Property Registration for NRIs – Rules and Procedure – Property in Indian soil has always been a matter of pride and a secure investment for every Indian. Owning a property in India is a dream of every Indian and Non-Resident Indian. The real estate sector in India is continuously growing, with many NRIs living abroad looking to invest in Indian property for residential or commercial uses. But the main problem that an NRI faces today is that they are unaware of the rules and regulations, Laws, eligibility criteria, and the steps involved in the property registration in India.

This blog is a guide on Property Registration for NRIs – Rules and Procedure, documentation, taxation, and the entire registration process. This blog will help you in purchasing your property in India whatever the type of property you are looking for whether for your hometown or for something completely new.

NRI and Property Purchase

Well, the first question that comes to mind is that an NRI can buy property in India. The answer to this is yes they can purchase property in India under the Foreign Exchange Management Act (FEMA), 1999. Under this act, the NRIs are allowed to purchase Property in India, but there are some restrictions such as they can only buy property for residential and commercial purposes. They are not allowed to buy property such as agricultural land, plantation property, or farmhouses.

Here are some of the properties that van NRI can buy

Purchase residential property (apartments, flats, bungalows, villas).
Purchase commercial property (shops, offices, complexes).
Inherit agricultural land, plantation land, or farmhouses (but do not purchase them directly).

Rules for Property Registration in India

Before purchasing a property or registering a property, an NRI must keep these rules in mind or a checklist

Mode of Payment

The payment for the property is a crucial task, and it must be legally made. Here are some of the important points to keep in mind

Payment for property purchase must be made through banking channels in India.
Transactions must be routed via NRE (Non-Resident External), NRO (Non-Resident Ordinary), or FCNR (Foreign Currency Non-Resident) accounts.
Payment cannot be made in foreign currency or traveller’s cheques directly.

Joint Ownership

If an NRI is looking to purchase the property in a joint ownership ,they must consider these points:

An NRI can jointly own property with another NRI.
Joint ownership with a resident Indian is also permitted.
Joint ownership with a foreign national (non-NRI) is restricted.

Power of Attorney (PoA)

The NRI often are busy with their work and unable to be physically present in the transaction process; in such cases power of attorney comes into action.

If the NRI cannot be physically present in India, they can authorise a trusted relative or representative through a registered Power of Attorney.
The PoA must be attested by the Indian Embassy/Consulate abroad and registered in India.

Home Loans for NRIs

If a NRI is looking to take a loan and then purchase the property, this option is also available in India. Consider the following points for more information

NRIs can avail home loans from banks and housing finance companies in India.
The loan amount must be repaid through NRE/NRO/FCNR accounts or inward remittances.

Tax Implications
Once the property is registered, it becomes a taxable asset and the owner must pay it. See more information on it :

Property purchase attracts stamp duty and registration charges, payable to the state government.
If the property is rented, the NRI is liable to pay income tax on rental income.
On selling the property, capital gains tax applies.

Documents Required for Property Registration for NRIs

The NRi must ensure all the required documents and paper are made available before the registration process begin so that the process may go smoothly and seaml;ess

The documents that are required for Property Registration for NRIs

Valid Passport and Visa/Overseas Citizenship of India (OCI) card.
PAN Card (mandatory for property transactions).
Proof of Address (Indian or foreign).
Passport-sized photographs.
Sale Agreement or Builder-Buyer Agreement.
No Objection Certificate (NOC) from builder or housing society.
Latest Tax Receipts and Encumbrance Certificate.
Power of Attorney (if applicable).

Step-by-Step Procedure for Property Registration of NRI

Her is step-by-step guide of how a NRI can register the property in India

Property Selection and Verification

The first step is toIdentify the property you want to purchase. And then conduct due diligence through a lawyer or property expert. After that the most important task is to Check land title, ownership history, and pending litigations.and then Verify whether the property is free from legal or financial disputes.

Agreement to Sell

The second step involved the drafting of the agreement to sell the property with the seller. In this agreement it must be clearly mentioned the price, payment terms, and possession details like date and time.

Payment through Banking Channels

The next step involved the payment for the property which must be done through NRE/NRO/FCNR accounts . you must keep bank receipts and transfer records for future reference.

Execution of Sale Deed

With the help of a legal expert a sell deed is drafted which contains the signature of both the parties. This deed contains information like details of property, both the parties and financial terms.

Stamp Duty and Registration Charges

The next step includes the payment of registration charges and stamp duty. The stamp duty is normally 4%–8% of property value and the registration charge is 1% of property value. These must be paid before registration to the local Sub-Registrar’s office.

Property Registration at Sub-Registrar’s Office

Both buyer and seller (or their representatives) must be present at the local Sub-Registrar’s office. At the office submission of required documents such as sale deed and proof of payment is done. The Sub-Registrar verifies documents, witnesses, and finalizes registration.
Mutation of Property Records

After registration, apply for mutation in municipal or local authority records. This will updates the ownership record of the property in the official government records and helps in smooth utility and tax payments

Tax Implications for NRIs

Stamp Duty & Registration Fee Mandatory for every property purchase, rates vary by state.
TDS (Tax Deducted at Source) If an NRI sells property, the buyer must deduct TDS at 20% on long-term capital gains and 30% on short-term gains.
Rental Income If the property is rented out, NRIs must pay applicable income tax in India.
Capital Gains Tax On sale of property, long-term or short-term capital gains tax applies depending on the holding period.

Conclusion

Property deals are a very delegate task and one mistake can cost heavy . and in case of NRI this is more crucial to perform each and every task legally . Here in this blog Property Registration for NRIs – Rules and Procedure we have discussed the eligibility criteria, rules , law steps involved documents and many more vital points for property registration of NRI. If you are a NRI and are looking to buy a property, go through this blog to understand the crucial important points about the Property Registration for NRIs.