A number of Non Resident Indians (NRIs) feel bullish on making investments in properties back home. International investors can easily foresee the momentum of Indian real estate and evaluate the rate of return and proportion in estimated appreciation. While analyzing a deal, you can devise a number of methods but requires ensuring a systematic approach as a vigilant move is the only safest measure.
The article talks about some measures that our NRI friends can take into account before making investment in India properties:
Drafting the Agreements: As such, there is no specification for the Ownership Flat Act. Most property developers and builders prepare the agreement which targets at certain rights available to the flat buyers. However, when it was found that some clauses turn out to be contrary to the provisions of law, some amendments were done, under which a form is prescribed.
If the agreements entered between property buyer and developer are contrary to the prescribed form, the purchaser may not be found guilty for any of the legal faults involved in the deal.
No Permission from RBI for Purchase or Sale of Immovable Property: NRIs and PIOs need not get any approval for purchase or even sale of immovable properties in India. But purchase or sale consideration should be settled as per the provisions of Foreign Exchange Management Act (FEMA) 1999.
Therefore, properties in India can be acquired
either by remittance of funds from abroad through normal banking
channels or by payments from purchasers. Ordinary
Non-resident Account/Non-Resident
(External) Account/National Defense Remittance Scheme Special
Account with bank in India.
When the property has been acquired in India, income thereon as well as sale proceedings of the property is sold later cannot be repatriated overseas even if the buyer had been made against foreign exchange remitted to India from Non-Resident (External) Account in India.
For NRIs to Acquire the Property
- The Reserve Bank of India must approve the valuation of the
property.
- The purchase price should be paid out of funds remitted from
abroad or held in the buyer’s NRE.
- The applicant requires giving an undertaking saying that he
will not repatriate outside India the sale proceeds of the property,
if sold later or the income accruing on it.
