For the non-resident Indians (NRIs), the real estate market in India has always been a worthwhile option. NRI investment in real estate is the most traditional form of investment. It is one of the safest forms of investment with a guaranteed return on investments. Because of Real Estate Regulations Act (RERA) and Goods and Services Act (GST), the NRI investment options in India have grown. There are some guidelines that NRIs can follow before investing in real estate.
Here is a guide for NRIs investing in Indian real estate.
- Tax benefits: The NRIs can enjoy the most tax benefits that an Indian resident is permitted to on buying of property. The NRI can claim a deduction of Rs 1 lakh under section 80C on the Income Tax Act, 1961.
- Do your research: Before applying for a home loan, it is very important to do a good research. You should also consider factors such as the location of the property, pricing, and age of competitive property before investing in real estate in India.
- Types of properties to invest: There is no limitation on the number of properties that an NRI can invest in. An NRI can buy as many residential and commercial properties they want for example, township projects in Mumbai ,residential projects in Mumbai etc to name a few among various options. When it comes to buying a plantation property, a farmhouse or an agricultural land, there are restrictions. These types of properties are only permissible in case they are gifted to the NRI.
- Following the rules and regulations: If the NRIs do not stick to the rules and regulations set by the government of a state they can get into trouble. Besides, if they do not follow the rules and regulations, it can become a risky investment. Hence, it is important to stick to the rules and regulations before investing in real estate in India.
- Financing: The NRIs can avail of the same loan interest rates as that of the resident Indians. The banks allow 80-85% of loan against the property value and permit shorter payback periods of 5-15 years. The resident Indian is allowed payback period of about 30 years.
- Documentation: The non-resident Indian can give the power of attorney to someone to complete the dealings or they can come down to India and invest directly. The documents needed include a work permit, a valid visa, salary certificate, and a permanent account number. There is also a need for a local contact address as well as power of attorney in India.
- Funding & financial transaction: To invest in any property in India or buy property in Mumbai all the transactions must be done in Indian currency through the Indian banks. It is compulsory to have an NRI account in an authorized bank.
- Property management: An NRI home buyer must purchase a home from a builder with their own property management services. This would be a benefit.
After the automated route was introduced by the Indian government, the paperwork has reduced. Now it is not difficult for an NRI to make an investment in property in India.