you adhere to the Foreign Exchange Management Act (FEMA) guidelines during the property sale process. Familiarise yourself with FEMA’s specific requirements, permissions, and restrictions to ensure a compliant transaction.
Legal Assistance
You can also take the help of a lawyer specialising in property law. They can guide you through legal requirements and ensure a smooth sale process.
What documents are required for an NRI to Sell a Property in India?
When an NRI decides to sell property in India, certain documents are typically required to facilitate the transaction. Here is a list of common documents that NRI may require:
Proof of Identity:
- Valid passport (with a minimum of six months validity remaining)
- Overseas Citizen of India (OCI) card or Person of Indian Origin (PIO) card (if applicable)
- Proof of Residence:
- Address proof from the country of residence (e.g., utility bills, bank statements, or driving license)
Property Documents:
- Sale deed or conveyance deed
- Allotment letter or possession letter from the builder/developer
- Encumbrance certificate (to establish that the property is free from any legal dues or liabilities)
- Building plan approval and completion certificate
Inheritance Documents (if applicable):
- Will or succession certificate
- Death certificate of the deceased property owner
- Legal heir certificate or affidavit establishing the inheritance rights
Tax-Related Documents:
- Permanent Account Number (PAN) card
- Tax identification number from the country of residence (if applicable)
- Capital gains tax calculations and payment receipts (if applicable)
Power of Attorney (POA):
- A valid Power of Attorney document is required if the NRI appoints a representative in India to carry out the property sale process on their behalf.
It is essential to note that the specific documents required may vary based on the nature of the property, state regulations, and the buyer’s requirements. NRIS should consult with legal professionals or real estate experts who can guide them through the specific document requirements and ensure a smooth property sale transaction in India.
Wrapping Up
NRIs can invest in the Indian real estate market, albeit with certain conditions and regulations. With the right knowledge, proper documentation, and adherence to legal requirements, NRIs can successfully buy and sell properties in India.
FAQs
Q1) Can NRIs purchase agricultural land or plantation properties in India?
NRIs are generally prohibited from buying agricultural land, farmhouses, or plantation properties in India. The acquisition of such properties is restricted to Indian citizens or individuals classified as “Persons of Indian Origin” (PIOs) as defined by the government.
Q2) Can NRIs acquire residential or commercial properties in India through inheritance?
Yes, NRIs are eligible to inherit properties in India from a relative, such as a parent or grandparent. In such cases, they can legally hold and sell the inherited property per the authorities’ guidelines and regulations.
Q3) Are NRIs required to be physically present in India for property transactions?
NRIs are not required to be physically present in India for property transactions. They can appoint a trusted representative through a Power of Attorney (POA) to carry out the necessary procedures, including signing documents, attending registration processes, and completing the transaction on their behalf.
