NRI

WELCOME TO MUMBAI'S REAL ESTATE GATEWAY FOR NRIS

Are you an NRI or PIO exploring real estate opportunities in Mumbai? Look no further than Churuwala Homes LLP, your trusted guide to navigating the dynamic and thriving real estate market in this vibrant city. Our dedicated NRI section is designed to provide you with comprehensive information, expert guidance, and personalized services tailored to your unique needs and preferences.

Non-resident Indians (NRIs) have been a significant segment of investors in the Indian real estate market, especially in Mumbai MMR. NRIs generally buy properties in India for investment purposes, out of their emotional connect with the country, and for settling back after retirement. India has emerged as a lucrative spot for international capital. According to a survey, almost 30% of the total global real estate transactions in India will be cross-border.

NRI DEFINITION ACCORDING TO FEMA:

“Person resident outside India” means a person who is not resident in India.
Person resident in India means one who resides in India for 182 days or more during the preceding financial year.

The following are exceptions to this rule:

• Persons going outside India for taking a job, carrying on a business or vocation, or for any other purpose for an uncertain period of time are considered as Non-Resident Indians, irrespective of their period of stay abroad.
• Persons coming to India for taking a job, carrying on a business or vocation, or for any other purpose for an uncertain period of time are considered as Resident in India, irrespective of the period of stay in India.

NRI DEFINITION ACCORDING TO INCOME TAX ACT:

An NRI is a person who is not resident in India. An individual is deemed to be a resident in India if:

• He/she is in India for a period of 182 days or more during the previous year; or
• He/she is in India for a period of 60 days or more during the previous year and 365 days or more during four years immediately preceding the previous year.

Overseas Citizen of India (OCI)

If you are not a citizen of India presently but were in the past or at least one of your parents / grandparents / great grandparents was an Indian citizen, or you are married to an Indian citizen / OCI, you can register as an OCI. You are eligible for certain privileges in India such as a lifelong multiple-entry visa.

NRI PROPERTY INVESTMENT IN INDIA – COMPLETE GUIDE

PROPERTY OWNERSHIP RULES APPLICABLE TO NRIs / OCIs

In order to attract more foreign investment, the Reserve Bank of India has made the rules simple for NRI investments. Real estate transactions fall under the purview of the Foreign Exchange Management Act (FEMA).

NRIs or person of Indian origin (PIO), as defined in FEMA and OCIs are allowed to acquire and own immovable property (other than agricultural land, plantation property or farm house) in India. This is under a general permission that has been given by the government of India. However, if you are a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran, Nepal or Bhutan (and such other countries as may be notified from time to time), you need prior permission from the Reserve Bank of India to acquire property in India. The basic conditions and restrictions on property ownership by NRIs / OCIs are laid down by the Foreign Exchange Management Act 1999 (FEMA).

For many Non-Resident Indians (NRIs), buying property in India is not just a financial decision — it’s an emotional one. Whether it’s securing a family home, creating a source of rental income, or building long-term wealth, India offers attractive opportunities for overseas investors. However, NRI property transactions are governed by specific rules under the Foreign Exchange Management Act (FEMA) and Reserve Bank of India (RBI) guidelines.

This guide covers everything NRIs need to know — from eligibility and documentation to taxation and repatriation — to make an informed and secure investment.

1. Why NRIs Invest in Indian Real Estate

• High Growth Potential – Rapid urban development and infrastructure expansion.
• Emotional Connection – Staying connected to roots and family.
• Favorable Exchange Rates – Lower cost in foreign currency terms.
• Steady Rental Income – Especially in metropolitan and IT hub cities.
• Regulatory Improvements – RERA ensures transparency.

2. What NRIs Can Buy in India

Under FEMA regulations, NRIs and PIOs are permitted to purchase:

• Residential properties (ready-to-move or under construction)
• Commercial properties
• NA Plot

Restrictions: Agricultural land, plantation property, and farmhouses cannot be purchased (except if inherited or received as a gift).

