NRI

NRI Overview

Dear NRI Investor,

Real estate in India has been constantly changing, with more opportunities for investment emerging every day.

Radiance, widely known as Chennai’s most loved developer, has always looked forward to aiding people in finding homes that truly reflect their dreams. With a number of breathtaking residential properties to our name, our passion to create unparalleled living spaces inspires us to create more.

Over the years, many have made rewarding investments with our help, making stunning Radiance homes their own. It would be our honour to help you make the investment of a lifetime.

Sincerly,
Varun Manian
Managing Director – Radiance Realty

Why Radiance

Built on tradition and driven by innovation, Radiance Realty is a formidable force in the real estate industry. With over 70 years of experience in delighting families and reinventing lifestyles, Radiance Realty has crafted stunning infrastructure that is a testament to their prowess. Having tailored many new beginnings with flair, Radiance Realty hopes to create many more.

Residential

Home Loans

The Non-Resident Indians (NRIs) are recognized under the Foreign Exchange Regulation Act, 1973. Every bank and housing finance company follows the RBI guidelines to define an NRI – “An Indian citizen who holds a valid document like an Indian passport and who stays abroad for employment or for carrying on business or vocation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad is an NRI.”

Broadly categorized, Non-Resident Indians qualifying for NRI housing loans are:

  • Indian citizens who stay abroad for employment or for carrying on business or vocation outside India or for any other purpose in circumstances indicating an indefinite period of stay abroad
  • Government servants who are posted abroad on duty with the Indian missions and similar other agencies set up abroad by the Government of India, where the officials draw their salaries out of Government resources
  • Government servants deputed abroad on assignments with foreign Governments or regional/ international agencies like the World Bank, International Monetary Fund (IMF), World Health Organization (WHO), Economic and Social Commission for Asia and the Pacific (ESCAP)
  • Officials of the State Government and Public Sector undertakings deputed abroad on temporary assignments or posted to their branches or offices abroad

Documents required for Resident Indians and NRIs for getting home loans are different in some respects. Home loans for NRIs are available for construction of new houses/ flats, purchase of old house/ flat addition/ alteration to an existing house and repairs/ renovation etc. NRIs can avail of loans by mortgaging an existing residential property. However, for availing home loans, NRIs have to fulfill certain conditions, according to the provisions of the Income Tax Act. They should have stayed in India for a period of 182 days or more within an assessment year or they should have stayed in India for at least a total of one year or more.

The FDI policy that permits FDI up to 100% from a foreign/ NRI investor under the automatic route has boosted NRI confidence. Banks have attractive NRI housing schemes to accommodate the housing needs of NRIs. From the stables of HFCs, NRI housing finance plans with suitable repayment options are available.

Last but not the least, NRIs should take due care while selecting their home loan provider companies or HFCs. Considering the geographical distances involved, it is significant that loan seekers associate with a proactive and responsive HFC.

ELIGIBILITY FOR NRI

The eligibility criterias for NRIs differ from Resident Indians based on a few parameters. The parameters include:

Age Qualification Income Payment options Number of dependants
The loan applicant has to be 21 years of age. The NRI loan seeker has to be a graduate. The loan applicant has to have a minimum monthly income of $ 2,000 (although, this criterion may differ across HFCs). The eligibility is also determined by the stability and continuity of employment or business. The NRI also has to route his EMI (Equated Monthly Instalment) cheques through his NRE/ NRO account. He cannot make payments from another source such as, his savings account in India. The eligibility of the applicant is also determined by the number of dependents, assets and liabilities.

Home loans for an NRI applicant ranges from a minimum of INR. 5 lakhs to a maximum of INR. 1 crore, based on the repayment capacity and the cost of the property, which although is variable by the priorities of the home loan provider. An applicant will be eligible for a maximum of 85% of the cost of the property or the cost of construction as applicable and 75% of the cost of land in case of purchase of land, based on the repayment capacity of the borrower.

However, the eligibility can be enhanced by applying for home loans with a co-applicant who has a separate source of income. Also, the rate of interest for home loans to NRIs is higher than those offered to Resident Indians. The difference is somewhere between 0.25%-0.50%. Some HFCs also have an internally earmarked ‘negative criterion’ for NRI home loans. As such, the NRIs who hail from locations that are marked as being ‘negative’ in the books of HFCs, find it difficult to get a home loan.

RBI DIRECTIVE LOANS

The Reserve Bank of India (RBI) has clarified that Non-Resident Indians (NRIs) and Persons of Indian Origin (PIO), purchasing immovable property in India must pay for the acquisition by funds received in India through normal banking channels by way of inward remittance from outside the country.

The NRIs and Resident Indians can also acquire immovable property in India other than agricultural property, plantation or a farmhouse. It has issued certain directives for sanctioning home loans to Non-Resident Indians.

The guidelines provided are:

  • The home loan amount should not exceed 85% of the cost of the dwelling unit, As the remaining 15% needs to be provided by one’s own contribution towards the cost of unit financed
  • The cost of dwelling unit which is by own contribution financed less the loan amount, can be met from direct remittances from abroad through normal banking channels, the Non-Resident (External) [NR(E)] Account and/ or Non-Resident (Ordinary) [NR (O)] account in India
  • However, repayment of the loan, comprising of the principal and interest including all the charges are to be remitted to the HFC from abroad through normal banking channels, the Non-Resident (External) [NR(E)] Account and /or Non-Resident (Ordinary) [NR (O)] account in India

The repayment option for NRIs is that they can pay through the funds held in any non-resident account maintained in accordance with the provisions of the Foreign Exchange Management Act, 1999, and the regulations made by the RBI from time to time.

DOCUMENTS REQUIRED FOR LOAN

Apart from the documents mentioned below, a vital document required while processing any NRI home loan is the ‘Power of Attorney’ (POA). Since the borrower is not based in India, the POA is important because HFCs would need a ‘representative’ ‘in lieu of’ the NRI to deal with if necessary. Although not obligatory, the POA is usually drawn on the NRI’s parents/ wife/ children.

The documents needed for obtaining NRI home loans are:

  • Passport and Visa
  • A copy of the appointment letter and contract from the company employing the applicant
  • The labor card/ identity card (translated in English and countersigned by the consulate) if the person is employed in the Middle East Salary certificate (in English) specifying name, date of joining, designation and salary details
  • Bank Statements for the last six months

 

List of Classified documents for Salaried and Self Employed NRI Applicants:

Salaried NRI Applicants Self-Employed NRI Applicants
Copy of a valid passport showing visa stamps Passport copy with valid visa stamps
Copy of valid visa/ work permit/ equivalent document supporting the NRI status of the proposed account holder Brief profile of the applicant and business/ Trade license or an equivalent document
Overseas bank A/C for the last 3 months showing salary credits 6 months overseas bank account statements and NRE/ NRO account
Latest contract copy evidencing salary/ salary certificate/wage slips Computation of income, P&L account and B/Sheet for last 3 years certified by the C.A. / CPA or any other relevant authority as the case may be (or equivalent company accounts)

PROPERTY DOCUMENTS

  • