Non-Resident Indians (NRIs) looking to invest in Indian real estate must navigate a structured process involving legal documentation and compliance with regulations. Here's a detailed guide to simplify the process.

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1. Eligibility for NRIs to Buy Property

NRIs can purchase residential or commercial properties but face restrictions on agricultural land, plantations, and farmhouses unless:
- Approval: Explicit approval from the RBI is obtained.
- Inheritance: Property is inherited or acquired through a will.

Key Criteria

• Indian Passport: A valid Indian passport is mandatory.
• Residential Status: Must reside outside India for more than 182 days during a financial year.
• Joint Ownership: Allowed with Indian residents but restricted with other NRIs unless inherited.

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2. Documentation Required for Property Registration

| Document | Purpose |
|-----------------------------|-----------------------------------------------------------------------------|
| Passport | Validates identity and NRI status. |
| PAN Card | Essential for tax compliance. |
| Address Proof | Proof of overseas residence (utility bill, rental agreement, etc.). |
| Property Documents | Title deed, sale agreement, and encumbrance certificate. |
| Power of Attorney (PoA) | Authorises an agent to act on your behalf if absent. |
| Bank Statements | Shows financial capability and legal fund transfer. |
| Photographs | Passport-sized photos for legal records. |
| Tax Returns | Past two years’ tax returns for financial transparency. |

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3. Payment Methods for NRIs

Payments for property purchases must comply with FEMA and RBI guidelines, routed through banking channels.

Accepted Payment Modes

• NRE Account: Tax-free funds, easily repatriated.
• NRO Account: Taxable funds for local transactions.
• FCNR Account: Foreign currency account, safe from exchange fluctuations.
• Wire Transfers: Direct remittance via approved channels.
• Direct Bank Payments: Online or manual transfers to the seller’s account.

Prohibited: Cash transactions.

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4. RBI Guidelines and FEMA Compliance

NRIs must adhere to these regulations:
- Permitted Properties: Residential and commercial; not agricultural land or plantations unless inherited.
- Repatriation of Funds: Sale proceeds can be repatriated up to the original investment amount.
- Fund Routing: All transactions must use legitimate banking channels.
- PAN Requirement: Mandatory for financial and property transactions.

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5. Tax Implications for NRIs

| Parameter | Details |
|-----------------------------|-----------------------------------------------------------------------------|
| TDS for Resident Sellers| 1% on property value >50 lakh. |
| TDS for NRI Sellers | 20% for long-term gains, 30% for short-term gains. |
| Capital Gains Tax | Long-term: 20% with indexation; Short-term: Taxed as per income slab. |
| Tax Deduction | Deductions for home loans (up to2 lakh) and standard rental deductions. |

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6. Power of Attorney (PoA)

A PoA enables NRIs to delegate property-related tasks to a trusted representative.

Types of PoA

• General PoA: Broad authority for legal and financial matters.
• Specific PoA: Limited to specific tasks like selling a property.

Execution

• Notarisation: Mandatory for legal validity.
• Registration: Required for property transactions.

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7. Steps for Property Registration in India

• Identify the Property: Ensure a clear title and no legal disputes.
• Draft an Agreement to Sell: Specify terms, price, and payment schedules.
• Pay Stamp Duty: Varies by state, typically 5–8% of property value.
• Schedule Registration: Book an appointment with the local sub-registrar's office.
• Verify Documents: Submit identity proof, PoA (if applicable), and property documents.
• Pay Registration Fees: Approximately 1% of property value, varying by state.
• Sign Sale Deed: Finalise the transfer in the presence of the sub-registrar.
• Receive Registered Deed: Proof of ownership post-registration.

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8. State-Wise Stamp Duty and Registration Charges

| State | Stamp Duty | Registration Fee |
|--------------------|----------------------------------|-----------------------------|
| Maharashtra | 5–6% (Male), 4–5% (Female) | 1% |
| Karnataka | 2–5% | 1% |
| Tamil Nadu | 7% | 4% |
| Uttar Pradesh | 7% | 1% |
| Delhi NCR | 5% (Male), 4% (Female) |50,000 |

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9. Important Legal Considerations

• Title Verification: Ensure no disputes or encumbrances on the property.
• Compliance with FEMA: Verify funds are legally transferred.
• Tax Compliance: File returns for TDS and capital gains.
• Dispute Resolution: Engage a lawyer to address potential legal hurdles.

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10. Frequently Asked Questions (FAQs)

Q1. Can NRIs buy property jointly with residents?
Yes, joint ownership is allowed with Indian residents.

Q2. Can NRIs purchase agricultural land?
Only through inheritance or explicit RBI approval.

Q3. How are home loans processed for NRIs?
Submit income proof, passport, visa, and NRE/NRO account statements to Indian banks.

Q4. Are property transactions taxable?
Yes, taxes apply to rental income, capital gains, and TDS deductions.

Q5. Can NRIs sell property in India?
Yes, with repatriation of funds subject to RBI guidelines and tax compliance.

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Summary

The NRI property registration process in India is straightforward if you adhere to legal requirements and documentation standards. From leveraging NRE/NRO accounts for payments to complying with RBI and FEMA guidelines, NRIs can navigate the process smoothly. Engage trusted professionals for expert assistance in managing property transactions.

Start your journey towards property ownership in India today!

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