It’s not uncommon to find Indians excitedly packing their bags and leaving the nation to migrate to a “foreign land of dreams” only to discover that there’s no place like home. And once they decide to return, the number one cause of anxiety is property purchase. If one is legally an NRI, buying property can be quite a task. If you’re an NRI planning to buy a house in Mumbai, here are some tips to help you go about the purchase.

Which Properties Can NRIs Purchase in India?

For the purchase of any residential or commercial property, NRIs don’t need special permissions. The RBI has given a general consent for NRIs to purchase as many immovable properties as they like, subject to certain conditions. The payment for such properties cannot be made in foreign currency but needs to be made in Indian Rupee via a non-resident bank account in accordance with the Foreign Exchange Management Act (FEMA) and RBI regulations. Furthermore, NRIs need special approval from the RBI on the purchase of agricultural land and farmhouses.

How Can NRIs Fund Property Purchase?

The payment for the purchase of any permitted immovable property in India needs to be made only via banking channels and hence cannot be made in travellers’ cheques or foreign currency.

In case an NRI does not possess the required funds, they can seek the help of housing finance institutions for home loans. The RBI has allowed banks and other housing finance institutions registered with the National Housing Bank to extend housing loan to NRIs that want to purchase a property in India. At Tata Capital, you can avail home loans from Rs. 2,00,000 to Rs. 5,00,00,000 depending upon your eligibility with home loan interest rates starting at just 9.25%.So, check out your eligibility using Tata Capital’s home loan eligibility calculator and apply for a home loan today.

An important thing to remember is that the loan cannot be directly received to the NRI’s bank account but needs to be disbursed either to the seller’s account or directly to the developer’s bank account. Again, repayment of home loans cannot be made via travellers’ cheques or foreign currency but only through banking channels.

Joint Ownership of Property

Though NRIs can purchase a property jointly in the name of another NRI, the same cannot be done with either a resident Indian or with those who are not permitted to purchase a property in India.

NRI Property Taxation

NRIs are required to follow a different tax system as compared to those residing in the nation. If the value of the purchased property exceeds Rs. 50 lakhs, NRIs need to deduct Income Tax @1% and pay the same to the Income Tax Department. And the rate of taxation will be much higher if the property is purchased from another NRI. For properties purchased for personal use and financed using home loans, the interest paid on the loan will be deducted from the total taxable income. The amount of interest that can be reduced is capped at Rs. 1.5 lakhs and NRIs can avail tax deduction benefits on loan repayment.

Power of Attorney (PoA) Since NRIs dwell outside the nation, they have the opportunity to pass over the Power of Attorney (PoA) to their friends or relatives for the completion of the property buying process. Your PoA can either be general or specific about the rights given to your representative.

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