Things to Know when You Buy Home from an NRI
Nov 10, 2018 Home Trading Steps
If you plan to buy a property from a non-resident Indian (NRI), you must know that the process is complicated. More stringent rules are imposed. As a buyer, you have been while making such deals. Here are some key points that you should be aware of when you go for home purchasing from NRI Owner.
If the seller of a property is a resident of India, then things are a bit simpler, and the Reserve Bank of India has no objection to put across. However, if the seller is an NRI, especially from countries such as Afghanistan, Bhutan, China, Nepal Pakistan or Sri Lanka, then approval is required from the central bank for selling their property. For agricultural land sale, the NRI must take approval from the RBI irrespective of the country where they live.
The seller must have Permanent Account Number (PAN) to execute the transaction. The buyer must have a Tax Deduction and Collection Account Number (TAN), without which tax (TDS that you as a buyer need to pay) will not be able to be deducted. If you do not have it yet (for both parties), then you must apply for it immediately. If you are planning to buy the property as a co-owner, then your spouse must also have TAN. The same goes with the seller in case there is more than one seller. Then all of them need to have a PAN.
If the seller is unable to be present in India for the process to be completed, the NRI can opt for a representative to complete the transaction. In those cases, you can ask for a particular power attorney, which is a bit different than the general one. In a way, it favours the buyer.
TDS deduction varies as per the deal value.
Ensure that you deposit the amount in an NRE or an NRO or FCNR account only of the seller.
If the seller of a property is a resident of India, then things are a bit simpler, and the Reserve Bank of India has no objection to put across. However, if the seller is an NRI, especially from countries such as Afghanistan, Bhutan, China, Nepal Pakistan or Sri Lanka, then approval is required from the central bank for selling their property. For agricultural land sale, the NRI must take approval from the RBI irrespective of the country where they live.
The seller must have Permanent Account Number (PAN) to execute the transaction. The buyer must have a Tax Deduction and Collection Account Number (TAN), without which tax (TDS that you as a buyer need to pay) will not be able to be deducted. If you do not have it yet (for both parties), then you must apply for it immediately. If you are planning to buy the property as a co-owner, then your spouse must also have TAN. The same goes with the seller in case there is more than one seller. Then all of them need to have a PAN.
If the seller is unable to be present in India for the process to be completed, the NRI can opt for a representative to complete the transaction. In those cases, you can ask for a particular power attorney, which is a bit different than the general one. In a way, it favours the buyer.
TDS deduction varies as per the deal value.
- If the deal is less than INR 50 lakh, the deduction is 20.80 percent.
- For the value between INR 50 lakh and INR 1 crore, TDS deduction in of 22.88 percent.
- If the value is more than INR 1 crore, then the deduction is 23.92 percent.
Ensure that you deposit the amount in an NRE or an NRO or FCNR account only of the seller.
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