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Home > Blogs > Legal Guidelines for Investments in India for NRI
Investments in India for NRI

Legal Guidelines for Investments in India for NRI

The Indian real estate market poses bundle a wealth of promising opportunities for Non-Resident Indians or NRIs, looking to invest in their homeland. Whether you are planning to come back for good, seeking a comfortable retirement plan or a lucrative rental property for steady alternate income, understanding the legalities of Indian laws and framework surrounding investments in India for NRI is crucial for a smooth and successful land buying process. 

This blog by Sembulam Developers, a leading name in Indian property development, will equip you with the nuances of the legalities of NRI property investment in India. Let us delve into the types of NRI properties for abroad residents to invest in, explore the regulatory guidelines set forth by the Reserve Bank of India (RBI) and the Foreign Exchange Management Act (FEMA), and address other pertinent aspects like taxation benefits and the role of Power of Attorney (POA). 

Legalities Related to Investments in India for NRI

NRI property investment in India comes under the Foreign Exchange Management Act (FEMA) and the regulations issued by the RBI. These guidelines are set up to safeguard NRIs and support the Indian economy where they invest their earnings abroad in India. Getting familiarized with these regulations is vital for taking a step and making compliant and secure investments in India for NRI. 

Main Aspects of Property Investments India Has in Store

While NRIs have several friendly schemes of investment options in India, there are some stringent regulations on the types of land they can purchase. Let us look at what they are: 
  • Residential and Commercial Land Investment: NRIs are permitted to readily invest in residential and commercial properties in India including villas, apartments, complexes, shops, offices, showrooms and storage warehouses. These properties can be owned for personal use or let out if looking for regular income.
  • Agricultural Land, Plantation Property, and Farmhouse Property: These property types are restricted for NRIs as there are many regulations to follow. However, there are exceptions on the pretext of an inherited property, but selling it requires prior approval from the Reserve Bank.
investments in India for NRI

RBI and FEMA Regulations for NRIs

For NRIs looking to buy land in India, the RBI and FEMA bodies have established a set of rules they must adhere to when investing in the real estate market of India. They are mentioned below: 
  • Approved Modes of Payment: NRIs must use only the funds held in their Non-Resident Ordinary (NRO) account in any Indian Banks to repatriate their funds earned abroad, to purchase properties in India.
  • Joint Ownership: NRIs are allowed to co-own a property with other NRIs, or Persons of Indian Origin (PIOs). However, the joint ownership with a resident Indian is not allowed unless the property is inherited, usually in case of family relatives in a big family.
  • Repatriation of Funds: NRIs can repatriate the sales proceeds of their property, to the account that they hold abroad, subject to taxation regulations.

POA (Power of Attorney) Formalities

When an NRI is not physically present in India to handle any property transactions, a Power of Attorney (POA) becomes an important part of any such transaction. A POA is authorized by the NRI as a trusted representative in India to act on his/her behalf while the NRI is buying land in India. However, the condition for a POA to mandate the land buying proceedings is that the POA must be approved by a qualified lawyer and registered with the appropriate authorities beforehand. 
Investments for NRI in India

Tax Implications and Documentation

NRIs are mandatorily liable to pay capital gains tax on the sales proceeds of their Indian property. The taxable amount depends on the holding period of the asset and the NRI’s residency status for paying taxes. Another mandatory clause while buying NRI properties is that they should obtain a No Objection Certificate (NOC) in all cases, from the resident country’s authorities which will help streamline the investment process. Owning this document demonstrates that there are no restrictions whatsoever, on the ability to purchase property in India as per current regulations. 

Other mandatory documents to hold onto are:

  • PAN Card
  • Passport
  • Aadhaar Card
  • Salary Slips
  • IT Returns
  • Relevant EC Bills
  • Salary Slips
  • Loan Application
  • POA details if any

Step-by-Step Guide to Applying for NRI Investment in India

  • NRIs investing in India must be aware of certain crucial aspects like rental income, repatriation of investment proceeds from rental income, capital gains etc.
  • Income generated from the rental properties in India must be appropriately filed by NRIs under the Income Tax Act.
  • Identifying the right type of property or land for buying land in India. Choosing the right financial option using housing loan or self-generated funds.
  • Choosing the right partner for looking out for NRI properties is ideal for NRIs.
  • Verifying the property ownership before finalizing a deal without disputes.
  • Acquiring NOC from the Income Tax Department for investments in India for NRI. Preparing a Sale Deed as per NRI regulations by RBI and FEMA.
  • Registering the property at the sub-registrar’s office.
  • Occupancy Certificate to be opted for newly built properties.
  • The purchase of property either through own NRI savings or going for loan options.
Investments for NRI

Current Market Trends for NRIs Investing in India

The Indian real estate market has great potential and offers NRIs a diverse range of investment options. The steady rise in developmental infrastructure and a growing focus on sustainable development are making Indian land prices more attractive to residents and NRIs. Sembulam Developers is at the forefront of these growing trends, offering high-gain, eco-friendly projects and a value for the investments made and caters to the specific investment needs of NRI investors. 

How to Look for Your Ideal NRI Property Investment?

Having a strong assistance and experienced partner brand by your side is an important aspect for successful NRI properties investment in India. This is where Sembulam Developers, a leading real estate developer in Tamil Nadu, comes in. We are aware of specific needs and aspirations of NRIs seeking to invest in their homeland.

Dindigul, is an option worth exploring for, as it is a city on the rise, offers a tempting investment proposition for NRIs. Here are some compelling reasons why Dindigul can get on the list of chosen places for investments in India for NRI for their dream property:

  • Strategic Location: Dindigul boasts of excellent connectivity to major cities like Bangalore, Chennai, Trichy, Madurai, and Coimbatore, making it a well-connected hub for both residential and commercial options.
  • Development Potential: The city is currently undergoing rapid transformation. It is witnessing significant infrastructural development, with good roadways, airways and public facilities, promising potential appreciation in property values.
  • Rich Cultural Heritage: For NRIs, as the old saying goes, staying at “home away from home” is the perfect adage. This leads to investing in Dindigul as it is steeped in rich cultural history.
  • Affordable Options: Compared to the already developed and large metro cities, Dindigul offers a wider range of scenic properties at attractive prices with sustainable building options or just letting it be for good returns on investment, making it a pocket-friendly investment destination for NRIs.
Land Investment for NRI

What sets Sembulam apart?

  • We believe in open and proactive communication with complete transparency throughout the investment process.
  • We are committed to bringing up eco-friendly projects that promote sustainable living across India.
  • Our dedicated concierge team is present to address your queries promptly, from the comfort of your home. 

Conclusion

Sembulam Developers is committed to assisting NRIs with accurate and secure investment options in Dindigul and more. We offer an expansive portfolio of scenic residential plots, meticulously chosen for their premium locations and future potential. Our team of experts will guide you through every step of the process right from, documentation, POA facilities, Handling NOC and other necessary documents, repatriation formalities, property selection to legal documentation, ensuring a stress-free investment journey for NRIs. 

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