Buying property undeniably ranks as one of the greatest Indian dreams. So it does not matter which part of the world you live in; a home in India is simply a must. And the Indian laws, over the years, have made this a fairly easy job. The Reserve Bank of India governs such transactions and they fall under the purview of the Foreign Exchange Management Act (FEMA).
In this column, we give you a lowdown on all that you need to know if you are an NRI wanting to buy a property in India. To begin with, we need to understand the definition of non-resident Indian. Since property purchases are governed by FEMA, we need to go by the definition of NRI as stated in FEMA. According to FEMA, an NRI is a citizen of India who is resident outside India.
Now let us understand the rules and implications:
Can an NRI buy property in India?
Yes, a non-resident Indian can buy either a residential property or a commercial property in India. Further, there is no limit on the number of residential or commercial properties that an NRI can purchase in India.
Exception : An NRI however cannot buy agricultural land, plantation land or a farm house in India. He cannot even acquire such property as a gift.
There is however, no bar on inheriting such property.
Do you need RBI permission?
No. RBI permission is not required to buy residential or commercial property.
How to fund the purchase?
Payment for the purchase of property can be made either by way of funds remitted to India from abroad through regular banking channels or through the balance in the NRE, NRO or FCNR Account.
What income taxes are applicable on house properties in India?
According to the Indian Income Tax Act, if a person (resident or NRI) owns more than one house property, only one of them will be deemed as self-occupied. There will be no income tax on a self-occupied property. The other one, whether you rent it out or not, will be deemed to be given on rent. If you have not given the second property on rent, you will have to calculate deemed rental income on the second property (based on certain valuations prescribed by the income tax rules) and pay the tax thereof.