FAQ’s For NRI
Here are 10 frequently asked questions (FAQs) tailored for Indian Non-Resident Indians (NRIs) regarding the acquisition and transfer of immovable property in India, based on current scenarios, laws, and regulations:
1. Can an NRI buy property in India?
Yes, an NRI can buy immovable property in India. As per the Reserve Bank of India (RBI) guidelines, NRIs are allowed to purchase residential or commercial property in India. However, they cannot purchase agricultural land, plantation property, or farmhouses.
2. Are there any restrictions on the type of property an NRI can buy in India?
NRIs can acquire residential or commercial property in India without restrictions. However, they are prohibited from purchasing agricultural land, plantation property, or farmhouses. Additionally, NRIs need to ensure that the property is acquired under the guidelines specified by the Foreign Exchange Management Act (FEMA).
3. What are the documents required for an NRI to acquire property in India?
The essential documents required for NRIs to acquire property in India include:
- A valid passport.
- Proof of NRI status (e.g., a copy of the visa or employment certificate).
- Permanent Account Number (PAN) card.
- Address proof (either in India or abroad).
- A completed application to the local Registrar for property registration.
4. How can an NRI fund the purchase of property in India?
NRIs can finance the purchase of property in India through:
- Their own funds, which can be transferred from their NRE or NRO accounts.
- Home loans from Indian banks. NRIs can avail home loans from banks in India, with terms varying based on the bank’s policies. The loan repayment must be made in Indian Rupees through an NRE, NRO, or Foreign Currency Non-Resident (FCNR) account.
5. Is it necessary for an NRI to have a local representative to buy property in India?
No, it is not mandatory for an NRI to have a local representative for purchasing property in India. However, many NRIs appoint a trusted person with a Power of Attorney (PoA) to handle property-related matters, especially if they are unable to be present physically in India.
6. Can an NRI transfer property in India to a family member?
Yes, NRIs can transfer property to a family member by way of sale, gift, or inheritance. For a sale or gift transaction, the property transfer must adhere to the legal framework under FEMA and Indian property laws. In the case of inheritance, NRIs can inherit property from family members, provided they comply with the applicable succession laws in India.
7. Are there any taxes applicable on property transactions for NRIs in India?
Yes, NRIs are subject to taxes on property transactions in India. The taxes involved include:
- Stamp Duty: Applicable at the time of property registration, which varies by state.
- Capital Gains Tax: If an NRI sells property, capital gains tax applies. Short-term capital gains (if the property is sold within 2 years) are taxed at 30%, while long-term capital gains (if the property is held for more than 2 years) are taxed at 20% with indexation benefits.
- Income Tax: If the property is rented out, the rental income is subject to income tax, which can be adjusted through deductions like maintenance expenses.
8. Can an NRI sell property in India?
Yes, an NRI can sell property in India. The sale of property should comply with FEMA and other Indian property laws. The transaction must be registered with the local sub-registrar, and the payment for the sale must be made through the NRE or NRO account. If the sale generates capital gains, the NRI is liable to pay capital gains tax.
9. What happens if an NRI inherits property in India?
When an NRI inherits property in India, they are subject to the same inheritance laws as Indian residents. The process of inheriting property involves obtaining a legal heir certificate and registering the property under the NRI’s name. Additionally, there may be inheritance taxes, depending on the value of the property and the applicable state laws.
10. Are there any special tax benefits for NRIs related to property ownership in India?
NRIs are eligible for certain tax deductions related to property ownership in India, including deductions on home loan interest under Section 24 of the Income Tax Act. However, NRIs must file tax returns in India to avail of these deductions, even if they do not have income in India. NRIs must also ensure that their property complies with local property tax regulations.
