How NRIs can benefit from investing in India and someuseful legal tips for investing

In India, property value has appreciated quite significantly during the few years. But

for the Non –resident Indian the increase in real estate value has been marginal owing

to the depreciation of the Indian rupee against the dollar. This has indeed made the

investments made by NRIs in Indian real estate an affordable and extremely lucrative

proposition. While the fact is that real estate prices in the world are sinking, in India

the real estate is booming and indeed a boon for investors. The best way for NRIs take

advantage of this situation is to think about making a suitable and sound investment

in India in the real estate sector.

At the Overseas Indian Facilitation Centre (OFIC) most investment queries are

regarding purchase of residential property in India. After the Union Cabinet approved

the Real Estate Regulation and the Development Bill, we are hoping to see the sector

becoming more and more transparent and will be able to protect the consumer’s

interest more.

The investment by NRIs in India will bring higher returns as the years go by and the

investment made will never be found regrettable. When you consider investing in

India the non-resident Indians should surely take into consideration the Foreign

Exchange Management Act and Income Tax Act. A good and adequate knowledge of

these two enactments will indeed be a great help to non-resident Indians who are

considering investing in India. Taking a wise-decision will be possible with

knowledge of these acts and the laws affecting investments in India. As per the

Foreign Exchange Management Act an NRI is permitted to buy or obtain any

immovable property in India which does not come under the category of agricultural

or plantation property or farm house. Thus it is clear to us that NRIs enjoy all of the

privileges which are enjoyed by Indians when it comes to purchase of property.

With reference to the acquisition of immovable property in India these are the

many rules / acts / laws that bind the NRIs.

1. They are allowed to buy immovable property which does not come under agri land

or farm house category but this is subject to conditions under RBI rules pertaining to

the same.

2. Acquire immovable property other than agricultural land / plantation property or

farm house by means of gift from an Indian citizen resident outside India or from a

PIO.

3. Acquire such property by inheritance.

4. Obtain a transfer of money by sale of immovable property other than agricultural /

plantation property of farm house by means of a sale to a person resident in India.

5. Transfer of agricultural land / farm house or plantation property by way of gift or

sale to an Indian citizen resident in India.

6. Transfer residential or commercial property in India by way of gift to a person who

is a resident in India or to a person resident outside India who happens to be a citizen

of Indian origin residing outside India.

Before indulging in any purchase of property in India the Non- Resident Indian

should carefully prepare the basic objective for such a purchase and investment in

real estate in Chennai. This we advise because the strategy will differ in each case

based on the purpose behind your investment. Also if the NRI plans to invest in

property with the sole purpose of making a profit at the time of selling then we will

suggest a different strategy for purchase.

If the NRI is considering investing with the sole purpose of receiving a regular flow of

money by way of rental income then the strategy will have to be entirely different.

By following a few rules as an overseas Indian NRIS will go a long way in ensuring

that they navigate the real estate market well in India:

Ensure proper ground checks

Firstly, ensure that you have done the proper ground checks and that you are

following the RBI rules for NRIs investing in India. Ascertain that all legal documents

are in order before buying the property. There are cases where residential projects

have been built on agricultural land without getting approval from the government

authorities. If this happens the property with the building will later be declared

illegal irrespective of who buys the property and hence you will stand to lose on the

purchase.

Considering this NRIs investing in India should ensure that the property has a clear

title deed, in original and solely in the name of the seller. If the seller refuses to

produce the original and shares a photocopy there is a chance that he has obtained a

loan on the property and hence you should ensure a thorough check is done to make

sure you there is no pitfall in the sale at a later date.

Also make sure the property has also secured all clearances needed by law, such as

environment and municipal clearances if required. Last but not the least, we advise

you to use the services of a lawyer to ensure that all papers are vetted by a qualified

professional.