Published on: 15/Jan/2020
What is NRI investment in India and what documents NRIs need when selling a property are frequent questions on Quora. Fate or will may have canoed you overseas and given you the label of an NRI, but that does not distinguish you from any other regular Indians residing within the country’s borders, particularly when it comes to investing in real estate. Are you now prepared to begin real estate investing and become a real estate tycoon? Hold on. Is there not something you are overlooking? The documents. You should be aware that purchasing real estate in India necessitates the requirement of documents and completion of some paperwork before you embark.
Real estate investments are a source of foreign currency inflows in the Indian economy. The reformatory changes and simple guidelines set by the government of India have made investing in residential or commercial real estate in India for an NRI has become very convenient. In addition, the falling rupee, which is causing problems for the Indian government, has created an excellent opportunity for NRIs investments in real estate. NRIs must get informed of the documents required to complete the transaction. They must also follow the rules & procedures for NRI to invest in India.
But, firstly, where can NRIs invest in the Indian real estate market?
Where or how should an NRI invest in India? The properties listed below are available for NRI investment in India.
- Commercial Real Estate: This is one of the fastest-growing industries in terms of investment pooling. The investment potential of CRE has skyrocketed as commercialization and urbanization have spread throughout the country, particularly in metropolitan areas. NRIs choose this real estate property for investment through real estate platforms like Assetmonk, where individuals expand their commercial activities.
- Residential Real Estate: These are prominent among NRI investors who want to increase their wealth and generate assets to use when returning to India from jobs abroad. These houses are for rent, with the owner earning a steady income from deposits provided by tenants. Such investments get avoided by large-scale NRI investors because they have lower profit margins and higher maintenance costs than CRE.
- Agricultural Land: The Foreign Exchange Management Act of 1999 exempts NRIs from acquiring agricultural lands in India. If an NRI wishes to purchase agricultural land in India, they must follow a different request procedure with the RBI, and the acquisition is still questionable. There are many RBI guidelines for NRI investment in India in agricultural land.
- Farmhouse or Plantation Property: As with agricultural properties, NRIs are ineligible to purchase Farmhouse or Plantation property. However, there are some exceptions. When a person receives property as an inheritance, it can get requested as a property investment.
Now, what documents are needed by NRIs for buying real estate in India?
- Indian Passport, PIO Card, or an OCI Card: To invest in real estate in India, non-resident Indians (NRIs) must have an Indian passport. If you are not a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, or Bhutan; but have previously held an Indian passport, you will need a PIO (person of Indian origin) card. If you are a foreign citizen whose father or grandfather was an Indian citizen, you need a PIO card. In other words, if you have a foreign passport, you must have a PIO card. An overseas citizen of India (OCI) card is required for anyone who is not a citizen of India. But he was eligible to become one before or after partition (or the child of such a person). You can apply for these cards at the Indian embassy or consulate in your home country. You must present the birth certificates of your parents to prove you are an OCI or PIO.
- The PAN Card: NRIs need a PAN (permanent account number) card because they must file income tax returns if they rent out their property. Furthermore, if the property gets sold later, the capital gains from the sale will be subject to capital gains tax. While capital gains are taxed, they get included in total income.
- Power of Attorney (POA): As an NRI, you do not have to be physically present in India to complete the property transaction. Anyone with a Power of Attorney (PoA) to act can complete the formalities on your behalf. The document empowers an individual to act on behalf of the NRI named in the deed. The person who grants the power gets referred to as a Donor, Principle, or Grantor. A person who grants the right gets referred to as a Donee, Agent, or ‘Attorney. If you are an NRI who does not visit India frequently, giving power of attorney to someone in the city buying a property will make the registration, execution of the sale, possession, and other processes much easy. What is the procedure for executing a Power of Attorney (POA)? A power of attorney delegates authority to another person in India to complete the property transaction on your behalf. You must sign this POA in the presence of a consulate officer or notary public in your country of residence. They will also have to attest to it.
What are the documents needed by NRIs for applying for a home loan?
We now know that you, as an NRI, can invest in or purchase real estate in India. But how do you finance a real estate purchase if you do not have deep pockets? You can pay for your property with inward remittances or funds in a non-resident account. You could also get a home loan. NRIs can borrow up to 80% of the property’s value, depending on their eligibility. The loan will be granted in Indian rupees and disbursed in Indian rupees.
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If you are a salaried NRI looking to apply for a home loan, you will need two photographs and address proof for both the applicant and co-applicant. An address proof could be utility bills or a driver’s license. You must submit bank statements from your Non-Resident External (NRE) and; NRO (Non-Resident Ordinary) accounts in India for the previous six months.
You must also submit bank statements for the last six months from your account in the country where you work. It is the account to which your salary should be credited. You would also need copies of your employer’s salary statements, as well as copies of loan sanction letters obtained in India and abroad, as well as a self-declaration of residential status. These documents must be certified by the Indian embassy in your country of residence.
NRIs must provide the following documents to obtain a home loan:
- A photocopy of the Indian passport and visa
- If an Indian passport is unavailable, you may apply for a PIO card if you have a foreign passport.
- If your parents are Indian citizens, you can apply for an OCI card.
- Work permit, employment contract, appointment letter from your home country
- Payslips for the previous six months and the most recent salary certificate
- The most recent income tax returns
- Bank statement of the NRE and NRO accounts from the previous year.
- Report from the bureau of the residence of the country
- Attorney-in-fact (in case you are not in India for executing the purchase transaction)
Assetmonk is a high-quality investment portal where investors can find high-yielding real estate properties. The website for online investing acts as a portal for NRI real estate investments. It simplifies real estate investment procedures by providing high-quality real estate asset options throughout the country at reasonable prices. Also, it saves NRIs time from the time-consuming search for a property in India.