3. Modes of Payment

All payments for the property related transactions NRI'S/POI must be made in Indian Rupees (INR) through the funds remitted to India through normal banking channel :

• NRE (Non-Resident External) Account
• NRO (Non-Resident Ordinary) Account
• FCNR (Foreign Currency Non-Resident) Account

Payments cannot be made in foreign currency or traveler’s cheques directly and No payment can be made outside India.

4. Home Loans for NRIs

Like normal Indian citizens, NRIs/PIOs too can avail of home loans in Indian Rupees for their property purchases, up to 80% of the property value, depending upon individual eligibility. Such a loan can be repaid:

• By way of inward remittance through normal banking channels.
• By debit to his NRE / FCNR (B) / NRO account.
• Out of rental income from such property.
• By the borrower’s close relatives, as defined in Section 6 of the Companies Act, 1956, through their account in India, by crediting the borrower’s loan account.

A wide choice of home loans is available to NRIs to purchase their home. Each financial institution has its own set of rules and norms. Here is a general guide:

5. Home Loan Eligibility Criteria

You may be a salaried person or self-employed to avail a home loan. You can apply for a home loan either individually or with co-applicants who may or may not be co-owners of the property. However, all co-owners need to be co-applicants. You may opt for a housing loan for purchase of new homes, resale homes or to construct your home on a plot owned by you. You can also avail a loan for purchase of a plot, for home improvement and extension, or for refinancing your existing home loan availed from another financial institution in India.

6. Property Documents Required for Home Loan

The following documents are generally required when applying for a home loan. Please note that property documents may vary from bank to bank:

1. Registered Agreement for Sale
2. Stamp duty and registration receipts
3. Share Certificate in case of a registered cooperative housing society
4. Maintenance bill and payment receipt issued by the housing society/builder
5. Property tax bill and payment receipt
6. Allotment Letter from the flat owners society / Housing Board / Private builder
7. Payment receipts of all payments made for flat purchase
8. Approved building master plan and floor plan of the flat purchase
9. NOC from the Builder / Housing Society
10. Occupation certificate in case of a ready-to-move property
11. Detailed estimate of construction cost for a self-constructed home on a plot of land, along with the date by which to commence and complete the construction
12. Title certificate from Advocate
13. Commencement and completion certificate issued by the local body
14. Any other documents as may be required by the banks for loan sanctioning and verification

7. Documents Required for Home Loan

The following documents are generally required when applying for a home loan. Please note that loan documents may vary from bank to bank:

1. A valid Passport and Visa/Work Permit with visa stamp on the passport
2. Overseas and Indian Address Proof
3. Salary Certificate
4. Salary slips of last 3–6 months
5. PAN Card (Permanent Account Number) and Aadhaar Card
6. ITR acknowledgement for last 2–3 years with Form 26AS (for applicants filing IT returns in India)
7. ITR of last 2–3 years filed in the overseas country
8. A copy of overseas Social Security Card
9. Proof of employment by the Government of the residing country (e.g., work permit, labor contract)
10. NRE/NRO/FCNR Bank Account details
11. Bank statements of past 6 months of all indigenous and NRO/NRE bank accounts maintained in India and overseas
12. Educational qualification certificates of the applicant and all co-applicants
13. Recent passport-size photographs
14. A copy of the property allotment letter / registered agreement

8. Home Loan Process

To apply for a home loan, you need to submit a duly filled home loan application form along with the necessary documents to the lender, either directly or through a Power of Attorney (POA) holder. The process generally involves the following steps:

1. Application Submission – Filled and signed loan application with all required documents.
2. Processing Fee Payment – Usually 0.25%–0.50% of the loan amount.
3. Verification & Credit Assessment – Lender verifies documents, credit score, past repayment records, and current repayment capacity of the borrower.
4. Sanction Letter – Issued if approved, stating loan amount, interest rate, tenure, and other terms & conditions.
5. Legal & Technical Evaluation – Property documents are verified, and valuation reports are obtained from empanelled valuers.
6. Loan Agreement & Disbursement – Funds are released to the reseller/developer in lump sum (for resale/ready property) or in stages (for under-construction property).

