Source: Hindustan Times ( https://bit.ly/4kDRzYV )

Many Non-Resident Indians (NRIs) look to invest in properties back home, driven by favorable government policies, easier access to home loans, and a strong emotional connection to their homeland. If you’re an NRI planning to invest in property in India, here’s what you need to know.

1.Basic Requirements

When buying a property in India, NRIs need to understand FEMA and RBI guidelines. “The Foreign Exchange Management Act (FEMA) governs NRI investments in India. While commercial and residential investments can be made, investments in agricultural land and plantations are restricted,” says Deepak Mishra, Director, Residential Transaction Services at Colliers India, a real estate services company. Under construction property should be registered with the Real Estate Regulatory Authority (RERA). NRIs also need to ensure that such properties are pre-approved by national banks for loans. NRIs should also ensure that the title of the property is clean and duly verified.
It is also crucial for NRIs to have a valid PAN card, as it is required for tax and financial purposes.

2.Financing Options

Indian banks allow NRIs to obtain home loans by issuing financing worth 80-85% of the property value during a 10 to 20-year period. Indian institutions have specific rules about home loans for NRIs that set requirements regarding employment abroad and income levels.

3.Power Of Attorney

Granting a Power of Attorney (PoA) is highly recommended for NRIs, especially if they cannot be physically present in India to manage real estate transactions.

4.Buying Multiple Properties

For self-occupied properties, the annual value is typically treated as zero, meaning taxpayers are exempt from paying tax on potential rental income from the property or if the property is left vacant.

5.Tax Matters

“When an NRI buys property from a resident Indian, Tax Deducted at Source (TDS) is deducted at 1% of the sale consideration if it exceeds ₹50 lakh,” says Mishra. However, NRIs can apply for reduced TDS or TDS exemption. This needs to be deducted by the buyer and deposited with the income tax department.