Among the top premier league of real estate developers in India, Raj Group headquartered in Mumbai, had created a niche for its esteemed clients' over decades in terms of delivering comprehensive residential, Commercial, IT & Hospitality and Construction solutions across all realtors categories.
With our incomparable legacy in construction sector, we have inspired and invited many foreign citizens of Indian origin to invest in their country of origin thorough our flawless project delivery module. We have redefined luxury and rediscovered comfort and lifestyle which perfectly suites our crème-de-la-crème NRI clients. We have been consistently providing quality lifestyle coupled with a better living prospect. Our projects are an exquisite craftsmanship of intellectual and stylish architectural plan with innovative designs which are reflected in number of accomplished projects we have delivered so far.
To offer real estate solutions to our esteemed NRI clients, we at Raj Group World, have assigned a dedicated team who are eager to serve them with indomitable enthusiasm and advisory expertise. The team reaches out to NRIs in various regions by way of exhibitions, road shows and seminars and fulfils sales through our dedicated project sales team.
If you are a NRI, acquiring a home loan in India can be a complicated and confusing process. Go through the following information to understand the process of receiving a home loan.
The Non-Resident Indians (NRIs) are recognized under the Foreign Exchange Regulatory Act, 1973. Every bank and housing finance companies follow the RBI guidelines to define NRI - "An Indian citizen who holds a valid document like Indian passport and who stays abroad for employment or for carrying on business or vocation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad is a NRI."
Broadly categorized, Non-Resident Indians qualifying for NRI housing loans are:
Documents required for Resident Indians as well as for NRIs for getting Home Loans are different in some respect. Home loans for NRIs are available for construction of new house / flats, purchase of old house / flat addition / alteration to an existing house and repairs / renovation etc. NRIs can avail of loans by mortgaging an existing residential property. However, for availing home loans, NRIs have to fulfill certain conditions according to provisions of the Income Tax Act. They should have stayed in India for a period of 182 days or more within an assessment year or they should have stayed in India for at least a total of one year or more.
The FDI Policy that permits FDI up to 100% from foreign/NRI investor under the automatic route has boosted NRI confidence. Banks have attractive NRI housing schemes to accommodate the housing needs of NRIs. From the stables of HFCs, NRI housing finance plans with suitable repayment options are available.
Last but not the least, NRIs should take due care while selecting their home loan provider companies or HFCs. Considering the geographical distances involved, it is significant that loan seekers associate with a proactive and responsive HFC.
Eligibility for NRI's
The eligibility criteria of NRIs differ from Resident Indians based on a few parameters. The parameters include:
NRI applicant is eligible to get a home loan ranging from a minimum of Rs 5 lakhs to a maximum of Rs 1 crore, based on the repayment capacity and the cost of the property, which although is variable by the priorities of the home loan provider. Also Home Loan Tenure for NRIs is different from Resident Indians. An applicant will be eligible for a maximum of 85% of the cost of the property or the cost of construction as applicable and 75% of the cost of land in case of purchase of land, based on the repayment capacity of the borrower.
However, a NRI can enhance his loan eligibility by applying for home loans with a co-applicant who has a separate source of income. Also, the rate of interest for home loans to NRIs is higher than those offered to Resident Indians. The difference is to the extent of 0.25%-0.50%. Some HFCs also have an internally earmarked 'negative criterion' for NRI home loans. As such, the NRIs who hail from locations that are marked as being 'negative' in the books of HFCs, find it difficult to get a home loan.
RBI Directive Loans
The guidelines provided are :
The repayment option for NRIs as they can pay through the funds held in any non-resident account maintained in accordance with the provisions of the Foreign Exchange Management Act, 1999, and the regulations made by the RBI from time to time. As most of the home loan provider companies consider the economical stability of the applicant, home loans for NRIs are quite feasible, because they are well in economic resource.
Document Required for Loan
The documentation required to be submitted by the NRIs are different from the Resident Indians as they are required to submit additional documents, like a copy of the passport, a copy of the works contract, etc. And of course NRIs have to follow certain eligibility criteria in order to get Home Loans in India
Another vital document required while processing an NRI home loan is the power of attorney (POA). The POA is important because, since the borrower is not based in India; the HFC would need a 'representative' 'in lieu of' the NRI to deal with and if needed. Although not obligatory, the POA is usually drawn on the NRI's parents/wife/children.
The documents needed for obtaining NRI home loans are :
List of Classified documents for Salaried and Self Employed NRI Applicants :
Salaried NRI Applicants
Copy of valid passport showing VISA stamps.
Copy of valid visa / work permit / equivalent document supporting the NRI status of the proposed account holder.
Overseas Bank A/C for the last 3 months showing salary credits.
Latest contract copy evidencing Salary / Salary Certificate / Wage Slips.
Self-Employed NRI Applicants
Passport copy with valid visa stamp.
Brief profile of the applicant and business/ Trade license or equivalent document.
6 months overseas bank account statement and NRE/ NRO account.
Computation of income, P&L account and B/Sheet for last 3 years certified by the C.A. / CPA or any other relevant authority as the case may be (or equivalent company accounts).
Additional documents to be submitted by Person of Indian Origin.
Photocopy of PIO Card
If the PIO card is not available, photocopies of any of the following documents:
Permissions and Approvals
Before a construction can begin, the builder must seek several permissions and approvals from relevant bodies. Without these clearances, the construction may come under litigation.
