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NRI
INVESTMENT IN
INDIA
India has been the land of golden opportunity for
NRI investment in India. The straightforward paperwork
and tax benefits have made property investment
opportunities even more attractive. A significant reason
why NRIs invest in Indian real estate is their yearning to
settle back after retirement. It is like a contingency case.
Recently the Indian government has also made the rules and
regulations more investment friendly. It has attracted lots of
attention toward Indian property, both residential and commercial.
It is also said that the lenient policies might boost the Indian real
estate market by $600 billion by the year 2025. The figures are
proof of a more alluring real estate market for NRIs to buy
property in India.
Although there are multiple options for NRI investment in India, such as gold,
stocks, mutual funds, direct equity, government securities, etc., real estate always
tops the chart. An understanding of the know-how of the Indian economy and
additional factors guide in investing in real estate in India.
8 FACTORS TO CONSIDER WHILE
MAKING NRI INVESTMENT IN INDIA
1. KNOWLEDGE ABOUT THE
PROPERTY
According to the Foreign Exchange Management Act,
“An NRI (Non-Resident Indian) or an OCI (Overseas
Citizen of India) may acquire immovable property in
India other than agricultural land/ farm house/
plantation property either by purchase or in the form
of a gift.”
NRIs should have complete knowledge of the type of
property.
If you’re a non-resident Indian, understand that you
can purchase residential and commercial property.
However, it is unlawful to invest in agricultural land,
farmhouse, and plantation. Any NRI buying property
in India can freely put their money into residential
and commercial properties and in as many as they
want.
2. DOCUMENTS NEEDED
Any real estate investment requires a
thorough check and alignment of the
correct documents. These documents not
only provide credibility but also help in
establishing certainty. A piece of good
news for NRI investment in India is the
hassle-free documentation for the
property. The paperwork is straightforward
and requires a passport, address proof,
permanent account number (PAN), and
most recent photograph. The minimal
documentation is one reason NRI
investment in real estate is rising in India.
3. MODE OF PAYMENT
The payment for the purchased property
needs to be in Indian currency and as per
the Indian Government Regulations.
Consult the financial experts to know if
this investment is taxable or not.
One factor to keep in mind is that NRIs
cannot use a traveller’s cheque or foreign
currency for the purchase. These modes of
payment do not come from permitted
channels; hence, they cannot be used as a
payment method.
4. HOME LOAN
One advantage that even NRIs have is the
availability of home loans. The procedure
of NRI investment in Indian real estate has
become simplified with this feature.
However, the payment of 20% of the
property value should be with their own
money. For the remaining 80%, you can
avail loan from a financial institution.
Banks and financial institutions registered
with the National Housing Bank can
extend home loans to NRI for residential
property, as per RBI guidelines.
5. RESEARCH
Before delving into the paperwork and the
payment procedure, every NRI should
thoroughly research the property and its
developer. You should perform a strict
backcheck on the property. A few things
you can probe into are the property’s
location, quality of the infrastructure,
goodwill of the developers and their
reputation, the history of the developers,
their testimonials, the social media
presence, etc. A wise method for NRI
investment in India is to make absolute
use of the internet. You can also use the
internet to enrich your knowledge of
Indian real estate and the laws
surrounding it.
6. TAX IMPLICATIONS AND
BENEFITS
As an NRI, it is difficult for individuals to acquire
residential or commercial property in India
without abiding by tax laws. If the sales
consideration of the property exceeds ₹50 lakhs,
a TDS of 1% is deducted from the income. If you
sell the acquired property within 3 years of
purchase, it is charged as short-term capital
gains. When an NRI investment in Indian real
estate exceeds 24 months, and they sell off the
property, it is a long-term capital gain applicable
for 30% TDS.
NRIs enjoy multiple tax benefits relating to an
investment in residential or commercial property
in India. They also enjoy similar perks as an
Indian citizen. NRIs claim a deduction of Rs. 1
Lakh under section 80 C of the Income Tax Act,
1961.
7. POWER OF ATTORNEY
Since NRIs investing in Indian real
estate reside abroad, it is not always
possible for them to transit to and fro.
In such cases, someone from the
family, a relative or a friend can work
as the representative. It is known as
hiring power of attorney. Power of
attorney legally binds a person to act
on behalf of the buyer. The only factor
to consider before appointing a power
of attorney is to sign a contract with
the person for law purposes.
8. LEGAL CLEARANCES
Legal procedures can look hectic but are
essential as well. It will include but will
not be limited to only specific factors. It is
crucial to establish the originality of the
ownership deed, verification of property
papers, clearance of outstanding bills,
municipality clearances or any other dues.
Legal backing and authorization will save
you from future problems. For example, in
case the residential or commercial
property is put under construction in
future, and any issue emerges related to
ownership, legal backing can help in
proving your point.
CONCLUSION
The post-pandemic scenario has also transformed the face of the
Indian real estate market. More and more Indians are looking for a
place to settle in their home country and to be close to their
families. As such, there has been an instant hike in the NRI
investment in India, and a significant portion of this investment
relates to real estate. Additionally, putting their money in the real
estate channel converts the NRI’s hard-earned money into
investment income.

