Best Investment options in India in 2022 for NRIs’ include fixed deposits, Mutual Funds, Direct Equity, REAL ESTATE, NCDs, Government Securities, certificate Deposits, NPS (National Pension Scheme), Fixed Deposits, Equity Investments, . Amongst the above mentioned, the best option is ‘Real Estate’ and the key strategies to implement to invest in a property being an NRI.
Property investment holds a major share in the NRI portfolio. Many NRIs who have relocated to foreign countries look at India as the right destination for investments. The country is a hot destination for many investors due to its propelling economy as well as a high return on investment. NRIs show a keen interest in property investments in the country and are very optimistic about the future real estate market in the country.
Reasons why NRIs should invest in India
Post pandemic, the Indian real estate market is resurgent. The pent-down demand for property purchases has begun to surge, and the economy will continue to flourish in the near future. The appreciation in the property price will bring a better return on investment for NRIs, and there are many new NRI investment options apart from buying a home or commercial space. The investment options could be fractional ownership of land, coworking space and warehouse.
Other investment options like FDs and gold equity give fewer returns on the investment. You get an interest rate of 4-5% on these investment options, which is only equal to the inflation rate. Investment in real estate is a lucrative option for NRIs. The booming real estate in the major cities of India is encouraging the NRIs to invest in the real estate market as they could generate good returns on investment in the long term and ensure the right interest on investment intact. If you have small funds and looking for best investment options in India other than real estate, you can invest mutual fund through any beneficial app for NRI.
NRIs also are interested in parking their surplus funds in the Indian real estate sector due to the simplified tax regime in the country. The NRI holding property in India for more than two years gets an indexation benefit. There are multiple options for NRIs to transfer money to the seller account on a property purchase to conduct a transaction in a hassle-free manner.
Key Strategies NRIs should know before investing
Buying a property in India – Best investment options in india
The RBI directive for NRI investment in a property purchase is a welcome relief for the buyers, and there are a few changes in the foreign exchange laws under FEMA. Real estate investment in India is still a sensible option for NRIs as they wish to settle in the country after retirement. Real estate investments in India offer more viability to investors compared to global markets.
Types of properties that can be invested
NRIs have a few restrictions on the type of properties they could purchase in India. One can purchase immovable properties like a residential project or commercial space, but one cannot invest in plantation land or agricultural land and farmhouses without permission from the government. If they are investing in commercial or residential properties, they can inform RBI about the transaction after completing it successfully. The government does not have a cap on the number of properties that could be invested in India as NRI.
Funding and financing the purchase
An NRI buying the property in India has to conduct a financial transaction through proper channels. The remittance for the property purchase has to be made through foreign banking channels or through the money deposited in NRO/NRE accounts. One can not make payments to the seller in foreign currency or traveller cheque. You can also choose to go with financing options like home loans from Indian banks to purchase the property in the country. An Indian employer can grant a home loan for NRI investment to purchase a property here.
Repaying home loan
If you have chosen financing options like a home loan to purchase immovable property in India, you should take the home loan in Indian currency and manage the repayments in the same currency as well. You can make the repayments directly through foreign remittances or the money deposited in NRO/NRE accounts. If you have rented the immovable property, the rents received can be adjusted towards EMI payments of the loan. The borrower can also adjust the money for loan EMI by transferring the funds to the relative’s account. If the property is purchased for self-occupancy, one can take a loan against deposits in NRE/ NRO account to the maximum cap limit of 100 lakhs.
Property ownership
An NRI can purchase property in his name or in joint ownership with another NRI. The NRI investment cannot purchase a property in joint ownership with the Indian residents in spite of them not investing any money in the property purchase. Resident Indians are not allowed to invest a part in the property purchased by NRIs claiming the ownership.
Ownership becoming post-NRI
Many employees accept the job offers abroad and become NRIs thereafter. They are mainly concerned about the properties they already own in the country. There is no big change in this regard. Your ownership of the property continues to remain the same in future. A resident Indian becoming NRI can purchase any property in his name because it is very complex to purchase it later. Any NRI can rent the property in India without prior permission from RBI.
How are NRIs taxed in India for their real-estate investments?
Eligibility
Even NRI can choose financing options like home loans to purchase a property in India. All the eligible can get the loan up to 80% of the property value.
Taxation on profits generated through real estate investments
Rental income
The rental income generated from the property in India is categorized as income accrued in the country and is taxable NRI investment irrespective of the residential status.
Short-term capital gains
The profits generated through short-term investments are considered short-term capital gains. If NRI is selling the property within two years of purchase, the profits generated through the sale are categorized for short-term gains and are taxed as per specific tax slabs of NRI.
Long term capital gains
Long-term capital gains can be earned through the property if the property is sold after holding it for more than 24 months. The long-term NRI investments are taxed at 20%, and the NRIs also can claim tax exemption under sections 54, 54 F and 54 EC.
Conclusion
The topic discusses the few best investment options in India, emphasising how real estate can be one of the best, with a focus on the strategies.
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