Purchase of Property
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Permissible Properties: NRIs can purchase residential and commercial properties in India without any restrictions from the RBI. However, they cannot purchase agricultural land, plantation property, or farmhouses without specific permission from the RBI, which is considered on a case-by-case basis.
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Costs and Considerations: When planning to sell the property after appreciation, NRIs should consider costs such as registration fees, brokerage, and other transaction-related expenses, which can total around 10%. Additionally, they should factor in exchange rate differences and maintenance costs during the holding period. The absolute gain should exceed these costs to make the investment worthwhile.
Sale of Property
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Permissible Sales: NRIs can sell residential or commercial properties to a resident of India, another NRI, or a Person of Indian Origin (PIO). However, inherited agricultural land or a farmhouse can only be sold to an Indian resident.
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Tax Implications: NRIs are subject to Short Term Capital Gains (STCG) or Long Term Capital Gains (LTCG) taxes on the sale. Tax liability can be mitigated by reinvesting the capital gains in accordance with Indian tax laws, such as repurchasing property or investing in specified government bonds within a stipulated period.
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TDS Deduction: There is a Tax Deducted at Source (TDS) obligation under Section 195 of the Income Tax Act when purchasing property from an NRI. This TDS is relatively high but can be reduced by obtaining a certificate from the tax department.
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Proceeds Management: Net sale proceeds are credited to the NRO account, and remittances can be made as per regulations.
Power of Attorney
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Delegation: If an NRI cannot personally attend to the procedures, they can issue a special power of attorney to a trustworthy person in India to handle the transaction on their behalf.
For more detailed information, NRIs can refer to the .
