Golden Rules For NRI Investments In India During Market Dip

Purchasing real estate is one of the most significant and likely accomplishments. But what if you're an NRI looking to invest in a home in India? With many NRI real estate investment choices accessible in India, a typical question may be whether or not you can buy a property in India. Yes, indeed. Anyone holding an Indian passport can invest in the Indian real estate market. In truth, NRI real estate investment in India is a profitable alternative.

Share on facebook
Share on twitter
Share on linkedin
from low angle building of skyscraper 2021 08 29 06 11 32 utc min 1 1 1 1 1 1 1 1 1 1 scaled

India is the first in the world in terms of inward remittances. According to a World Bank study, Migration and Development Brief, published in April of this year, the biggest remittance beneficiaries are India ($79 billion), China ($67 billion), and Mexico ($36 billion). In reality, according to statistics from successive World Bank assessments, it has been rising in India. India has the highest value at $79 billion, followed by China ($67 billion) and Mexico ($36 billion). According to information on the Reserve Bank of India (RBI) website, half of the remittances received by Indian citizens are used for family upkeep, followed by bank deposits. However, a significant portion gets invested in real estate.

Investing in real estate may deliver a strong return on investment while needing a lower initial financial expenditure for NRIs. Assetmonk, for example, provides seamless ways to assist you with your next investment in this area, with a high-quality strategy ranging from finding the best property to acquiring and moving in. NRIs would have a plethora of choices in Indian real estate. Through RERA, the Indian government’s attempt to regulate the real estate sector and provide better transparency and accountability has led to a resurgence of NRI interest in the Indian real estate market. As a result, India is a favorite real estate investment destination for NRIs.

Here is: NRI Investment in India – Best Investment for NRI in India.

But what about the RBI guidelines for NRI investment in real estate?

The Reserve Bank of India has simplified the conditions for NRI investments to attract more foreign investment. Real estate transactions get governed by the Foreign Exchange Management Act (FEMA).

The Reserve Bank of India (RBI) permits NRIs or PIOs with a valid Indian passport to purchase residential/commercial property in India. The investor does not need to acquire specific clearance from the RBI for this. In addition, the investor does not need to notify the RBI while purchasing residential or commercial property in India. According to RBI regulations and income tax legislation, an NRI may purchase an unlimited number of these two categories of properties. 

However, an NRI cannot purchase agricultural property or plantation in India under the RBI’s general license. It implies that non-resident Indians (NRIs) cannot invest in farmhouses unless they acquire specific approval from the RBI. The RBI would only entertain such requests on a case-by-case basis. An NRI may purchase a property alone or jointly with another NRI. However, regardless of the participation of the second holder in the acquisition, resident Indians or people who are not permitted to own properties in India cannot become joint investors in such assets.

What are the factors that foster NRI investment in Indian real estate?

Regardless of whether the real estate market is bullish or bearish, non-resident Indians (NRIs) wish to return to India for reasons other than financial gain. But also to remain anchored in their home country. Previously, NRIs had good cause to be wary of the Indian real estate market. But, that is no longer the case due to the following reasons.

  • Regulation: Today, game-changing legislation such as the Real Estate Regulatory Authority (RERA) and the goods and services tax (GST) have increased NRI trust and transparency. It has also expedited the property-buying process. As a result, it has fueled fresh NRI investments in the Indian real estate industry.
  • Rupee depreciation: The rupee’s depreciation versus the dollar in 2018 was another compelling reason for NRIs to see Indian real estate favorably. The recent weakening of the Indian rupee has sweetened the deal even more since NRIs now have to spend less money than previously to buy a home in the nation.
  • Retirement Benefit: Reverse mortgages are becoming more popular in the United States. India, on the other hand, is now planning for this system. NRIs looking to retire in India may invest in and profit from reverse mortgages. The money borrowed from a bank for this type of mortgage is not taxable income for NRIs. In this way, older non-resident Indians might realize the benefits of owning property in India. Simultaneously, they can borrow money from banks as part of the reverse mortgage on the home.
  • Tax Benefit: As an NRI, you are eligible for the tax benefits that an Indian resident is entitled to when purchasing a property. Also, if you sell the property within three years after buying it, it gets deemed a short-term capital gain, and the proceeds are taxed. But, if you sell the property after three years, you can defer the long-term capital gains tax by investing in another property.
  • Low property prices: NRI investors should take advantage of the present real estate market downturn. Historically, the rate of price inflation in India has always been faster than in western industrialized countries. As a result, when compared to other global real estate markets, India may offer investors better value for money, with returns in less time. Those looking to invest in low-cost housing may be interested to know that, according to the Maharashtra Chamber of Housing Industry (MCHI), the entire supply of inexpensive apartments in Mumbai surged by 300 percent in the previous year.

