‘NRI’ is an abbreviation for ‘Non-Resident Indian’ who has been a citizen of India but is currently residing overseas. Their purpose of being abroad could be varied such as employment, carrying on business or other personal reasons.

The answer is yes, NRI’s can invest in Indian real estate however the investments need to be in sync with the Indian laws, RBI rules and regulations. In order to invest, an NRI will need the below mentioned documents:

• Power of attorney of an individual who can carry out the proceedings on your behalf.
• PAN card
• If the PAN card is unavailable a scanned copy of your passport will do.
• An NRE or NRO account that will be used to make the transactions.

The answer to this question is yes, an NRI may sell his or her property in India without intervention from the RBI, however, they need to follow the below mentioned regulations.

A person of Indian origin resident outside India may –

• Transfer any immovable property in India other than agricultural land/farm house/plantation property, by way of sale to a person resident in India.
•  Transfer agricultural land/farm house/ plantation property in India, by way of gift or sale to a person resident in India who is a citizen of India.
•  Transfer residential or commercial property in India by way of gift to a person resident in India or to a person resident outside India who is a citizen of India or to a person of Indian Origin resident outside India

 According to Indian laws there is no specific regulation that states that an NRI can receive or offer residential properties as gifts. However, if we take a look at the below mentioned amendment, it becomes pretty clear that an NRI may dispose or acquire a property as a gift but it can be done so to a person of Indian origin only. Here, is the amendment for your reference:

A person of Indian origin may acquire any immovable property in India other than agricultural land / farm house / plantation property by way of gift from a person resident outside India who is a citizen of India.

In order to buy an immovable property in India, an NRI can use the following payment methods:

• Funds received in India through normal banking channels by way of inward remittance from any place outside India or
• Funds held in any non-resident account maintained in accordance with the provisions of the Act and the regulations made by the Reserve Bank under the Act; viz. Non-Resident (External) Rupee Account (NRE Account), Foreign Currency (Non-Resident) Account (FCNR Account), Non-Resident Ordinary Rupee Account (NRO Account)
• Regulation 3 of FEM (Acquisition or Transfer of Immovable Property in India), Regulations 2000.

In accordance to the Reserve Bank of India, the loan amount for NRI’s should not be more than 85% of the entire cost of the dwelling unit. Own contribution, which is the cost of dwelling unit financed less the loan amount, can be met from direct remittances from abroad only through normal banking channels, your Non-Resident (External) [NR (E)] Account and /or Non-Resident (Ordinary) [NR (O)] account and /or Non-Resident Special Rupee account [NRSR] in India.

In layman terms, Power of Attorney can be explained as a strong legal document that gives one person who is referred to as the ‘Attorney’ who will have the sole authority to act on the actual owner’s behalf who is buying the property. The POA can be provided with a broad legal authority or limited authority to make legal decisions about the principal’s property and finance. The power of attorney is frequently used in the event of a principal’s illness or disability, or when the principal can’t be present to sign necessary legal documents for financial transactions.

The types of POA are as follows :

• Non-Durable POA - The non-durable power of attorney is used only for a set period of time and usually for a particular transaction in which you grant your agent authority to act on your behalf. Once the transaction is completed, or should the principal become incapacitated during this time, the non-durable power of attorney ceases.
• Durable POA - The durable power of attorney is much more encompassing than the non-durable power of attorney and it can be used to allow an agent to manage all the affairs of the principal should they become unable to do so. It does not have a set time period and it becomes effective immediately upon the incapacitation of the principal. It does expire upon the principal’s death.
• Special or Limited POA - A special or limited power of attorney is used on a limited basis for one-time financial or banking transactions, or for the sale of a particular property. This is most often used when the principal is unable to complete the transaction due to prior commitments or illness and wants to appoint an agent to act on their behalf. The agent has no other authority to act on behalf of the principal other than what is assigned to them in the limited power of attorney.
• Medical POA - The medical power of attorney grants authority to the agent to take specific control over the healthcare decisions of the principal should they become incapacitated or unable to do so. This usually takes effect upon the consent of the presiding physician and it allows the agent to authorize all medical decisions related to the principal.
• Springing POA - A springing power of attorney becomes effective at a future time and only when a specific event occurs, such as the incapacitation of the principal or a triggering event that occurs while the principal is out of the country and unable to act upon it. This type of power of attorney can be durable or non-durable and can encompass any number of affairs the principal wants to assign to the agent.

