Benefits NRI gets by buying property in India

Source:6 AUG, 2011, 07.00PM IST, ASHISH GUPTA,TNN 

There are many families where the children are working abroad. However, the parents stay back in India. Having made a good amount of money, many of these non-resident Indians (NRIs) and persons of Indian origin (PIO) intend to come back to India later. 

Also, they see India as a safe and good investment option. Investing in property here is always a preferable option. But how can they do it? Can they invest in property in India? Are there any restrictions? How can they fund the investment? 

First and foremost, thanks to the liberal policies of the government, NRIs and PIOs can purchase property in India.

 However, one needs to comply with the requirements of the Foreign Exchange Management Act (FEMA). So, if your children are NRIs, they can buy property in India. It could be a residential property or a commercial property. 

To add to it, there is no restriction on the number of properties they can purchase in India. Neither you nor they require any Reserve Bank of India (RBI) permission. However, they cannot buy agricultural land, plantation land or a farm house in India. 

Funding the purchase 

A NRI or PIO can pay either through funds remitted to India from abroad through regular banking channels or out of the balance in their NRE, NRO or FCNR accounts. One can take a loan from a bank to purchase the property. Banks provide housing loans to NRIs to buy a house. The purpose of the loan, margin money and the quantum of loan will be on par with those rules applicable to housing loans to residents. 

Repayment of the loan should be made out of inward remittances or out of funds held in the investor's NRE, FCNR or NRO account. It can also be done out of rental income from such property or by the borrower's close relatives in India. 

They have to purchase the property by way of a registered conveyance deed.

 In case the NRI is not present in India at the time of registration, he can execute a power of attorney in favour of someone, who can then execute the documents on his behalf. This person with the power of attorney should preferably be a relative of the NRI, father, brother etc. 

The normal processes of registration and stamp duty apply even in such cases.

 It is advisable to either purchase jointly with a family member resident in India, or to give a power of attorney to some family member who is resident in India to deal o n behalf of the NRI.