NRI Property Buying-Tax & FEMA

BUYING AN IMMOVABLE PROPERTY IN INDIA – BY AN NRI/OCI/FOREIGN CITIZEN – FEMA & INCOME TAX PROVISIONS
Background
  • India has always remained a desired destination for investment in immovable property.
  • The purposes of buying a property in India are: to settle in India after returning back to India, to settle their children in India, to buy a house for their parents or other family members in India, Investment in India etc.
  • Otherwise also, many Non Resident Indians (NRIs), Overseas Citizens of India (OCIs), Person of Indian Origins (PIOs), Foreign Citizens, due to their personal attachment to India, keep an interest to purchase a property in India.
  • There are various provisions and regulations, which need to be taken care before/during buying/purchasing an immvoable property in India by NRIs.
Income Tax Act
  • Under Income Tax Act 1961, as per the TDS provisions, buyer NRI/OCI needs to deduct TDS before making payment for acquisition of property.
  • TDS rates vary as per the residential status of the seller of property.
  • If Seller of property is Resident then TDS is applicable @1% if property purchase amount exceed Rs 50 Lakh.
  • If Seller of property is Non-Resident then as per the provisions of section 195 of the Income Tax Act, TDS needs to be deducted @20% or @30% (depending on the period of holding of property by the Seller). Surcharge (@10% or @15%) may also applicable if property purchase amount exceeds Rs 50 Lakh or 1 Crore respectively. Cess @4% is also applicable.
  • In relation to Non-Resident Seller, due to high rate of TDS applicability, an application can be filed with the jurisdictional assessing officer for TDS Exemption Certificate (TEC) or Lower Rate TDS Certificate u/s 197/195.
  • Under the provisions of section 56(2) of the Income Tax Act, the NRI buyer (of property) need to ensure that the registration of property is not less than the Stamp Duty Value of the property as per the Stamp Valuation Authority Rules.
  • On deduction of TDS, the buyer NRI need to file a TDS return in relation to TDS deducted on purchase of property. This TDS return shall be filed in Form 26QB (in case of resident seller) or 27Q (in case of Non-Resident seller).
Foreign Exchange Management Act (FEMA) – RBI Regulations
  • Under FEMA, an NRI/OCI/Foreign Citizen need to be very cautious before buying an immovable property in India. They must consult some expert in this regard.
  • Under general permission, NRIs and PIOs can buy a property in India.
  • Buying property for Real Estate business activity is not allowed to anyone including NRI/OCI etc.
  • To buy an agriculture land or farm house in India, prior approval needs to be taken from RBI.
  • NRIs/OCIs can buy an immovable property in India out of their foreign funds, NRE account or NRO account.
  • Multiple & Frequent purchase/sale of immovable property in India will lead to RBI Regulations violation under Realt Estate Business Activity category.
  • Citizens of India neighbor countries (ie Pakistan, China, Nepal, Srilanka, Hong Kong, Bhutan, Bangladesh, Mynamar etc) are not allowed to buy an immovable property in India. They need to take RBI approval for purcase of immovalbe property in India.
S Lohia & Associates – Services & Credentials – Wrt NRI/OCIs/PIOs/Expats Buying Immovable Property In India
  • S Lohia & Associates Expert Team is all the time available to advise various provisions in relation to Buying/purchasing and immovalbe proeprty by NRIs, OCIs, Expats in India.
  • One Window service in relation to various regulations & services of Non-Resident Indians, Overseas Citizens of India, PIOs, Expats, Foreign Citizens to assist them in acquiring an immovable property in India.
  • Experience of handling NRIs/OCIs/Expats of various countries across the world in relation to their property purchase transactions in India.
  • Best Methodologies, Processes & Technologies To provide NRIs/Foreign Citizens convenient & effective services for their property transactions in India.
  • Smooth transaction and No litigation post transaction.
  • Representative Services and other value services to make the NRIs/Foreign Citizens property purchase transaction effective & convenient.
  • Having offices/access to across the India.
  • In house team of valuers, lawyers for assisting NRIs/Foreign Citizens in relatin to various legal and other requirements.
  • Experience in dealing with authorities including RBI Authorities, Income Tax Authorities.
Usefulness Of Above Information

Above information can be helpful to NRIs, Expatriates, Foreign Citizens, OCIs, PIOs  etc in relation to their doubts about Property Transactions in India such as:

  • I am a Foreign Citizen. I need to know what are the provisions applicable for property purchase transaction in India?
  • As an NRI, what I need to know in relation to my intentions to buy an immovalbe property in India?
  • I am an NRI. I want to know salient features and regulations in relation to buying an immvoable property in India?
  • TDS provisions in relation to purchase of an immovable property by NRIs, Foreign Citizens in India?
  • What are the RBI Regulations in relation to purchase of an immovable property by NRIs or Foreign Citizens in Indai?
  • TDS rates appliable in relation to purchase of immovable propety in India by NRIs/PIOs?
  • How much time it takes to get a TDS Exemption Certificate from Income Tax Department in tlation to TDS on purchase/sale of immovable proeprty by NRIs /PIOs in India? How to submit TDS Exemption Ceritificate application online?
  • I am PIO and OCI. I need a Chartered Accountant in Delhi in relation to purchase of an immovable property?
  • Looking for CA services in relation to advisory and compliances wrt purchase of property in India?
  • Chartered Accountant in Delhi India For NRI/OCI Immovable Property Transaction?
  • NRI Income Tax Services in India for NRI TDS compliances?
  • CA in Delhi India for Power of Attorney, Property Registration Services for NRIs?
  • NRI property purchase/buying/selling transaction Tax implications, FEMA impliaction in India?
  • How buyers can deduct TDS u/s 195 or 194IA if they are buying property from NRI?
Contacts

S LOHIA & ASSOCIATES Chartered Accountants 
Address : 1301, Naurang House (13th Floor),
21 Kasturba Gandhi Marg,
Connaught Place, New Delhi 110 001.
Tel No. : +91-11-43505250, 66095250
Tel Fax No. : +91-11-43505250
Mobile No. : 9810353219,9910353219
Email Us: sulabhlohia@slohia.com