9. Power of Attorney (PoA)

It is desirable to appoint any of any relativs or a trusted person as the Power of Attorney (POA) holder in India. The POA holder would be entitled to act on behalf of you as per the authority provided under the POA contents and your physical presence need not be required at all times for processing/facilitating your home loan. PoA can be General or Specific, depending on the purpose and it should be notarized or attested by the Indian Embassy or Consulate in the resident country.

10. Maximum Loan Amount

Typically between 75% and 90% of the property cost is given as a loan. The balance would be your own contribution.

11. Tenure

You can avail a maximum term of up to 20 years depending on your profile like your age at maturity of loan, age of property at loan maturity and other terms.

12. Interest Rate

You may opt for an adjustable rate home loan or a fixed rate loan (where the interest rate is fixed for 2 or 3 years, post which the loan will automatically convert to an adjustable rate, adding up to a total term of 20 years). Interest rates as applicable would be levied on the disbursed loan.

13. Repayment of Housing Loan

If you plan to buy an under-construction property, you need to pay only the interest till its completion after which you can start your EMIs. However, if you wish to start repaying your principal too, you may opt to tranche the loan and start paying the full EMIs. While purchasing a fully constructed property, your EMIs would commence immediately. All EMI payments need to necessarily happen through your NRE/NRO bank account in India. There is no penalty for pre-payment of partial or full value of the outstanding loan amount paid from own sources. However your home loan may attract prepayment charges in case you are refinancing it to another financial institution in India.

14. Tax Benefits

You are eligible to a tax deduction on interest paid and loan repayment on your home loan under the Income tax Act 1961 if you are an NRI as per the income tax definition and file your income tax returns in India.

• Section 80C:Deduction up to Rs 1.5 lakh/year on principal repayment along with deduction allowable under Section 80CCC and Section 80 CCD subject to the terms and conditions that the house property should not be sold within five years of possession. Otherwise, the deduction claimed earlier will be added back to your income in the year of sale. Deduction for stamp duty, registration charges and other expenses for the purpose of transfer of the house can also be claimed under Section 80C but within the overall limit of Rs 1.5 lakh. This deduction is not available if the taxpayer files his return under the new regime.
• Section 24(b): Deduction up to Rs 2 lakh/year on interest payment (self-occupied property). Interest under section 24 need not be actually paid to claim the deduction. As soon as the interest falls due for a financial year, deduction can be claimed. The following are the provisions of the Income tax Act 1961 related to deduction of interest on a home loan:

15. Change in Status from NRI to Resident

In case you return to India permanently, which changes your status from Non Resident Indian to Resident Indian, the lender may reassess your loan eligibility and repayment capacity and work out a revised repayment schedule. However there is no major impact as a resident has unfettered freedom to acquire property in India. A minor change in the tax benefit would be the possibility of treatment of one home as self-occupied.

• NRIs can avail home loans from Indian banks, subject to eligibility criteria.
• Loans are sanctioned in INR and repaid through NRE/NRO/FCNR accounts.
• The tenure is generally shorter compared to resident Indians.
• Proper documentation and creditworthiness are mandatory.

16. Tax Implications While Purchasing

• Stamp Duty & Registration (state-specific)
• TDS at 1% if property value exceeds ₹50 lakh

17. TDS on Property Sale by NRI

Buyers must deduct TDS under Section 195. TDS depends on capital gains and may range from 20% – 30%+ with surcharge/cess. (Unlike residents where TDS is a flat 1%).

🧾 Applicable TDS Rates for NRI Sellers

⚠ Important: TDS is deducted on the entire sale value, not just on the gain, unless a lower deduction certificate is obtained from the Income Tax Department.

👤 Responsibility of the Buyer

• Buyer must deduct TDS at the applicable rate and deposit it with the Income Tax Department.
• Buyer must obtain a TAN (Tax Deduction Account Number) (mandatory for NRI property purchases).
• TDS must be deposited using Form 27Q.

