Buyers Guide

The interest on housing loan is allowed as a deduction up to INR 200,000/- per year for self occupied property and full amount in case of let-out property. To claim this deduction, the purchase or construction of the property should be completed within a period of five years from the end of the year in which the loan is taken.

Repayment of principal amount of the loan is eligible for a deduction under section 80C up to a maximum amount of INR 150,000.

Expenses such as stamp duty, registration fees and other expenses for transferring the property in the buyer’s name are allowed as a deduction under section 80C. The deduction for these expenses is within the overall cap of INR 150,000 under section 80C.

According to the Indian Income Tax Act, If a person (resident or NRI) owns more than one house property, any one property, at the choice of the person, will be considered as self –occupied property. There will be no income tax on a self-occupied property.
The other properties, whether rented or not, will be assumed to be given on rent. The deemed rental income (based on certain valuations prescribed by the income tax rules) will be considered as taxable income.

In case of rent paid to a non-resident, the tenant may deduct TDS on the rent paid. However, practically, not many tenants deduct TDS

The buyer of the property is required to deduct TDS on the profit made on the sale of the property. However, if the buyer does not know the exact amount of profit made, he may deduct TDS on the gross amount of payment made. To avoid this, the seller can either satisfy the buyer about the profit made on the transaction or secure a lower TDS deduction certificate from the Indian Tax Authorities (discussed later)

Wealth-tax has been abolished. Accordingly, there will not be any wealth-tax on the house property

If a residential property is held by the seller for more than 36 months, it is considered a long-term investment or else short term. From 1st April 2017, the period of 36 months will be reduced to 24 months.
NRIs are entitled to claim exemption from long term capital gains tax if they reinvest in specified assets as per Income tax Act.

Long term capital gains are taxable at the following rates:
a) If overall income taxable in India exceeds INR 1 crore, the effective tax rate is 23.69%
b) If overall income taxable in India is between INR 50 lacs and INR 1 crore, the effective tax rate is 22.66% (as applicable from 1 April 2017. Up to 31 March 2017, the effective rate will be 20.60%)
c) If overall income taxable in India is below INR 50 lacs, the effective tax rate is 20.60%
Short term capital gains and rental income is treated as any other income of the NRI and is taxable as per applicable slab rates.

The NRI owner can approach the Income-tax Authorities to obtain a certificate for deduction of tax at lower rate. If this certificate is obtained, it can be provided to the tenant who will then deduct TDS at the lower rate specified in the certificate.

If the income is derived from a property situated in India, the income is taxable in India in most of the cases. This usually covers rental income as well as profit made on sale of the property. Wherever the income is taxable in India, the NRI owner needs to file his tax returns in India.

To file a tax return in India, you need to obtain a Permanent Account Number (PAN). The tax returns are to be filed once a year

For the purposes of availing of the facilities of opening and maintenance of bank accounts and investments in shares/securities in India, a foreign citizen (other than a citizen of Pakistan or Bangladesh) is deemed to be of Indian origin, if,
He, at any time, held an Indian passport, or
He or either of his parents or any of his grandparents was citizen of India
by virtue of the constitution of India or Citizenship Act, 1955 (57 of 1955).Note: A spouse (not being a citizen of Pakistan or Bangladesh) of an Indian citizen or of a person of Indian origin is also treated as a person of Indian origin for the above purposes provided the bank accounts are opened or investments in shares/securities in India are made by such persons only jointly with their NRI spouses.
For investments in immovable properties.
(a foreign citizen (other than a citizen of Pakistan, Bangladesh, Afghanistan, Bhutan, Sri Lanka, or Nepal), is deemed to be of Indian origin if,
He held an Indian passport at any time, or
He or his father or paternal grand-father was a citizen of India by virtue of the (Constitution of India or the Citizenship Act, 1955 (57 of 1955).

Overseas Corporate Bodies (OCBs) are those which are predominantly owned by individuals of Indian nationality or origin residing outside India and include overseas companies, partnership firms, societies and other corporate bodies which are owned, directly or indirectly, to the extent of at least 60% by individuals of Indian nationality or origin residents outside India as also overseas trusts in which at least 60% of the beneficial interest is irrevocable held by such persons. Such ownership interest should be actually held by them and not in the capacity as nominees. The various facilities are granted to NRI’s are also available with certain exceptions to OBCs as long as the ownership / beneficial interest held in them by NRIs continue to be 60%

If you are of Indian Origin and hold an Indian Passport, then you are entitled to buy property in India. If you are an overseas passport holder like a US Passport or a British Passport Holder, then you need to have a PIO Card. This can be applied for at the Indian Embassy or Consulate in your country where you are residing or you could enquire with them for further details. It is sufficient if you have your father's or mother's passport or birth certificate or any other proof of their being an Indian Citizen. It is essential to carry that proof with you.