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NRI Investment in India 8 Points for NRI Investment in Real Estate

  • 2. India has been the land of golden opportunity for NRI investment in India. The straightforward paperwork and tax benefits have made property investment opportunities even more attractive. A significant reason why NRIs invest in Indian real estate is their yearning to settle back after retirement. It is like a contingency case. Recently the Indian government has also made the rules and regulations more investment friendly. It has attracted lots of attention toward Indian property, both residential and commercial. It is also said that the lenient policies might boost the Indian real estate market by $600 billion by the year 2025. The figures are proof of a more alluring real estate market for NRIs to buy property in India. Although there are multiple options for NRI investment in India, such as gold, stocks, mutual funds, direct equity, government securities, etc., real estate always tops the chart. An understanding of the know-how of the Indian economy and additional factors guide in investing in real estate in India.
  • 3. 8 FACTORS TO CONSIDER WHILE MAKING NRI INVESTMENT IN INDIA
  • 4. 1. KNOWLEDGE ABOUT THE PROPERTY According to the Foreign Exchange Management Act, “An NRI (Non-Resident Indian) or an OCI (Overseas Citizen of India) may acquire immovable property in India other than agricultural land/ farm house/ plantation property either by purchase or in the form of a gift.” NRIs should have complete knowledge of the type of property. If you’re a non-resident Indian, understand that you can purchase residential and commercial property. However, it is unlawful to invest in agricultural land, farmhouse, and plantation. Any NRI buying property in India can freely put their money into residential and commercial properties and in as many as they want.
  • 5. 2. DOCUMENTS NEEDED Any real estate investment requires a thorough check and alignment of the correct documents. These documents not only provide credibility but also help in establishing certainty. A piece of good news for NRI investment in India is the hassle-free documentation for the property. The paperwork is straightforward and requires a passport, address proof, permanent account number (PAN), and most recent photograph. The minimal documentation is one reason NRI investment in real estate is rising in India.
  • 6. 3. MODE OF PAYMENT The payment for the purchased property needs to be in Indian currency and as per the Indian Government Regulations. Consult the financial experts to know if this investment is taxable or not. One factor to keep in mind is that NRIs cannot use a traveller’s cheque or foreign currency for the purchase. These modes of payment do not come from permitted channels; hence, they cannot be used as a payment method.
  • 7. 4. HOME LOAN One advantage that even NRIs have is the availability of home loans. The procedure of NRI investment in Indian real estate has become simplified with this feature. However, the payment of 20% of the property value should be with their own money. For the remaining 80%, you can avail loan from a financial institution. Banks and financial institutions registered with the National Housing Bank can extend home loans to NRI for residential property, as per RBI guidelines.
  • 8. 5. RESEARCH Before delving into the paperwork and the payment procedure, every NRI should thoroughly research the property and its developer. You should perform a strict backcheck on the property. A few things you can probe into are the property’s location, quality of the infrastructure, goodwill of the developers and their reputation, the history of the developers, their testimonials, the social media presence, etc. A wise method for NRI investment in India is to make absolute use of the internet. You can also use the internet to enrich your knowledge of Indian real estate and the laws surrounding it.
  • 9. 6. TAX IMPLICATIONS AND BENEFITS As an NRI, it is difficult for individuals to acquire residential or commercial property in India without abiding by tax laws. If the sales consideration of the property exceeds ₹50 lakhs, a TDS of 1% is deducted from the income. If you sell the acquired property within 3 years of purchase, it is charged as short-term capital gains. When an NRI investment in Indian real estate exceeds 24 months, and they sell off the property, it is a long-term capital gain applicable for 30% TDS. NRIs enjoy multiple tax benefits relating to an investment in residential or commercial property in India. They also enjoy similar perks as an Indian citizen. NRIs claim a deduction of Rs. 1 Lakh under section 80 C of the Income Tax Act, 1961.
  • 10. 7. POWER OF ATTORNEY Since NRIs investing in Indian real estate reside abroad, it is not always possible for them to transit to and fro. In such cases, someone from the family, a relative or a friend can work as the representative. It is known as hiring power of attorney. Power of attorney legally binds a person to act on behalf of the buyer. The only factor to consider before appointing a power of attorney is to sign a contract with the person for law purposes.
  • 11. 8. LEGAL CLEARANCES Legal procedures can look hectic but are essential as well. It will include but will not be limited to only specific factors. It is crucial to establish the originality of the ownership deed, verification of property papers, clearance of outstanding bills, municipality clearances or any other dues. Legal backing and authorization will save you from future problems. For example, in case the residential or commercial property is put under construction in future, and any issue emerges related to ownership, legal backing can help in proving your point.
  • 12. CONCLUSION The post-pandemic scenario has also transformed the face of the Indian real estate market. More and more Indians are looking for a place to settle in their home country and to be close to their families. As such, there has been an instant hike in the NRI investment in India, and a significant portion of this investment relates to real estate. Additionally, putting their money in the real estate channel converts the NRI’s hard-earned money into investment income.