FEMA or The Foreign Exchange Management Act states that an Indian citizen staying outside the country can invest in the real estate of India, provided that the property in question is not a farmhouse, plantation property or agricultural land. Moreover, the tax liability for NRIs is diverse if the said property is bought for rental, self use, or for the only purpose of investment.

Here are some points that differentiate property buying of NRI from resident property buying in India:

• An NRI does not need any special permission when buying a residential property in India. But, the payment cannot be made in the currency of the country where they stay. Rather they can make the purchase using the currency of India, through funds got in the country via normal banking channels. These funds have to be maintained in a non-resident account in the Reserve Bank of India (RBI) and the Foreign Exchange management Act (FEMA) regulations. There are also no limitations on the number of immovable properties that an NRI may buy, either commercial or residential.
• NRIs can purchase all kinds of immovable properties in India apart from plantation property, farmhouse, and agricultural land. To buy any of these properties in the country, they have to get consent from the government and the RBI.
• TDS estimate is done at the rate of 30.9 % on short-term capital gains and 20.6 % on long-term capital gains, when an NRI sells a property in India. But, the concluding taxation rate is same for resident Indians and NRIs. If an NRI has a lower tax slab applicable, he/she can apply for reimburse of the TDS by filing income tax return.
• Since NRI’s live outside, they have a choice to give Power of attorney to their friends or relatives to end the property purchase procedure in India. The PoA can be specific or general about the rights your agent can use.
• Developer agencies such as CREDAI or the Confederation of Real Estate Developers Association of India showcase exhibitions for NRIs regularly and give a number of offers. Some of them offer loans on the spot from top banks and other discounts. So, research all such offers prior to you make an investment to make sure that you get a good deal.

Home Loan for NRIs

The RBI has offered a general consent to housing finance companies and banks listed with the National Housing Bank to offer loans to NRIs for purchasing residential assets in India. Authorized in Indian currency, the loan has to be paid back by the same currency. But, the loan amount, as per the regulations, cannot be credited to the bank account of an NRI directly and has to be paid to either the developer’s or the seller’s account. The loan can be paid back using funds in FCNR deposits or an NRI’s NRO/NRE account.

There are several best property sites in India that offer properties on sale for resident Indians as well as NRIs.

Benefits of buying 2 BHK flat in Mumbai, India for NRIs

• In spite of the high realty prices that Mumbai, India is famed for, the city still features at the top in the list of favorable investment destinations in the country, due to the scope for high ROI. Besides, because of the significant overhang of unsold inventory by the real estate developers in Mumbai, and postponements in approvals for new projects in Mumbai, property prices in the city have stabilized. Thus, investing in Mumbai is definitely a good option.
• The real estate costs in foreign countries might have taken a plunge, and the same destiny has been observed in maximum Indian cities. But, Mumbai is a city where the real estate prices have remained steady and not undergone any major correction. The reason is very simple. This city still experiences a huge influx of people from all parts of India, who wish to fulfill their dreams by making it huge and earning huge here. This has always resulted in steady demand for properties in Mumbai, either for rental purpose or for ownership.
• A NRI can invest easily in any residential property and start earning regular income from the same by giving it on rent. And they do not need to worry about any hidden tax clauses, as all the rental income applicable tax provisions are noticeably specified in an easy manner.

• From the rental income taxes obtained from a NRI, deduction is available in regards to payment of house tax, together with a special 30% deduction towards maintenance, repairs, as well as collection charges of that property. And it can prove to be a great deduction advantage on the tax paid by NRIs, irrespective of whether they spend on repairs/maintenance or not.
• Another important deduction permissible for NRIs is the whole interest payment on the purchase of the property that is given on rent. Hence, the NRIs can take benefit of this deduction by taking a loan for purchasing that property.

• A NRI can buy any residential property with the only objective of earning noteworthy profits by selling the same after few years. But, to get better benefits, the NRI needs to sell the property after three years, which would make the gains the non-resident individual makes from selling the property come under long-term capital gain, which gets many tax advantages. In contrast, if the property is sold within 3 years, then, the short-term capital gain coming out of it is liable to taxes, and has to be shown together with the ‘other income’ of the NRI.
• Aged NRIs can take huge benefit of the reverse mortgage as they can take pleasure in the invested property on one hand, and also take money from the bank resulting in reverse mortgage of that property.
• According to the Foreign Exchange Management Act, a NRI can repatriate the rental income easily received from invested property in India. It is even feasible to repatriate the sales proceeds arising for any invested real estate in India.

With such a vast range of benefits for purchasing a property in India, and more specifically in Mumbai, NRIs are certainly spoilt for choices!