Everything about NRI Investment in Real Estate
Jul 13, 2018 Real Estate News
Indian real estate is a gold mine for real estate investors. Higher returns in the real estate often drive not only Indian citizens but also NRIs to invest in the same. We discuss everything that NRIs need to know about investing in Indian Real Estate.
Under Section 47 of Foreign Exchange Management Act, 1999, the Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2000, apply on immovable property transactions by the non- residents or other transactions involving foreign exchange. The RBI classifies the FEMA transaction under two groups: capital account transaction and current account transaction.
It is important to note that the succession laws in India and region and community specific. Hindus and Muslims are governed by different succession laws which have to be read with FEMA rules.
Under Section 47 of Foreign Exchange Management Act, 1999, the Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2000, apply on immovable property transactions by the non- residents or other transactions involving foreign exchange. The RBI classifies the FEMA transaction under two groups: capital account transaction and current account transaction.
Tax implication
Anyone in India is being taxed on the basis of their residence and not citizenship. Indian citizens are taxed under their global income while NRIs are taxed for their Indian income. One of the most important things to note is that the travel expenses incurred by the NRIs are not deductible under the Income tax Act, 1961.Investment rules every PIO and NRI must keep in mind before investing
- NRIs and PIOs must remember that they cannot buy any agricultural land not it can be gifted to them.
- Any Indian citizen residing outside India or any PIO does not need any special permission to buy property in India. Though, all the payments must be made in Indian currency through proper banking channels or through the funds maintained in any non- resident account under FEMA and RBI regulations.
- NRIs and PIOs are free to buy property in India, but they are allowed to carry out business on the premises.
- NRIs are free to sell or dispose their property to an Indian citizen.
How can NRIs own property in India?
There are a few ways through which NRIs can own a property in India.- Direct purchase: an NRI can hold as many properties in India as many as he wishes, given all the payments must be made in Indian currency through normal banking channels.
- Gift: NRIs can receive any property as a gift from their Indian relatives or friends. Barring the agricultural land, they are free to accept any other land as a gift.
- Inheritance: NRIs can inherit any property in India from their relatives.
Investment options for foreign nationals
Any direct acquisition is not permitted for foreign national neither they are allowed to be the joint owners of the property. Though the foreign nationals who are citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Nepal, Iran and Bhutan, require prior approval for buying a property in India. Foreign nationals are allowed to rent or gift the property to any India citizen through the permission from RBI.It is important to note that the succession laws in India and region and community specific. Hindus and Muslims are governed by different succession laws which have to be read with FEMA rules.
