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NRI Booking Process

Guide for Non-Resident Indians (NRIs) & Overseas Citizens of India (OCIs) on Buying Property in India

Introduction:

India has always been an attractive destination for Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs) looking to invest in real estate. Whether for personal use, investment, or future relocation, purchasing property in India involves certain legal and financial compliance requirements. This guide provides an overview of the process and the key regulations governing property transactions for NRIs and OCIs.

Eligibility to Buy Property in India

NRIs and OCIs are allowed to purchase both residential and commercial properties in India. However, there are certain restrictions:

  • Agricultural land, plantation property, and farmhousescannot be purchased but can be inherited or received as a gift.
  • Property purchases must comply with the Foreign Exchange Management Act (FEMA) regulations.

Requirement of OCI Card

  • An Overseas Citizen of India (OCI) card is not mandatory to buy property in India but is highly recommended as proof of status.
  • OCIs must ensure they comply with FEMA guidelines while purchasing property.
  • OCI cardholders can buy and sell property in India under the same regulations as NRIs.
  • To apply for an OCI card, visit: https://ociservices.gov.in

Financial Compliance & Funding the Purchase

NRIs and OCIs can fund their property purchases in India through the following means:

  1. Payment Methods
    • Payments must be made through banking channelsin India using normal banking procedures.
    • Funds should be remitted from abroad through NRE (Non-Resident External) or NRO (Non-Resident Ordinary) accounts.
    • International credit cards cannot be used for property purchases.
  1. Home Loan for NRIs & OCIs
  • NRIs and OCIs can avail home loans from Indian banks registered with the Reserve Bank of India (RBI).
  • The loan amount is generally restricted to 80% of the property value, with the remaining balance to be self-financed.
  • Repayment must be made through NRO/NRE accountsor by rental income earned in India.

Taxation & Repatriation of Funds

  1. Tax Implications
  • Stamp Duty & Registration Charges: Varies by state, typically 5-7% of the property value.
  • Capital Gains Tax: Short-term gains (held for less than 2 years) are taxed as per the applicable income tax slab, while long-term gains (held for more than 2 years) attract a 20% tax with indexation benefits.
  • Rental Income Tax: If the property is rented out, the income earned is taxable in India.

 

  1. Repatriation of Sale Proceeds
  • The sale proceeds of a property can be repatriated under certain conditions:
  • The property was purchased following FEMA guidelines.
  • The amount repatriated does not exceed the original investment in foreign exchange.
  • A maximum of USD 1 million per financial yearcan be repatriated.

Legal Compliance & Documentation

  • Title Deed & Property Documents: Ensure clear title and ownership history.
  • Encumbrance Certificate: Confirms that the property has no legal dues.
  • Sale Agreement & Sale Deed: Properly drafted and registered with local authorities.
  • PAN Card: Required for tax transactions in India.

Useful Links

Conclusion

Purchasing property in India as an NRI or OCI is a lucrative investment, but it is crucial to comply with the legal and financial regulations. Consulting a qualified real estate lawyer and tax expert is highly recommended to ensure a smooth transaction. For further assistance, feel free to contact us!

For inquiries, reach out to us at 9832398323

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