Here are few things that you must keep in mind while purchasing property from NRIs.
The FEMA :- Firstly, can you buy a property from an NRI or not? Well, you can. Under the Foreign Exchange Management Act (FEMA), foreign nationals of non-Indian origin are allowed to sell their property to residents of India and People of Indian Origin (PIO).
However, if you are buying a property from an NRI, who is currently a citizen of Afghanistan, Bangladesh, Bhutan, China, Pakistan, Nepal or Sri Lanka, you must check if they have an approval from the Reserve Bank of India (RBI).
RBI’s approval is also required if you are buying an agricultural land or farm house from an NRI.
Power of Attorney :- “Generally, foreign nationals try to sell their properties via a third party wherein they hand over the Power of Attorney to them to sell the land on their behalf. If you are buying a property from an NRI, do check whether such a Power of Attorney is signed by an officer in the Indian Embassy,” says Atulay Nehra, owner, Atulay Nehra Consulting, a legal firm functioning in NCR.
The buy-sell agreement :- The buy-sell agreement between you and the seller must be written in Rs 50 stamp paper. Both parties must sign it in the presence of two witnesses.
What does the agreement include? “The actual cost of the property, the advance amount paid (if any), the duration in which the sale would be completed and most importantly, a clause mentioning how to proceed in case of any default from either parties,” says Nehra.
Registering the property :- After the buy-sell agreement, it is important to register the property. It can be registered in a sub-registrar’s office.
In order to register the property, you need to check that the NRI (seller) has the original title deed, previous deeds, receipts of property tax and the Torence Plan.
Tax deductions
There are many buyers who are unaware of the tax rules, when it comes to purchasing a property from an NRI. Under Section 195 of the Income Tax Act, 1961, you will have to pay the tax before making the payment to the NRI. This is known as Tax Deducted at Source (TDS).
If you are buying a property priced less than Rs 1 crore, the TDS will be charged at the rate of 20.6 per cent, while if the price of the property exceeds this amount, the rate is 22.66 per cent.
Source : http://www.99acres.com/articles/purchasing-property-from-an-nri-things-you-must-know.html
The FEMA :- Firstly, can you buy a property from an NRI or not? Well, you can. Under the Foreign Exchange Management Act (FEMA), foreign nationals of non-Indian origin are allowed to sell their property to residents of India and People of Indian Origin (PIO).
However, if you are buying a property from an NRI, who is currently a citizen of Afghanistan, Bangladesh, Bhutan, China, Pakistan, Nepal or Sri Lanka, you must check if they have an approval from the Reserve Bank of India (RBI).
RBI’s approval is also required if you are buying an agricultural land or farm house from an NRI.
Power of Attorney :- “Generally, foreign nationals try to sell their properties via a third party wherein they hand over the Power of Attorney to them to sell the land on their behalf. If you are buying a property from an NRI, do check whether such a Power of Attorney is signed by an officer in the Indian Embassy,” says Atulay Nehra, owner, Atulay Nehra Consulting, a legal firm functioning in NCR.
The buy-sell agreement :- The buy-sell agreement between you and the seller must be written in Rs 50 stamp paper. Both parties must sign it in the presence of two witnesses.
What does the agreement include? “The actual cost of the property, the advance amount paid (if any), the duration in which the sale would be completed and most importantly, a clause mentioning how to proceed in case of any default from either parties,” says Nehra.
Registering the property :- After the buy-sell agreement, it is important to register the property. It can be registered in a sub-registrar’s office.
In order to register the property, you need to check that the NRI (seller) has the original title deed, previous deeds, receipts of property tax and the Torence Plan.
Tax deductions
There are many buyers who are unaware of the tax rules, when it comes to purchasing a property from an NRI. Under Section 195 of the Income Tax Act, 1961, you will have to pay the tax before making the payment to the NRI. This is known as Tax Deducted at Source (TDS).
If you are buying a property priced less than Rs 1 crore, the TDS will be charged at the rate of 20.6 per cent, while if the price of the property exceeds this amount, the rate is 22.66 per cent.
Source : http://www.99acres.com/articles/purchasing-property-from-an-nri-things-you-must-know.html
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