How Indian Overseas Can Invest in Real Estate in India?
Since the last five years, India has seen significant rise in property prices. Since the value of Indian Rupee has been declined against American Dollar, it is just a marginal hike for the Non-Resident Indians. Especially for these Indians, real estate investment in projects like DLF Sky Court, DLF Almeda in India has become more lucrative and affordable. In fact, every NRI makes investment queries about investing in Indian residential property at the OFIC (Overseas Indian Facilitation Centre). Due to the approval of Regulation & Development Bill for real estate investment from the Union Cabinet, the sector is expected to improve protection for the customer’s interest and gain more transparency.
But as a NRI, you should follow some fundamental guidelines to research Indian real estate market.
In the Beginning
First of all, consider the type of real estate. According to the RBI guidelines, NRIs are not allowed to invest in farm land, plantations and agricultural lands in India. For doing that, you should check the documentation if you want to invest in land.
Make sure to see original title deed which is merely in the seller’s name. In case seller shows duplicate copy and doesn’t share original, then it is likely that he took a loan against it. In order to have flawless deal till the end, conduct a proper check.
In addition to that, make sure that all the clearances have been secured by the court of law, including municipal and environmental clearances, and authority to shift the entire possession of whole plot or land to each owner of the apartment in the society after project completion. Also ask for such credentials in under construction projects in order to invest safely. It is better if you seek professional assistance in order to assure that all the important approvals have been secured by the builder.
While Making Purchase
After proper negotiation and due diligence, if you have identified the trustworthy residential options like DLF The Primus and Dlf Regal Gardens, you can reach at the agreed-upon sale price. You may get sales agreement subsequently on the stamp paper of Rs. 50. It states the advance payment, final amount, terms of installment and the amount due.
After completion of sale deed, you should register at sub-district magistrate or sub-registrar. It is important to mention your foreign address in the sales contract. As a buyer, you can appoint a power of attorney to anyone in India who can operate on your behalf. Make sure your holder of power of attorney is notarized in your country where you are living in.
You can get the property registered in your name and the power of attorney holder will sign on your behalf when asked by the concerning authorities. You can pay off the purchase price from either money withdrawn fromordinary banking channels in India or cash from your non-resident account.
Besides stamp duty and registration amount, you also have to pay service tax in transaction. The amount varies according to property. For example, if you are acquiring property from a developer, then 12.36% of service tax is charged on 25% of the total sale price of residential unit below 2000 sq. ft. or 30% for apartments whose area is bigger.
On the purchase price of property, you will have to pay stamp duty for one residential unit or built-up property. According to the state, stamp duty amount varies. In Delhi, stamp duty payable is categorized into three slabs; 4% of value of property for women owners, 5% in case of joint ownership for man and woman and 6% in case of sole ownership for man. In all property transactions, 1% of registration fee is charged.