NRI Property Purchase: The Basics
Non-Resident Indians can freely purchase residential and commercial property in India under the Foreign Exchange Management Act (FEMA). However, agricultural land, plantation property, and farmhouses require special RBI approval. Understanding the process and documentation requirements is crucial for a smooth transaction.
Essential Documentation
1. Power of Attorney (PoA)
If you cannot be present for registration, execute a PoA in favour of a trusted family member or legal representative. The PoA must be notarised by the Indian consulate in your country of residence and adjudicated in India.
2. PAN Card and Aadhaar
A PAN card is mandatory for property transactions above ₹10 lakh. While Aadhaar is not mandatory for NRIs, having one simplifies the process. Apply through the Indian consulate if needed.
3. NRE/NRO Account
Property purchases must be funded through an NRE (Non-Resident External) or NRO (Non-Resident Ordinary) account. Repatriation of sale proceeds follows different rules for each account type.
Home Loan Options for NRIs
- Most Indian banks offer NRI home loans at rates similar to resident Indians
- Loan tenure typically capped at the borrower's retirement age or 60 years
- Loan-to-value ratio usually 75-80% of property value
- Income proof from overseas employer required along with latest tax returns
Tax Implications
- TDS at 20% (with indexation) for long-term capital gains on property sale
- Rental income taxed at applicable slab rates
- Section 54/54EC exemptions available for reinvestment of capital gains
- DTAA benefits available depending on country of residence