🧾 Steps to Comply with TDS on NRI Property Sale

📉 Can an NRI Avoid High TDS?

Yes, through the Lower Deduction Certificate (LDC) process:

• NRI seller can apply for a certificate under Section 197 of the Income Tax Act.
• If approved, buyer deducts TDS only on the capital gain (not the entire sale value).
• This prevents cash-flow blockage and speeds up the transaction.
• Timeframe: Apply at least 30–45 days before the date of sale.

🏠 On Rental Income

Rental income earned by an NRI is taxable in India and may also need to be reported in the country of residence, depending on the provisions of the DTAA (Double Taxation Avoidance Agreement).

18. Repatriation of Funds

RBI allows NRIs to repatriate sale proceeds of up to two residential properties, provided:

• The property was purchased through NRE/FCNR accounts.
• Funds are repatriated within prescribed limits (currently up to USD 1 million per financial year, including other assets).

19. Compliance under the Real Estate (Regulation and Development) Act, 2016 (RERA)

• Developers must register their projects with RERA before selling. Verify the property on the official RERA portal for your state.
• Check details of any complaints, defaults, or disputes against the developer.
• Real estate agents must be registered with RERA to operate legally, and renew their license every 5 years.
• A regulatory body ensures standard processes and penalizes violators, protecting buyers.

20. Due Diligence Before Buying a Property in India by an NRI

1. Research & Shortlist – Identify location, budget, and property type.
2. Verify Title & RERA Registration – Ensure property is free from disputes.
3. Check Approvals – Confirm construction-related approvals are procured.
4. Check Developer Reputation – Review past delivery records.
5. Arrange Finances – Ensure funds via NRE/NRO accounts.
6. Execute Agreement – Sign Sale Agreement & pay booking amount.
7. Pay Taxes & Duties – Complete stamp duty & registration.
8. Take Possession – Collect all handover documents.
9. Occupancy Certificate – Mandatory before property use; absence risks penalties/demolition.
10. ROI Consideration – Factor in rental yield, resale potential, infrastructure, and connectivity.

21. Land-use Permissions

Buyers must examine the Master Plan and confirm that the property complies with the zoning plan (residential, commercial, industrial, etc.).

If actual use differs, Town Planning Authority approval for change of land use is mandatory.

22. Key Legal Checklist for Buying a Resale Property

1. Check seller’s residence status & nationality, and government consents if required.
2. Verify seller’s identity proof (Aadhaar, PAN, etc.).
3. For entities (company, trust, etc.) check constitution documents & authorization for sale.
4. If seller is a minor or unsound, obtain court order & guardian appointment.
5. Review any restrictions/conditions on property transfer.
6. Obtain property tax payment proof.
7. Collect utility bill receipts.
8. For land: conduct a survey & demarcate boundaries.
9. Request loan closure letter & original property docs from bank.
10. Check for sanctioned building plan.
11. Obtain Completion Certificate (CC) / Occupancy Certificate (OC).
12. Collect Possession Letter from developer.
13. Verify Society dues clearance.
14. Search for encumbrances via Sub-Registrar Office or online portals (MCA, State Stamp & Registration).

23. Precautions NRIs Should Take

• Verify all property documents thoroughly.
• Confirm compliance with local building laws.
• Check RERA registration for under-construction projects.
• Understand tax obligations in India & abroad.
• Use only official banking channels for transactions.

24. Frequently Asked Questions

Q: Can an NRI buy property jointly with a resident Indian?
Yes, but the property must comply with FEMA rules.

Q: Do I need to visit India for property registration?
No, it can be done via Power of Attorney.

Q: Can I rent out my property in India?
Yes, NRIs can rent property and remit income abroad after paying applicable taxes.

25. Conclusion

NRI investment in Indian real estate offers both financial growth and emotional satisfaction. By understanding rules, tax implications, and processes, NRIs can make profitable, legally compliant investments.

Embark on a journey with Churuwala Homes LLP – explore exclusive deals, streamline transactions, and unlock Mumbai’s real estate potential. Your dream property awaits!