A Guide For NRIs To Transfer Money To Buy Property In India

While investing in India, Non-Resident Indians (NRIs) prefer real estate when compared to other asset classes. To attract more such investments in the country, the Narendra Modi-led government has made it easier for NRIs to invest in Indian real estate. For instance, non-reptariable investments of NRIs in India is now considered a domestic investment. Also, investments in real estate from funds taken from an NRI's Rupee account in India would also be considered as domestic investment.

However, there are a number of regulations that govern NRI investments in real estate in India and these might get confusing at times. PropGuide looks at the norms governing transfer of money to India and how NRIs should transfer money to India:

• To buy property, NRIs may use money in their Non Resident External (NRE)/Non Resident Ordinary (NRO) Savings account or a Foreign Currency Non-Resident (FCNR) account in India. NRIs are also allowed to transfer money to India, if it is the income earned overseas or their personal savings abroad.

• NRIs can remit the money through normal banking channels from their place of residence to India. For instance, their NRE or NRO account seen as normal banking channels. However, while transferring money, NRIs should be careful. If the country of their residence does not have a Double Taxation Avoidance Agreement with India, the amount will be taxed in both countries.

• If an NRI is taking a home loan, he is eligible to get 80 per cent of the money from the bank or financial institution. However, he will be expected to repay his principal amount and interest rate through the same channel. NRIs are eligible for tax deductions on the interest payment. While there are no upper limits on this, they are expected to pay capital gains tax, if they sell their real estate assets. NRIs are allowed to take home loans against the money they have deposited in their NRE or FCNR account, if it is up to an amount of Rs 1 crore.

• Buying property with funds received from regular banking is easy. For payouts, NRIs require an NRE account and for depositing and transferring money to India, NRIs need an NRO account. NRIs can also repatriate money from their NRE account to their foreign account after money is deducted as income tax and capital gains tax payment.

• NRIs can make equated monthly instalment (EMI) payments for their apartments, either through their Non-Resident External (NRE) account or Non-Resident Ordinary (NRO) account or Foreign Currency Non-Resident (FCNR) bank account. It can also be done by directly remitting money from abroad.