Yes. Under the general permission granted by Reserve Bank properties other than agricultural land/farm house/plantation property can be acquired by foreign citizens of Indian origin provided the purchase consideration is met either out of inward remittances in foreign exchange through normal banking channels or out of funds from the purchasers' NRE/FCNR accounts maintained with banks in India and a declaration is submitted to the central office of Reserve Bank in form IPI 7 within a period of 90 days from the date of purchase of the property/final payment of purchase consideration.

The purchase consideration should be met either out of inward remittances in foreign exchange through normal banking channels or out of funds from NRE/FCNR accounts maintained with banks in India

They are required to file a declaration in form IPI 7 with the central office of Reserve Bank at Mumbai within a period of 90 days from the date of purchase of immovable property or final payment of purchase consideration along with a certified copy of the document evidencing the transaction and bank certificate regarding the consideration paid.

Yes, as an NRI you can apply for a home loan in India. Getting a home loan is as easy for an NRI as a resident Indian. Some lender may, however, ask for a local power of attorney holder.

Yes. Reserve bank has granted general permission for letting out any immovable property in India. The rental income or proceeds of any investment of such income are eligible for repatriation.

If an NRI wishes to sell his property and take away the profits, then:
IF PROPERTY WAS BOUGHT IN FOREIGN EXCHANGE.
He can take away the proceeds.
Sale is restricted to only two properties
Sales allowed only after three years.
IF PROPERTY WAS BOUGHT IN INDIAN RUPEES.
Money must be kept in India.
IF PROPERTY FOR COMMERCIAL PURPOSES IS BOUGHT IN FOREIGN EXCHANGE.
Any or all can be sold
Entire proceeds can be transferred

Applications for repatriation of sale proceeds are considered provided the sale takes place after three years from the date of final purchase deed or from the date of payment of final installment of consideration amount, whichever is later.

Non Resident Indians are allowed to make real estate investments in India without any cap on the quantity or the number of investments.

Yes, an NRI / PIO may gift residential / commercial property to a person resident in India or to an NRI or a PIO. However, a foreign national of non-Indian origin gifting to another foreign national needs prior approval of the Reserve Bank of India

(a)NRIs and PIOs can freely acquire immovable property by way of gift either from a person resident in India or an NRI or a PIO. However, the property can only be commercial or residential. Agricultural land / plantation property / farm house in India cannot be acquired by way of gift.
(b) A foreign national of non-Indian origin resident outside India cannot acquire any immovable property in India through gift.

Refund of application / earnest money / purchase consideration on account of non-allotment of flat / plot / cancellation of bookings / deals for purchase of residential / commercial property, together with interest, if any (net of income tax payable thereon), is allowed provided the original payment was made out of NRE / FCNR account of the account holder or remittance from outside India through normal banking channels and the authorized dealer is satisfied about the genuineness of the transaction.

The non-resident Indians who are staying abroad may enter into an agreement through their relatives and/or by executing the Power of Attorney in their favor as it is not possible for them to be present for completing the formalities of purchase (negotiating with the builder or Developer, drafting and signing of agreements, taking possession, etc.) These formalities can be completed through some known person who can be given the Power of Attorney for this purpose.

You can avail a maximum loan of 80% of the Agreement value. However your loan amount may differ as per your income eligibility as appraised by the bank. All loans are at the sole discretion of the bank.

Banks and financial institutions usually offer loans for a term of up to 30 years.

Completed application form
Photograph
Photo Identity Proof
Residence Address Proof
Signature Verification Proof
Age Proof
Processing Fee
Income Proof

Last 3 months' Salary Slip
Form 16
Repayment Track record of existing loans/Loan closure letter
Bank Statement for the last 6 months from Salary Account

A brief introduction of Business/Profession
Photo Identity Proof, Residence Address Proof, Signature Verification
Statement for all the main partners/directors
Repayment Track record of existing loans/Loan closure letter
Board Resolution in case of a company
Proof of existence of the company
Office Address Proof
Income Tax Return / Computation of Total Income / Auditors Report / Balance Sheet / Profit & Loss Account certified by Chartered Accountant for last 2 years (both for business and personal of partners/directors)

Home buyers needs to choose between fixed and floating rate home loans. Most of the banks/ financial institutions provide the home buyers with an option of switching floating rate to fixed rate once a year with no extra costs. However this need to be confirmed with the lender.

No penalty options to pre pay the loan is provided by some banks/financial institutions subject to limits laid by them. Generally pre-payment is permitted after a minimum of 6 months following loan disbursal.

Equated monthly installment (EMI) is the amount payable to the lending bank / institutions every month till the loan is repaid in full. It consist of a portion of interest and also a portion of the principal. Each banker have their own formula of EMI and it differ from bank to bank, at their sale discretion.