But where should an NRI invest in real estate?

Clueless much as where to invest in Indian real estate? You do not have to worry. We have got your back. However, to determine where you can invest in India, you must first ask if the property is for personal use or investment purposes.

Here is Checklist for NRIs Looking to Invest in Indian Real Estate.

  • Residential Real Estate: Given the stagnation, there are possibilities for personal use. The residential market, in particular, is in better shape this year, as speculative investment activity has decreased dramatically. These are popular among NRI investors who wish to enhance their wealth and develop assets to use when they return to India from occupations abroad. These houses get built for rent, with the owner obtaining a steady income from deposits paid by renters. The market has also become more appealing to NRIs as transparency has increased and investment regulations are relaxed. Developers have also tailored solutions for this market niche by building smart houses with worldwide appeal.
  • Commercial Real Estate: Commercial real estate may be a superior investment. While residential real estate is still the NRIs’ first love, the commercial real estate class provides a viable alternative. NRI demand for Grade A offices, IT parks, logistics centers and even REITs (real estate investment trusts) has surged because of strong capital appreciation and rental income. While the present residential property rental return is 1.5-3.5 percent, a suitable commercial property may provide an average rental income of 6-10%.

Here is: 5 Reasons Why NRIs are Aiming at Indian Commercial Real Estate Properties.

  • Agricultural Land: The Foreign Exchange Management Act of 1999 exempts NRIs from owning agricultural lands in India. If an NRI wants to purchase agricultural land in India, they must follow a distinct request procedure with the RBI, and the acquisition is still questionable.
  • Farmhouse or Plantation Property: As with agricultural properties, NRIs are ineligible to acquire Farmhouse or Plantation property. This rule, however, has several exceptions. When a person receives property as an inheritance, it might get requested as a property investment.

The Indian real estate business, particularly among NRIs, is an enticing location for a safe and secure investment with significant returns. Given the current circumstances, the unforeseeable future, technology improvements, and favorable legislation, it is the moment for NRIs to participate in the Indian real estate market. Thus, their investment in domestic properties will continue to increase fast in the coming years.

Assetmonk is a premium wealthtech platform that links investors to high-yielding real estate assets. This website serves as a channel for NRI real estate investments. It streamlines real estate investing procedures by offering high-quality real estate asset opportunities around the country at reasonable pricing. It saves NRIs time from the time-consuming and unproductive process of looking for a property in India.

Rules For NRI Investments In India FAQ'S:

Yes, an NRI can invest in property in India. He can invest in residential real estate and commercial real estate. But he cannot invest in agricultural land or a farmhouse.

NRIs who sell residential property in India must pay Capital Gains Tax. The tax due on capital gains gets determined by whether it is short-term or long-term.

The three documents that an NRI must have to buy property in India are:

  • Indian Passport or an OCI Card: NRIs must display their Indian passport. You can purchase property in India if you have a PIO (Persons of Indian Origin) card. You can also buy property if you have an OCI (Overseas Citizen of India) card and a foreign passport.
  • PAN Card: NRIs require a PAN (permanent account number) card since they must submit income tax returns if they rent out their property. It is for all real estate transactions.
  • Power of Attorney: If you are an NRI who does not visit India frequently, giving a specific power of attorney to someone in the city you are buying a property would make the registration, execution of the sale, possession, and other formalities much easier.

Related Articles

istockphoto 1313421433 612x612 1

Pradhan Mantri Kisan Samman Nidhi Yojana

What is the Pradhan Mantri Kisan Samman Nidhi Yojana? The Pradhan Mantri Kisan Samman Nidhi Yojana is a plan initiated by the Indian government. It gives income help of as much as Rs. 6000/- annually to all marginal and small farmers. Families of land-owning farmers receive an Rs. 6000/-  cash advantage a year under the Pradhan Mantri Kisan Samman Nidhi Yojana plan. This amount will get paid Rs. 2000/- in 3 equal payments per 4 months. Also, read Saving Schemes in India. The Motive of the Pradhan Mantri Kisan Samman Nidhi Yojana? As we all know, agriculture is the backbone in the Indian economy. So, farmers are an important part of society. But, the economy has socioeconomic gaps between the urban areas with rural areas. So, farmers battle with long-term profitability. This problem has afflicted the majority of India’s people since its freedom. The state and federal governments have worked to solve this challenge. They have also introduced a variety…

