REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016 (RERA) INVESTMENT BY FOREIGN NATIONALS AND NON-RESIDENT INDIANS
A foreign national is any person who is not a national of the country in which he or she is residing and NRIs are overseas Indians, officially known as Non-Resident Indians or Person of Indian origin, are people of Indian birth, descent, origin who lives outside the Republic of India.
An NRI or person of Indian origin (PIO), as defined in FEMA and as stated above, can acquire by way of purchase, any immovable property in India, other than agricultural land/plantation property/farm house. This is under a general permission that has been given by the Government of India. However, no person being a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan, shall acquire or transfer immovable property in India, other than lease, not exceeding five years, without prior permission of the Reserve Bank.
Where can they Invest?
An NRI is allowed to invest in both residential and commercial properties in India. However, any agricultural land, farm house and plantation property can be owned, only if it is inherited or gifted to the NRI.
NRIs can earn returns from their investments in real estate, in the form of rental income and short or long-term gain.
Documents which a Non-Resident Indian NRI buyer must have while buying property in India
1] Must go for RERA Registered Projects only.
2] Execute proper Power of Attorney (POA) for dealing with the builder (Indian PAN required)
- The rental income earned from a property asset in India, falls under the income accrued in India and is taxable, irrespective of residential status.
- Short-term capital gains apply on the profit earned through the sale of a property, within two years of its purchase. The capital gains for such property are calculated as the difference between the sale proceeds and the cost of acquisition. It is taxed as per the applicable slab rate for the NRI.
- Long-term capital gains (applicable when the property is held for more than two years) are taxed at 20 per cent. However, unlike short-term capital gains, exemption can be claimed under sections 54, 54 F and 54 EC.
The absence of authority and lack of proper rules and regulations in the real estate sector has always been a problem, after implementation of RERA, index of good governance, discipline in Real Estate Sector and home buyers are feeling secured because of the introduction of RERA Rules and sites available because of the commencement of the Real Estate (Regulation and Development) Act of 2016 (RERA) respectively.