Buying or Selling Property by NRI, Legal aspects for NRIs selling or Buying property in India. There has been always confusion that whether Non resident Indian is eligible for buying or selling property in India by his own name. The answer to the query is definitely yes. But there are some conditions which needs to be fulfilled and exceptions are also to be taken care of. This article would cover the points regarding the restrictions on buying and selling of the properties in India.
Buying or Selling Property by NRI
Restrictions on Buying of Property in India:
Any non resident can buy any property in India, and there is also no restriction on the number of properties that can be bought. There is only one exception to the above status, and that is the restriction on the purchase of agricultural property. Agriculture Land is the only exception. This Land cannot be received by any relative also, but it can be received as inheritance from fore fathers. There is no RBI permission required for buying such property. But the important thing to note is that the person who is not of Indian origin would not be able to acquire any property in India.
Non residents can also rent or let out the properties which are in existence in India, subject to the income by way of rent would be liable for 30% TDS and if the income is exceeding 10 Lakhs, it would also be liable for surcharge on it.
Restrictions on Selling of Property in India:
Non-residents can sell any property in India to any citizen of India. Here there is no restriction on selling the agricultural property, it can be sold easily. But if the non-origin Indian wants to sell the property, it would require prior approval of RBI for selling the agricultural land.
One thing to note is that the gains arising from selling the property would be liable for taxation and would be liable to pay capital gain tax, whichever it may be short term or long term as the rates applicable. You can save these taxes by investing the proceeds in buying another house or in 54EC bonds or depositing in capital account scheme.
Buyer Protection – Buying Property from NRI
The buyer needs to keep in mind the following small things when you want to purchase the property from NRIs.
- Non-Resident Indian should must be having PAN card at the time of selling the property. If there is no PAN card of such seller, then it needs to be taken as it is compulsory document for registering of the property.
- The payment made to the NRI would be liable for TDS and the purchaser needs to deduct it and give the balance amount. The rules and provisions of Section 195 of the Income tax Act would be applicable.
- After paying the above TDS, purchaser also needs to furnish the TDS return and needs to give Form 16A to the seller, i.e. NRI. If the NRI does not want deduction than it would have to furnish the declaration to the income tax department.