Following points should be taken into consideration while executing the POA–

• Customer shall prepare POA as per defined format.
•  Executant shall have to paste his/her photograph along with signature on each page.
• The POA shall have to be authenticated / adjudicated from Indian Embassy or local authority.
• The authenticated/adjudicated POA shall have to be sent to India.
• In India, the POA holder has to paste his/her photograph along with his/her left hand thumb impression and signature.
• Then this document will have to be stamped for Rs. 500/- (ESBTR, Franking, Stamp paper) and notarised from a Registered Notary. Please ensure that a stamp of “Before Me” is affixed on the document.
• POA holder and executants Photo ID attach before Notary

The documentation required to be submitted by the NRIs are different from the Resident Indians as they are required to submit additional documents, like copy of the passport and a copy of the works contract, etc. and of course NRIs have to follow certain eligibility criteria in order to get Home Loans in India. Another vital document required while processing an NRI home loan is the power of attorney (POA). The POA is important because, since the borrower is not based in India; the Home Finance Company would need a 'representative' 'in lieu of' the NRI to deal with and if needed. Although not obligatory, the POA is usually drawn on the NRI's parents/wife/children/ close relatives or friends.

The documents needed for obtaining NRI home loans are Bank specific. General list of documents are as mentioned below:

• Passport and Visa
• A copy of the appointment letter and contract from the company employing the applicant.
• The labour card/identity card (translated in English and countersigned by the consulate) if the person is employed in the Middle East Salary certificate (in English) specifying name, date of joining, designation and salary details.
• Bank Statements for the last six months List of Classified documents for Salaried and Self Employed NRI Applicants. Banks may have specific requirements apart from the below listed documents.

Salaried NRI Applicants

• Copy of valid passport showing VISA stamps
• Copy of valid visa / work permit / equivalent document supporting the NRI status of the proposed account holder
• Overseas Bank A/C for the last 3 months showing salary credits Self-Employed NRI Applicants
• Passport copy with valid visa stamp
• Brief profile of the applicant and business/ Trade license or equivalent document
• 6 months overseas bank account statement and NRE/ NRO account
• Computation of income, P&L account and B/Sheet for last 3 years certified by the C.A. / CPA or any other relevant authority as the case may be (or equivalent company accounts)

Since general permission is not available to NRI/PIO to acquire agricultural land/plantation property/farm house in India, such proposals will require specific approval of Reserve Bank and the proposals are considered in consultation with the Government of India.
Regulation 3 of FEM (Acquisition or Transfer of Immovable Property in India), Regulations 2000.

The mere acquisition of property does not attract income tax. However, any income accruing from the ownership of it, in the form of rent (if it is let out)/annual value of the house (if is not let out and it is not the only residential property owned by that person in India) and/or capital gains (short term or long term) arising on the sale of this house or part thereof is taxable in the hands of the owner.

 The Government of India has granted general permission for NRI/PIO/OCI to buy property in India and they do not have to pay any taxes even while           acquiring property in India.

• However, taxes have to be paid if they are selling the property situated in India. Rental income earned from such property is taxable in India.
  Under the provisions of Income-tax Act 1961, every person has to furnish a return of his income on or before the due date, if his total income exceeds the basic exemption limit. Thus, NRI/PIO/OCI will have to obtain a PAN and file return of income if their total income from renting and selling of such property exceeds the basic exemption limit.

