India has always been an attractive investment destination for Non-Resident Indians (NRIs). Despite the pandemic-induced economic slowdown, NRIs are still showing interest in investing in India. In recent years, several factors have contributed to this trend, including the depreciating Indian rupee, the growing Indian economy, and the government's efforts to boost investment.

These factors have made India an attractive destination for NRIs looking to invest in the long term. With the Indian economy poised for continued growth and development, NRIs can expect to see significant returns on their investments in the years to come.

Why NRI’s are attracted to Indian Real Estate?

The depreciating Indian rupee has been a significant factor that has drawn NRIs towards investing in India. Over the years, the Indian rupee has steadily declined against major currencies like the US dollar and the Euro. This depreciation has made investing in India cheaper for NRIs, especially those living in countries with strong currencies. The lower value of the Indian rupee means that NRIs can invest more in India for the same amount of money they would have invested a few years ago.

The Indian economy's growth and development have also been a significant factor that has attracted NRIs towards investing in India. Despite the pandemic, the Indian economy has shown remarkable resilience and is expected to grow at a robust pace in the coming years. This growth has been driven by various factors, including the government's efforts to promote investment in key sectors such as infrastructure, healthcare, and manufacturing. This growth potential has made India an attractive destination for NRIs looking to invest in the long term.

Furthermore, the Indian government's initiatives to boost investment and ease of doing business have also been a driving force for NRIs' investments in India. The government has introduced several reforms, including the Goods and Services Tax (GST), which has streamlined taxation and made it easier for businesses to operate in India. The government has also introduced several regulations, making it easier for NRIs to invest in India. These include Foreign Exchange Management Act (FEMA) regulations, Real Estate (Regulation and Development) Act 2016 (RERA), etc.

According to Manoj Asrani, First Executive, Brickasset Pvt Ltd, “The current real estate environment makes it easier, transparent and encouraging for Non-Resident Indians (NRIs) and Overseas Citizens of India (OCI). Given the fact that NRIs intend to earn higher Returns on Investment (ROI), the prevailing real estate climate not only bodes for healthy returns but minimized tax liability too.”

However, no matter how transparent Indian Real Estate has become, it’s important for NRIs to know all the legal & financial implications beforehand to safeguard their capital and for a hassle-free purchasing experience. Legal and financial requirements for NRIs investing in Delhi-NCR

NRIs looking to invest in Delhi-NCR must comply with certain legal and financial requirements. Firstly, NRIs must have a PAN card and an NRI bank account to invest in India. NRIs must also comply with the Foreign Exchange Management Act (FEMA) regulations, which govern the transfer of funds into and out of India. Apart from FEMA, Real Estate (Regulation and Development) Act 2016 (RERA), and the Benami Properties Act 2016 are some other regulations NRIs should be wary of. NRIs must also comply with the Income Tax Act and file tax returns in India.

NRIs investing in real estate in India must also be aware of the various legal requirements. NRIs must ensure that the property they are investing in has a clear title and is free from any encumbrances. NRIs must also ensure that the property is registered with the relevant authorities. NRIs must also be aware of the stamp duty and registration charges that apply to real estate transactions in India.

Essential documents

• Know Your Customer (KYC) documents (copy of passport and its relevant pages encompassing the name, photo, date of birth, and address)

• Copy of the Permanent Account Number (PAN)

• Overseas address proof (permanent or the correspondence address outside India)

Types of properties NRIs can invest in

Investment in both residential and commercial properties is open to NRIs, OCIs, and Persons of Indian Origin (PIO). However, agricultural land, plantation land, or farmhouse can be acquired only if it is inherited or received as a gift from a person who is a citizen of India or a resident of India settled abroad.

Registration formalities

The registration of the purchased property has been completed at the registrar's office. To complete the registration process, certain essential documents are needed, such as a Title Deed that includes a photograph and signature of the new owner. In case the NRI (Non-Resident Indian) is not available during the registration, an immediate relative can be issued a registered Power of Attorney (POA). After the registration is successfully completed, the NRI will become the new owner of the property.

Income earned from the property The monetary benefit derived from the property in India is termed the income accrued and is taxable under the Income Tax Act. Tax implications for NRIs investing in Delhi-NCR

NRIs investing in real estate in Delhi-NCR are eligible for certain tax benefits under the Income Tax Act. NRIs can claim deductions on home loans, interest paid on loans, and property taxes, among other things. NRIs must also comply with the provisions of the Double Taxation Avoidance Agreement (DTAA) between India and their country of residence. The DTAA ensures that NRIs are not taxed twice on the same income.

NRIs must also be aware of the tax implications of selling their property in India. NRIs must pay capital gains tax on the profit they make from the sale of their property. 

Short-term capital gains (STCG)

In accordance with the Income Tax Act, if the NRI decides to sell the property within two years of its acquisition, any profit generated from the sale will be categorized as short-term capital gain. As a result, the NRI will be required to pay taxes on the profit, as per the applicable slab rate for NRIs.

Long-term capital gains (LTCG)

If the NRI holds onto the property for a period exceeding two years, the income generated from the sale will be classified as long-term capital gain, and the NRI will be subject to a tax rate of 20 percent. Nevertheless, there are several exemptions available for long-term capital gains under Sections 54, 54 F, and 54 EC that can be claimed.

Financing options for NRIs investing in Delhi-NCR

NRIs looking to invest in real estate in Delhi-NCR have several financing options available to them. NRIs can take out a home loan from an Indian bank or financial institution. However, NRIs must comply with certain legal and financial requirements to be eligible for a home loan. NRIs must also be aware of the interest rates and repayment terms before taking out a home loan.

Another financing option available to NRIs is to use their NRE or NRO account to invest in real estate in India. NRIs can also use their foreign income to invest in real estate in India. NRIs must comply with FEMA regulations and ensure that they have the necessary approvals before investing in real estate in India.

Loan eligibility for NRIs

Depending on their individual eligibility, NRIs can receive a loan of up to 80 percent of the property's value. The loan will be disbursed in Indian rupees, and the repayment of the loan can be made through various methods.

These methods include inward remittance through banking channels, debit from an NRE/NRO/FCNR (B) account held in India, rental income accrued from the property, or via a close relative of the borrower. Section 6 of the Companies Act, 1956 allows any close relative of the NRI to transfer the loan amount to the NRO account on behalf of the NRI for repayment purposes.

Conclusion and final thoughts

Investing in real estate in Delhi-NCR can be a lucrative investment opportunity for NRIs. With its growing economy, thriving infrastructure, and increasing demand for real estate, Delhi-NCR offers a wide range of investment opportunities for NRIs. However, NRIs must be aware of the legal and financial requirements and the risks associated with investing in real estate in Delhi-NCR. NRIs must also do their due diligence and work with reputable real estate company to minimize the risks associated with investing in real estate in Delhi-NCR. 

With Zoltan Properties’ real estate consultation & advisory services our experts help you find out the best property under your budget and as per your financial goals. We also have the most promising properties listed for sale in India. These projects are from reputable builders who have a history of delivering quality projects on time.

By investing in real estate in Delhi-NCR, NRIs can achieve their financial goals and build a sense of emotional connection with their home country. However, investing with an expert & reputable real estate company such Zoltan Properties can not only maximize your ROI, but also assure the safety of your capital.

Read Also: Why NRIs Are Investing In Indian Real Estate?