NRI (Non-Resident Indian), can buy residential or commercial property in India- An Investo Knowhow

As an NRI (Non-Resident Indian), you can buy residential or commercial property in India, except for agricultural land, plantation property, or farmhouses. Here’s a step-by-step guide on the procedure and required documents for purchasing a plot or apartment in India.

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Step-by-Step Procedure for NRIs Buying Property in India

1. Choose the Property

• Decide whether you want to buy a plot, apartment, or under-construction property.
• Verify the developer’s reputation (for apartments) or land title (for plots).
• Ensure the property has clear titles and no legal disputes.

2. Hire a Lawyer for Due Diligence

• Engage a local property lawyer to verify:
  • Title deed (ownership documents)
  • Encumbrance certificate (no pending loans/mortgages)
  • Approved layout plan (for plots)
  • RERA registration (for under-construction properties)
  • No objection certificates (NOCs) from relevant authorities.

3. Execute the Sale Agreement

• Sign a Sale Agreement (for under-construction properties) or Sale Deed (for ready properties).
• Pay the advance/booking amount (usually 10-30% of property value).

4. Secure Financing (If Required)

• NRIs can get home loans in India from banks/NBFCs.
• Required documents:
  • Passport & Visa copy
  • PAN card
  • Salary slips/bank statements (if employed abroad)
  • Power of Attorney (if applicable)

5. Make Payment

• Payments must be made in Indian Rupees (INR) through:
  • NRE (Non-Resident External) Account (tax-free repatriation)
  • NRO (Non-Resident Ordinary) Account (taxable, but allows property purchase)
  • Foreign Inward Remittance Certificate (FIRC) is required for foreign funds.

6. Register the Property

• Registration is mandatory under the Indian Registration Act, 1908.
• Visit the Sub-Registrar’s Office with:
  • Original Sale Deed
  • Passport copies (attested)
  • PAN card
  • Passport-sized photographs
  • Payment receipts
• Pay stamp duty & registration fees (varies by state, usually 5-8% of property value).

7. Mutation of Property

• After registration, apply for mutation (updating municipal records in your name).
• Required for property tax payments.

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Key Documents Required for NRIs Buying Property in India

1. Identity & Address Proof

• Passport copy (attested by Indian Embassy/Notary)
• Overseas Address Proof (Utility bill/Driving License)
• PAN Card (Mandatory for property registration)

1. Property Documents

• Title Deed (in seller’s name)
• Encumbrance Certificate (last 30 years)
• Approved Building Plan (for apartments)
• RERA Certificate (for under-construction properties)
• NOCs (Society, Municipal, Pollution, etc.)

1. Payment & Tax Documents

• FIRC (Foreign Inward Remittance Certificate) for foreign funds
• Bank statements (NRE/NRO account)
• TDS Certificate (if applicable, usually 1% for property > ₹50 lakhs)

1. Legal & Registration Documents

• Sale Agreement/Sale Deed (drafted by lawyer)
• Power of Attorney (if buying through a representative)
• Stamp Duty & Registration Receipts

1. Additional Documents (If Taking a Home Loan)

• Loan approval letter
• Employment proof & salary slips
• NRI status proof (Visa copy)

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Important Points for NRIs

✔ Repatriation of Sale Proceeds – NRIs can repatriate up to $1 million per financial year from the sale of property, provided they meet certain conditions (property was bought in foreign currency or from NRE funds).
✔ Tax Implications – Capital gains tax applies on property sale (Long-term: 20% if held >2 years; Short-term: as per income slab).
✔ Power of Attorney (PoA) – If you cannot be present in India, appoint a trusted person via PoA (notarized & apostilled).
✔ Rental Income – Taxable in India; must file ITR if rental income exceeds ₹2.5 lakh/year.

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Final Steps After Purchase

• Update KYC with the housing society/municipal corporation.
• Consider property insurance for protection.
• If renting out, comply with TDS on rent (if rent exceeds ₹50,000/month).

By following these steps and ensuring proper documentation, NRIs can smoothly purchase property in India. It’s advisable to consult ICG- we are specializing in NRI property transactions for compliance.