With RERA in place and GST rolled out across the nation the real estate sector has been streamlined and it has become more transparent than ever. This has, in the process, reinforced the confidence of NRIs in the Indian real estate sector. There is huge opportunity for NRIs who want to invest in their native country. This is also part of giving back to their motherland. Property buying is largely a long-term investment decision and NRI's decision to invest back home is more towards their retirement years. NRIs investing back home are always abreast with all the development in the Indian market right from financial conditions to growth story, to real estate rules making Indian market conducive for investing. Recent developments in the Indian real estate market such as RERA, GST, Benami Act, REIT, FEMA and government initiatives like demonetization have been steps in the right direction of the present government, resulting in NRI sentiment turning positive from negative, thereby attracting investments into the Indian real estate. NRIs investing back home should be well versed with Indian real estate rules and regulations, country laws, banking account and home loans, down payment rules, RBI interest rate schemes and power of attorney. This would help them go in the right direction.
Tax benefits:
1. Indian resident staying abroad is entitled and enjoys almost similar tax benefits which a normal citizen would enjoy when it comes to investment in property.
2. The government of India allows a deduction of Rs. 1 lakh under section 80 C of the Income Tax Act, 1961 for NRIs investing in Indian real estate.
3. On selling of property within three years of purchase, which is a short-term capital gain NRIs have to pay required taxes on the capital gain.
4. If the NRIs sell their property after three years they have the option of reducing long-term capital gains tax by investing in another property.
5. NRIs need no permission from RBI to buy residential or commercial property in India.
6. NRIs need no permission from RBI to buy immovable property for residing purpose in India.
7. There are no rules guiding transactions of this sort under the ambit of the Foreign Exchange Management Act (FEMA).
8. There is no restriction on the number of properties than can be invested in.
9. However, a NRI cannot buy agricultural land, farm house and plantation property. They can own such property only it if is inherited or gifted to the NRI.
10. If you are buying property that is under construction you may have to give your developer or a trusted associate a power of attorney.