NRI Zone

NRI Zone

As per Notification FEMA-5 /2000 dated 3.5.2000 as amended from time to time, a Non Resident Indian (NRI) is an Indian citizen residing outside India or is a person of Indian Origin.

Likewise, the definition of Person of Indian Origin (PIO) means an individual (not being a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan) who (i) at any time, held Indian passport, or (ii) who or either of whose father or whose grandfather was a citizen of India by virtue of Constitution of India or the Citizen Act, 1995

An NRI or Person of Indian Origin (PIO) can own both residential as well as commercial properties in India and there is no restriction on the number of properties NRI can buy. However, NRI cannot purchase any agricultural land, farm house and plantation property. NRI can have ownership of such property only if they've been gifted or inherited.

Also, the monetary transaction must be in Indian rupees (INR) and through normal banking channels using an NRI account.

Funding The Purchase

Lenders will be more than happy to fund your purchase provided the NRI is eligible and the property papers are clean.

According to RBI norms, a maximum of 80% of the value of property can be funded by a financial institution. Rest has to come from the NRI's personal resources. Indian financial institutions give rupee loans and so the same needs to be repaid in rupees only.

Since all transactions must happen through the banking channel, repayment has to be done by inward remittances.

NRI can directly get the money remitted from NRO/NRE account in India or issue post-dated cheques or Electronic Clearance Service (ECS) from NRI’s NRE, NRO or Foreign currency Non Resident (FCNR) account.

LIn case the NRI wants to let out the property he/she can use the rent to repay the loan as well. Cheques issued from a relative's local account can also be used to make the loan payments.

Passing the PoA

If you are buying an under-construction property, your developer may ask for a power of attorney (PoA) favouring them. This is not unusual and would make documentation work slightly easier and quicker.

A PoA can be given to execute any contracts, deeds as well as mortgage, lease or even sell. So make sure the kind of authority you are giving to the person through the PoA. Just get it worded properly by a professional lawyer you trust.

Also, if and when you want to dispose the property, it is a good idea to have a PoA given to a resident Indian who may be able to act on your behalf to complete formalities such as registration, possession, execution of agreement of sale, etc.

You need to decide on whether you want to repatriate the money or not. If you want to repatriate, it needs to come in foreign currency from an overseas account, NRE or FCNR account. One can repatriate up to the amount invested in the property.

The other condition is that repatriation cannot exceed the foreign exchange amount paid for purchase of property through banking channels. Refund of application money, advance on cancellation has no limitations. Also, it must be noted that an NRI cannot repatriate proceeds of more than two properties.

Chennai is a famous metropolitan city with good demand for its properties on both national as well as international level. Properties in Chennai are in demand not only among the local buyers but the property investors from other parts of the country as well the world.   NRIs are now willing to invest here for the unparalleled advantage of high returns on investment. The property prices in Chennai are multiplying day by day and so is the demand. Therefore the property investors are sure to make lucrative profits. Moreover when investment is done with careful and proper analysis about the location, value and various other factors favoring an investment in property, would definitely earn long term earnings for the investor as the property demand is unlikely to fall down for at least a few years to come.

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