A Non-Resident Indian wishing to buy a flat in Royal Grande in Pune may want to have a look at some of the rules governing NRI investment in real estate. The Indian real estate sector has undergone several changes in the recent past, and currently, many NRIs hold many properties in the country.
Many attractive properties are coming up in Pune, one of them being Royal Grande Wakad.
Restriction on farmland
In order to make real estate investment in India lucrative for NRIs, the Reserve Bank of India has made several amendments in the Foreign Exchange Management Act. Any NRI can buy property in India for residential and investment purposes. However, no NRI can buy farmland, agricultural land, farmhouse or plantation.
Restriction on the following countries
Citizens of Sri Lanka, Bangladesh, Nepal, Bhutan, Afghanistan, Iran and China cannot acquire any immovable property in India. However, citizens of these countries can take land on lease for 5 years subject to the approval from the Reserve Bank of India.
Where can NRIs invest?
If you are an NRI, you could invest in residential property like the Royal Grande Wakad as per the RBI rules. You may also buy a commercial property in India. Since buying plantations, agricultural and farm land is not permitted. NRIs can be eligible to own such properties if these are gifted to them or if they have inherited them.
How can NRIs make financial transactions while buying properties?
There are a few rules governing property transactions in the case of Non-Resident Indians. These are:
- NRIs can remit funds through normal banking channels.
- They can also use their NRE/ FCNR (B) / NRO accounts maintained in India while buying a flat in Pune or any other Indian city.
- Travellers cheques and foreign currency are not permissible while buying property in India.
- If any developer of an upcoming project in Pune approaches you to make overseas payment, you should avoid it. RBI rules expressly prohibit overseas payments.
Loan eligibility for NRIs
NRIs can benefit from various lending products offered by several banks and non-banking financial companies. As an NRI, you could pick up home loans up to Rs. 3.5 crores from organisations like Bajaj Housing Finance Limited. These loans can be paid in 20 years. Buying a flat in Royal Grande in Pune has never been easier.
However, you may want to consider loan eligibility conditions for NRIs. These include:
- A borrower can pay off his home loan through an India-based account of his relatives. This manner of payment is allowed under Section 6 of the Companies Act.
- An NRI borrower can make inward remittances through normal banking channels.
- He can pay off the loan by remitting money to his NRE/NRO or FCNR(B) account.
- As an NRI, you could also consider paying off your home loan through rental income.
How are NRI investments taxed?
Since NRI investments are considered assets, taxes are also calculated accordingly. Here are some factors to consider:
- Your rental income is taxable.
- If you sell your property within two years of its purchase, the sale proceeds attract short term capital gains. It is a good idea to check the applicable NRI income tax slab for calculating your tax liability.
- If an NRI holds his real estate property for more than two years, its sale attracts Long Term Capital Gains Tax. However, you can claim exemptions under Sections 54, 54 F and 54 EC. However, you may want to check with your financial advisor about the current Income Tax rules regarding NRI investments in Indian real estate.
To sum up, if as an NRI you are considering investing in Royal Grande Wakad, it is a good idea to acquaint yourself with the recent RBI and Income Tax rules. NRIs, like other Indian citizens can avail of bank loans while buying a flat in Royal Grande. Loans are available up to Rs. 3.5 crores and can be paid in 20 years. When you sell your property in India, your profit may be subject to individual taxes like Short Term and Long-Term Capital Gains.