5 Things NRIs Should Know Before Buying Property in India
Many Non-Resident Indians (NRIs) plan to invest or buy properties in India for several reasons, including easy home loans, supportive government and a strong emotional connection to their homeland. If you are an NRI seeking more information on buying property in India, then here are 5 things you should know.
5 Things NRIs to Know Before Buying Property
1) Key Requirements for NRIs
NRIs must be familiar with FEMA and RBI guidelines. NRI investments in India are governed by the Foreign Exchange Management Act (FEMA). They can buy commercial and residential properties but are restricted from buying agricultural lands and plantations except if they are inherited or gifted.
NRIs are also required to have a valid PAN card for tax purposes. additionally, their NRI status should be verified by a certificate.
2) Power Of Attorney (PoA) Rule for NRIs
Giving Power of Attorney to a local Indian resident is recommended as NRIs cannot visit India to manage the transactions related to property purchase. A PoA gives authority to a third person (such as a family member or legal representative) who represents them in legal procedures like registrations, property purchases, sales and home loan formalities.
Getting a PoA becomes more important if you are financing your property with a home loan. It saves your time and avoids any problems arising during the purchase of properties. A PoA must be registered and notarised as per Indian laws to become valid. It is suggested to consider a specific POA, which gives limited authority as compared to a general POA to minimise risk.
3) Financing Alternatives for NRIs
NRIs are also eligible for house loans from Indian banks to buy property in India, with financing options up to 85% of the property and a repayment period of 10 to 20 years. NRIs must meet some specific criteria set by Indian institutions, including employment abroad and income level.
All banks have specific rules about home loans for NRIs. The repayment of home loans can be done only with Indian Rupees, either by NRE or NRO accounts. To make the payment, NRIs can fully pay without a home loan which they can remit money using authorised banking channels. They can also pay from their Non-Resident External/ Non-Resident Ordinary account (NRE/NRO) or they can use a Foreign Currency Non-Resident account (FCNR). It should be noted that NRIs cannot pay through traveller’s cheque and foreign currency.
4) Provision on Purchasing Several Properties for NRIs
The Union Budget 2025 allows individuals to choose any two properties as self-occupied without any conditions, which means taxpayers are exempted from paying tax on additional property used for personal purposes.
5) Tax Implications for NRIs
If an NRI purchases property from an Indian resident, TDS must be deducted at a rate of 1% if the sale consideration exceeds Rs.50 lakh. NRIs can also apply for TDS exemption or deduction. This deduction is made by the buyer and is deposited to the income tax department.
