Close Search Home About Current Offers Contact Us search NRI Corner Self Help Guide for NRIs Investing in Indian Real Estate In this section, we talk briefly about the most important issues and aspects of investing in Indian real estate that you as an NRI should be well aware of to have a smoother and hassle-free investment experience. The topics we cover are : Why Invest? – Overview Repatriation – Overview and Link to Blog Article Taxation of NRI Investments in India NRI Home Loans – Introduction and Process of Applying for a Loan in India NRI Bank Accounts Explained & Comparison of NRO and NRE Accounts Power of Attorney – Uses and Benefits Explained PAN Card – Is it Required and How to Apply for It Overview of Double Taxation Avoidance Agreement between India and other countries. Why Should NRIs Invest in India? Here are the top 5 reasons why you as an NRI should invest in Indian real estate : Substantial Returns Easy Repatriation Ease of Investing NRI Home Loans Professional Assistance While returns of upto 20% can be safely taken for granted, many a times, you can easily end up with as high as 50% to 100% in 2 to 4 years time. Repatriation of Sale Proceeds of Real Estate Property in India by NRIs SHORT VERSION Good news! NRIs are allowed to repatriate upto $ 1 Million per annum per person out of sale proceeds of their real estate properties in India and there is NO LIMIT on number of properties that can be bought, sold and repatriated by NRIs. And when it comes to repatriation of rental income, an unlimited amount of money can be repatriated every year. As a couple, you can both repatriate upto $ 1 Million each per annum, which means you can collectively repatriate upto $2 Million or approx Rs.6 crores based on current exchange rate, out of sale proceeds and an unlimited amount of rental income every year. LONG VERSION To read a more detailed note on repatriation, please click here. THE BIGGEST MISCONCEPTION IN REPATRIATION One of the biggest source of fear and discomfort for NRIs in repatriating their money is the clause that states : “in the case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties.” This does not mean that NRIs can repatriate capital of only 2 properties in their lifetime. What this actually means is that FREE & UNLIMITED REPATRIATION of sale proceeds is allowed only for the first 2 properties and from the 3rd property onwards, repatriation is restricted or limited to an amount of $1 Million per person per year. From the 3rd property onwards, the sale proceeds must be deposited into an NRO account and out of this balance, a total of upto USD 1 Million (approx Rs.6 crores) can be repatriated per person per financial year – a limit that has already been explained above. Example : If the sale proceeds of your property are say Rs.8 crores, you can repatriate Rs.6 crores this year and balance Rs.2 crores must be deposited into your NRO account in India and you can repatriate this in the next financial year. THERE IS NO REAL RESTRICTION on the number of residential properties whose sale proceeds an NRI can repatriate in his lifetime. The Repatriation process Explained in 3 Easy Steps Step 1 You must first fill out and submit Form 15CA – an online application form with IT Department of India. This can be done by you or you can have a Chartered Accountant in India do this for you on your behalf. Step 2 You must then obtain form 15CB from a Chartered Accountant – this form certifies that you have paid necessary taxes on the amount that is going to be repatriated. Step 3 You must then submit both Form 15CA and 15CB to an authorized agent or bank who will help you obtain foreign currency and repatriate the same to your overseas bank accounts. The process is as simple as explained above and can be done in 7 to 15 working days depending on how well prepared you are. Taxation of NRI Investments in India Taxation of real estate investments by NRIs is a very straightforward process and you need to know just the following 2 points to understand what taxes are applicable to you as an NRI investing in Indian real estate and when such taxes are applicable to your transactions : Capital Gains Tax or Taxes on Profits from Sale of Property : When you sell a property, you are required to pay Capital Gains tax on the profits earned by you. If you have sold the property within 3 years from date of purchase, you pay 30% of total profits as Short Term Capital Gains tax and if you have sold the property after 3 years from the date of purchase, you have to pay 20% of profits as Long Term Capital Gains. This tax is calculated only on the PROFITS and not on the entire capital. Taxes on Rental Income : If you are earning rental income from properties, the entire rental income is combined with your other taxable income in India and is charged at the applicable tax slab under which you fall for that financial year. In most cases, this ends up being 30% as most NRIs fall into the highest tax bracket. TAX EXEMPTION? You may be eligible for certain exemptions as below : Capital Gains Taxes : If you reinvest the capital gains into another property within a fixed time period, you are exempt from paying any capital gains taxes. But this is subject to a number of terms and conditions. To know more, read our article titled “Taxation of Real Estate Investments in India”. Tax on Rental Income : By default, you are allowed to deduce 30% of total rental income as expenses involved in maintaining the rented property. This means that effectively, you are paying tax only on 70% of the rental income. Apart from this, if you have taken a loan on the rented property, you are allowed to deduct the entire interest being paid on that loan from the income of the property and the remaining / leftover income is then taxed. There is NO TAX on purchase of property. You may have to pay 2 other types of taxes – The Wealth tax and Property Tax. But since these taxes are so miniscule, they barely affect your finances and hence you do not need to bother by studying them in depth. This is all there is for you to know about