Read more
istockphoto 951524746 612x612 1

Post Office Time Deposit

So, what is the Post Office Time Deposit Scheme? India Post provides the post office time deposit as a modest savings program for Indians. Post Office Time Deposit Scheme is a savings account investment provided by India Post. This program gets intended for depositors who desire to make a one-time deposit with an FD of 5-year which is a tax advantage. With a few exceptions, it is identical to a bank fixed deposit. People can create a post office time deposit account by approaching their closest post office or by utilizing India Post’s official app or website. India Post has been in existence since 1854. It is the most globally disseminated postal network, with over 1.55 lakh offices spread over India. Majorly known for mail delivery, India Post also offers these services: Small savings schemes. Postal Life Insurance and Rural Postal Life Insurance Instant money order E-money order. Mutual funds. Services for money transfer Also read Post Office Investments –…

Read more
istockphoto 1364622197 612x612 1

PPF Vs SSY

PPF Vs SSY: What is the difference between the two? Sukanya Samriddhi Yojana Account (SSY) and Public Provident Fund (PPF) are the safest investments. These are accessible to those desiring significant financial development with a low-risk component. So, if you wish to invest in any or both of these schemes, you would investigate and check. Financial objectives, risk tolerance, rate of interest, and versatility should all get addressed. Read SSY – Sukanya Samriddhi Yojana Benefits & Interest Rates. PPF Vs SSY PPF and SSY are solid investment options, although they differ in important ways. The Sukanya Samriddhi Yojana is a female child welfare plan. It helps to safeguard a girl child’s future. But, the PPF is a program that enables depositors to receive zero-tax interest. In India, the Public Provident Fund (PPF) plan provides a long-term investing choice. It provides high profits while also giving tax deductions to the investor. A PPF account may get created in any private or…

Read more
Small Savings Schemes

Small Savings Schemes

Small savings schemes are an excellent way to save money. They offer a good rate of interest and can be used as an alternative form of collateral for investments, bonds, and property. The following schemes are available throughout the country and are some of the most popular ones that you can consider: Post Office Time Deposit Scheme The Post Office Time Deposit Scheme (POSTD) is a small savings scheme launched by the Government of India to provide investment opportunities in the secondary market. The scheme was launched on 15th September, 2015. This scheme is popular in rural as well as remote corners of the country, where the people have limited access to other financial products or alternative investments. The Ministry of Finance sets the interest rates for this scheme based on the performance of government securities, which is generally spread across the yields of the government sector. For 2022, the rates of interest are 5.5%, 5.7%, 5.8%, and 6.7% for…

Read more
istockphoto 1033711098 612x612 1

UAN Helpdesk

What is the UAN helpdesk for PF account holders? UAN is a 12-digit Universal Account Number that is assigned to every PF account holder at the time of joining the first job. The PF number when allocated, is used for each organization through the use of UAN. The new PF identification number that the person is associated with is his UAN in each new company of which an employee is a part. UAN can be described as a code that is used to identify several PF account IDs for an individual participant. It serves as an umbrella for multiple PF IDs assigned to individuals by various organizations. Also read UAN Registration & Activation Process Online. What exactly is UAN Helpdesk? The Employee’s Provident Fund Organization, India has a separate helpdesk online for (Universal Account Number) UAN-related issues and complaints. Users can access the helpdesk online and resolve their issues on their own or contact the executive offline. Employees can also…

Read more
child saving scheme

Child Saving Schemes

A child is the most precious thing in your life, and it’s important that you take care of them. However, it can be hard to know how much money you should save for their future education, health, and insurance needs. There are many different types of child saving schemes available for parents who want to safeguard their children from financial difficulties later in life. Here are some examples: Sukanya Samriddhi Scheme The Sukanya Samriddhi Yojana is a child saving scheme specially made for girl children. It was launched by Prime Minister Narendra Modi on January 22, 2015. The objective of this scheme is to promote the financial inclusion of girls in India by incentivizing them to save money through the Sukanya Samriddhi account. The interest rate ordered by this scheme is 7.6% per annum, and the minimum and maximum investment amounts are ₹250 and ₹1.5 lakh per annum respectively. Also, the maturity period of the Sukanya Samriddhi Scheme depends on…

Read more