Document Required for Buying Property
Tax on Income from Immovable Property Selling / Renting
Capital Gains Tax on NRI / PIO / OCI?
Repatriation of Funds
(a) at any time, held Indian passport, or
(b) who or either of whose father or whose grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955).5
(i) Who is a citizen of another country, but was a citizen of India at the time of, or at any time after, the commencement of the constitution, or
(ii) Who is a citizen of another country, but was eligible to become a citizen of India at the time of the commencement of the constitution, or
(iii) Who is a citizen of another country, but belongs to a territory that became part of India after the 15th Day of August, 1947.
(iv) Who is a child of such a citizen, or
(a) Provided that no person, who is or had been a citizen of Pakistan, Bangladesh shall be eligible for registration as an Overseas Citizen of India.
(a) Non-Resident Indian (NRI)- that is a citizen of India residing outside India.
(b) Person of Indian Origin (PIO)- that is an individual (not being a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan), who.
(c) at any time, held Indian passport or.
(d) who or either of whose father or whose grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955).
Rate of tax deduction at source (TDS).
Long term Short term.
Exemption available (only for long term capital gains).
The long term capital gains arising on sale of a residential house can be invested in buying/constructing another residential house, within the prescribed time. The exemption is restricted to the amount of capital gains or amount invested in new residential house, whichever is lower.11 If the amount of capital gains is invested in bonds of National Highways Authority of India (NHAI) or Rural Electrification Corporation, then the entire capital gains is exempted, else the proportionate gain is exempted. As per the financial budget 2007-08, a cap of Rs. 50 lakhs has been imposed on investment that can be made in capital tax saving bonds.
(i) In foreign exchange received through normal banking channel or
(ii) By debit to NRE account (foreign currency equivalent, as on the date of payment) or debit to FCNR(B) account.
Repatriation of sale proceeds of residential property purchased by NRI's/PIO's out of foreign exchange is restricted to not more than two such properties. Capital gains, if any, may be credited to the NRO account from where the NRI's/PIO's may repatriate an account up to USD one million, per financial year, as discussed below.13
(b) If the property was acquired out of Rupee sources, NRI/PIO may remit an amount up to USD one million, per financial year, out of the balances held in the NRO account (inclusive of sale proceeds of assets acquired by way of inheritance or settlement), for all the bonafide purposes to the satisfaction of the Authorized Dealer bank and subject to tax compliance. The NRI/PIO may use this facility to remit capital gains, where the acquisition of the subject property was made by funds sourced by remittance through normal banking channels/by debit to NRE/FCNR(B) account.
(a) The quantum of loans, margin money and the period of repayment shall be at par with those applicable to housing finance provided to a person residing in India.
(b) The loan amount shall not be credited to Non-resident External (NRE)/Foreign Currency Non-resident (FCNR)/Non-resident non-repatriable (NRNR) account of the borrower.
(c) The loan shall be fully secured by equitable mortgage by deposit of title deal of the property proposed to be acquired, and if necessary, also be lien on the borrower's other assets in India..
(d) The instalment of loan, interest and other charges, if any, shall be paid by the borrower by remittances from outside India through normal banking channels or out of funds in his Non-resident External (NRE)/Foreign Currency Non-resident (FCNR)/Non-resident Non-repatriable (NRNR)/Non-resident Ordinary (NRO)/non-resident Special Rupee (NRSR) account in India, or out of rental income derived from renting out the property acquired by utilization of the loan or by any relative of the borrower in India by crediting the borrower's loan account through the bank account of such relative (The word 'relative' means 'relative' as defined in section 6 of the Companies Act, 1956.).
(e) The rate of interest on the loan shall conform to the directives issued by the Reserve Bank of India or, as the case may be, the National Housing Bank.
(a) Your taxable income in India during the year was above the basic exemption limit of ` 1.6 lakh OR
(b) You have earned short-term or long-term capital gains from sale of any investments or assets, even if the gains are less than the basic exemption limit.
Note : The enhanced exemption limit for senior citizens and women is applicable only to residents and not to non-residents.
(a) If your taxable income consisted only of investment income (interest) and/or capital gains income and if tax has been deducted at source from such income, you do not have to file your tax returns. 17
(b) If you earned long term capital gains from the sale of equity shares or equity mutual funds, you do not have to pay any tax and therefore you do not have to include that in your tax return.
Tip: You may also file a tax return if you have to claim a refund. This may happen where the tax deducted at source is more than the actual tax liability. Suppose your taxable income for the year was below ` 1.6 lakh but the bank deducted tax at source on your interest amount, you can claim a refund by filing your tax return.
Another instance is when you have a capital loss that can be set-off against capital gains. Tax may have been deducted at source on the capital gains, but you can set-off (or carry forward) capital loss against the gain and lower your actual tax liability. In such cases, you would need to file a tax return.
Ministry of External Affairs : www.mea.gov.in
Indian Income tax : www.incometaxindia.gov.in
RBI (NRI FAQ) : www.rbi.org.in
These are the broad guidelines meant for ready reference with respect to acquisition and transfer of immovable property in India by NRI/PIO/OCI and in each case prospective buyer or seller of property in India must consult his/her own legal/finance/tax advisor and obtain suitable advise for their specific transaction. Raj Group assumes no responsibility or legal liability for transactions entered into by placing reliance on these FAQs. These guidelines are as applicable as on 31st January 2011 and are subject to amendment by the regulatory authority. Raj Group assumes no responsibility for updating these FAQs.