taxation of real estate transactions for NRIs. For more detailed information on how these taxes are calculated, terms and conditions for exemptions mentioned above and other related details, please read our article titled “Taxation of Real Estate Investments in India” NRI Home Loans – Introduction and Process of Applying for a Loan in India Investing using a home loan can help you earn upto 100% greater ROI than investing using your own funds. In this regard, you will be happy to know that NRIs can apply for home loans in India to fund their property purchase. Some key points to note : Your Physical Presence is NOT Required : You don’t have to be physically present in or travel to India to apply for a loan. You can appoint a relative as your Power of Attorney to complete loan procedure on your behalf (Power of Attorney does NOT have the right to sell your property & hence you don’t have to worry). No Penalty for Pre-Closing a Loan : You can pre-pay or pre-close the loan at any point of time without paying any penalty or damaging your credit rating india. How Much Can You Borrow : You can fund upto 80% of property cost through a home loan. Your eligibility depends on your income and repayment capacity and there is NO LIMIT on the number of loans you can take. How Long Does the Process Take : The entire process takes between 30 to 45 working days and can be completed entirely via 3 couriers to India and a couple of emails. We Can Help You with the Complete Process : At G&C, we take care of the entire process from start to finish which means that neither you nor your family or friends in India have to interact with the bank or bother about the paperwork and we become your single point of contact. LOAN APPLICATION PROCESS The entire process can be understood in 3 simple steps : Step 1 Courier your loan application along with the processing fee cheque and all supporting documents (click here for an indicative list of documents that you need to submit). Step 2 Once banks study your documents, verify your employment and calculate your eligibility, you will be issued a sanction letter which states the amount of loan and interest rate you are being offered and all other terms and conditions of the loan. Step 3 You have to submit your original property documents with a few other supporting papers and pay any other applicable loan related charges to get the loan disbursed. The entire process will be coordinated by us and we will literally spoon-feed and handhold you till the end! Visit our Home Loan Corner to : Understand how you can benefit from using home loans See how affordable it is to invest via home loans using an EMI calculator Access a comprehensive knowledge base of all home loan related FAQs View additional resources on important topics such as comparison of fixed v/s floating rate loans, single v/s joint home loans, difference between Pre-EMI and EMI, tax benefits of home loans and much more. CALCULATE YOUR HOME LOAN ELIGIBILITY NRI Bank Accounts Explained & Comparison of NRO and NRE Accounts While there are various types of bank accounts that an NRI can open and maintain in India, the 2 most commonly used and popular types are the NRO Account and NRE Account. This is a brief overview of these 2 account types, what purpose each of these accounts serve and most importantly, why you as an NRI need to have both these accounts open and active in India as each is dedicated for a separate purpose as explained below. NRO – Ordinary Non-Resident Rupee Accounts This account is essentially used to accept and hold any income earned by you in India and any Indian Rupees received by you from any person or entity WITHIN India. What transactions can I do with an NRO account? NRE – Non-Resident External Rupee Account This account is essentially used to bring money INTO INDIA from foreign countries (i.e foreign currency remittances) and to use those funds to make local payments to any person or entity in India. What transactions can I do with an NRE account? SUMMARY NRO and NRE accounts can both be used to bring in money from outside India and to make local payments but only an NRO account can accept deposits of Indian Currency or any income earned WITHIN India (NRE account cannot accept earning accrued in India or Indian currency except in exceptional cases). As an NRI, you should have both NRO and NRE accounts as each serves a different purpose and you WILL need both these types of accounts at some time or the other if you are actively investing or transacting in India. As the minimum balance that has to be maintained is only Rs.10,000 per account, it is quite easy and practical to have both accounts and hence we highly recommend you to do so. Read our article titled “Ready Reckoner – Bank Accounts for NRIs” for more detailed information on each account type, the repatriability and taxation of funds in these accounts and the type and currency of deposits and withdrawals that can be made from each of these accounts. Power of Attorney – Uses and Benefits Explained For NRIs living across various parts of the world, it is neither easy nor practical to travel to India everytime they purchase or sell a property or to conduct various other financial/legal transactions that require their physical presence in India. And this is where a Power Of Attorney (or General Power of Attorney – as it is popularly known) helps. What is a Power of Attorney? A POA (Power of Attorney) is a legally binding and enforceable document that a NRI can use to authorize a Resident Indian to represent him in any general or specific transaction in India. How is POA helpful to NRIs in making Real Estate Investments? A Power of Attorney enables an NRI to empower his or her relatives in India to legally represent them and conduct all formalities related to the purchase or sale transaction on the NRI’s behalf, so that he or she does not have to travel to or be physically present in India to conduct the transaction. Here are some of the major real estate transactions that can be done by your POA on your behalf : Purchasing Property : To execute all contracts and agreements with the builder, register your property and apply for a loan for that property. Renting Out Your Property : To lease your property and collect rent on your behalf. Selling Your Property : The right to sell your property and negotiate the sale price. It is important to note that this right to sell can be granted ONLY IF YOU EXPLICITLY state so in the GPA and can be completely excluded from the purview of the GPA if you do not want to grant the same. Applying for a Home Loan in India : Since the NRI is not based in India, the banks need a representative in lieu of the NRI to deal with and a POA can be used by NRIs to authorise their relatives in India to represent them. Any Other Matter Pertaining to Your Property : To manage, compromise, settle, and adjust all matters pertaining to your property such as paying property and income tax on your behalf, maintaining your property, and any other such property related matters. Types of Power Of Attorney There are two types of power of attorney : “General” and “Special” (or limited). General Power of Attorney : This allows the grantor (the NRI) to empower the appointee (the NRIs relative in India) with the rights to carry out all legal acts on the former’s behalf without restricting it to a particular transaction or act and gives the appointee very broad powers to act on behalf of the grantor. Special or Specific Power of Attorney : This kind of POA restricts the authority of the appointee to act only on a particular kind of transaction or to carry out a specific legal transaction for the grantor (mostly just one / single activity). This is the more commonly used format in India for real estate transactions. KNOW MORE : Read our article titled “Ready Reckoner – Power of Attorney for NRIs” to know more on how a GPA / POA is created, what is its validity and what you should keep in mind while appointing a GPA. CAUTION : Every act performed by your agent within the authority of the Power of Attorney is legally binding upon the persons granting it. Hence a power of attorney should be given only to a trustworthy person, preferably an immediate family member. PAN Card – Is it Required and How to Apply for It Do NRIs need a PAN Card to Purchase & Sell Real Estate in India? The short answer is YES. NRIs do need a PAN card to conduct any kind of financial transactions in India. What is a PAN or PAN Card? PAN or Permanent Account Number is a 10 digit alphanumeric number issued by the Income Tax Department in India and acts as a document of identity proof. The primary purpose of PAN is to keep a central record and identification of all financial transactions of a person or entity. The PAN is unique to each person and is valid for the life-time of the PAN-holder. PAN is almost mandatory to conduct financial transactions such as opening a bank account, applying for a loan, receiving taxable income such as salary or professional fees, purchase or sale of assets above specified limits etc. PAN Card Is Required If You Buy, Own or Sell Real Estate Property in India You will need a PAN when you have to pay applicable taxes on the income generated by the property – either capital gains earned when you sell a property or in rental income generated on a regular basis. Applying for a PAN Card You can apply for a PAN card from anywhere across the world in 3 simple steps as explained below : Step 1 Fill the Application Form Based on your citizenship status (whether you are an Indian passport holder or not), you will have to fill out the appropriate application form. Step 2 Courier Your Documents to Our Office in Bangalore Along with a signed hard copy of the above application form, you will have to courier a set of documents that establish your identity, age, address and citizenship proof. You can either pay the fee in cash or send us a Demand Draft for the required amount. Step 3 Your done! As simple as that You can chose to have the PAN card delivered to your overseas address or have it delivered to your representative in India. Fill out the form below to have one of our managers get in touch with you to send you the application form, list of documents required and then help you through the entire process. Complimentary Assistance at No Charge To You At G&C, we can help you apply for a PAN card and this assistance is provided free of charge to build a long term relationship with you. Feel free to reach out to Sridhar Kumar on sridhar.kumar@gcglobal.in (Mobile : +91 9686627071) to get started with your application process. Double Taxation Avoidance Agreement (DTAA) India has these agreements with close to 84 countries including USA, UK, Canada, Singapore, Australia, UAE, Germany and more where any amount repatriated from India will not be taxed again (i.e. no double taxation) in the country of residence of the NRI and hence this becomes another motivating factor for NRIs to invest in the Indian real estate market. Click here to see a list of countries with whom India has this DDT agreement. Additional Resources for NRIs Read our most popular blog articles shown below to learn more about investment and financial planning topics that are of immense benefit to NRIs : Repatriation of Sale Proceeds of Real Estate Assets in India by NRIs – Click Here Taxation of Real Estate Investments in India – Click Here Four Credit Report Myths Busted – Click Here Credit Reports : How to Improve Your Personal Credit Rating – Click here NRI Investments in Indian Real Estate – Click Here GET STARTED Learn How You Can Earn 100% to 300% ROI In Indian Real Estate Read Our Quick Start Guide Now Corporate Office I-68, Diamond District Old Airport Road Bangalore - 560008 O : +9189-41520808/09/10 +91 9900123737 +91 9980319639 Popular Pages Home Company Profile Senior Management Getting Started with Us Testimonials Track Record Current Offers Monthly Income Assets Residential Commercial Plots & Lands Frequently Asked Questions Home Loan Corner Service Fee Policy NRI Corner Legal © 2021 G&C Global. 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