Guidelines for NRIs to invest in India by JS Group

With real estate sector coming off its slump phase, many developments are happening in the industry leading to a stabilized economical situation. Adding to these developments are the fluctuations happening in the value of rupee against dollar as this has invoked a greater interest among NRIs to invest in the country. Seeing this change, we are providing certain guidelines which non-resident Indians should consider before making an investment in the country:

• It is important to know that any person of an Indian origin and having an Indian passport can invest in property in India without any limit on the number of such investments. Nevertheless, he cannot invest in a farm house or an agricultural land.
• NRIs investing in India should give the power of attorney (PoA) to any person, relative or friend, who resides within the country and is an Indian resident. This person can take care of all the formalities which need to be completed for buying a property, such as registration, execution of agreement deed, possession, etc.
• It is mandatory to get the PoA attested by an authorized Indian embassy/consulate official or trade commissioner of the country.
• The investments made by NRIs can be funded by them or they can take home loans to serve this need. There is a set of guidelines given by the RBI for availing home loans by NRIs. These are:
  • Maximum of 80 per cent of the total investment amount can be funded by the financial institution giving loan and the rest is to be provided by the NRI himself.
  • The repayment of loan taken for purchase of property can be done either through funds remitted to the country via banking channels or NRE, NRO, FCNR accounts. It can also be done through cheques from bank accounts of NRI’s relatives living in the country.
  • NRIs are also permitted to take loans to repair and renovate property in India.

If an NRI has inherited property in India, he has to pay tax on his deemed income. Section 24 of the income-tax act says that the interest paid on housing loan can be deducted from the income from the house property up to Rs. 1.5 lakh per annum. And Section 80C says that one can also deduct principal repayment to the extent of Rs. 1 lakh. This applies only to the income earned in India.