In the event of sale of immovable property other than agricultural land/farm house /plantation property in India by a person resident outside  India who is a citizen of India or a person of Indian origin, the authorised dealer may allow repatriation of the sale proceeds outside India, provided the following conditions are satisfied, namely:

• The immovable property was acquired by the seller in accordance with the provisions of the foreign exchange law in force at the time of acquisition by him or the under the provisions of Regulation 3 or 4 of FEM (Acquisition or Transfer of Immovable Property in India), Regulations 2000;
• The sale takes place after three years from the date of acquisition of such immovable property or from the date of payment of final instalment of consideration for its acquisition, whichever is later; and ;
• The amount to be repatriated does not exceed
•  The amount paid for acquisition of the immovable property in foreign exchange received through normal banking channels or out of funds held in Foreign Currency Non-Resident Account; or
• The foreign currency equivalent ,as on the date of payment, of the amount paid where such payment was made from the funds held in Non-Resident External account for acquisition of the property;
• In the case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties.
  Regulation 6 of FEM (Acquisition or Transfer of Immovable Property in India), Regulations 2000

The documents required for buying the property are:

• OCI/PIO card (In case of OCI/PIO)
• Passport (In case of NRI)
• Passport size photographs
• Address proof

Sale is executed in the following ways:

• Before purchasing any immovable property, an agreement of sale should be executed. An agreement of sale is the basic document on which a conveyance deed is drafted.
• The execution of an agreement of sale needs to be witnessed by two persons capable of entering into contract. The witnesses being from the sides of  both parties - one from the purchaser's side and one from the seller's side.
• The names of the parties to the contract, their age, father's name, and place of their residence should be mentioned. All the owners should be made parties to the contract. The nature of the title held by the seller, including any encumbrance such as lease, mortgage, or charge on the property,should be mentioned.
• The mode and time of possession and the consideration to be paid should be clearly and specifically mentioned. The stamp duty to be paid on such agreement for sale shall be mentioned in the agreement of sale itself.

The Steps involved in registration of agreement of sale are as follows:

• The sale deed is carefully drafted /prepared by legal expert/advocate
• Stamp paper is purchased as per the Circle Rate
• Date is fixed for registration in the Sub Registrar Office
• The Government registration fee is paid
• Both the buyer and seller and 2 witnesses visit the sub registrar office on the fixed day for the registration of Deed
• The Registered Sale Deed can be collected after a week

The NRI will have to deduct TDS on payment on purchase of immovable property other than agricultural land at the rate of 1% where the consideration for such immovable property is Rs.50 Lakhs or above u/s 194IA:

• All the details regarding the transaction and TDS on Property are required to be furnished in Form 26QB and this Form 26QB is required to be
  submitted at the time of payment.
• After depositing the TDS, the buyer of the property would also be required to issue Form 16B to the Seller of the property in respect of the
  TDS deducted and deposited with the government.

The Reserve Bank of India (RBI) has cut some slack for the NRI’s and granted some general permissions to a few selected financial institutions offering housing finance e.g. HDFC, LIC Housing Finance Ltd., etc to provide housing loans to NRI nationals for the below mentioned purposes:

• Personal purposes or for carrying on business activities except for the purpose of relending or carrying on agricultural / plantation activities or for investment in real estate business
• Acquiring flat/house in India for his own residential use
• Regulation 6 of Schedule 1 of FEM (Deposit), Regulations 2016

AD banks can grant loans to the account holder of FCNR account against the security of funds for :

• Personal purposes or for carrying on business activities except for the purpose of relending or carrying on agricultural / plantation activities or for investment in real estate business.
• Acquiring flat/house in India for his own residential use.
• Regulation 9 of Schedule 2 of FEM (Deposit), Regulations 2016.

AD banks can grant loans to the account holder of NRO account against the security of funds for:

• Personal purposes or for carrying on business activities except for the purpose of relending or carrying on agricultural / plantation activities or for investment in real estate business.
• Regulation 5 of Schedule 3 of FEM (Deposit), Regulations 2016.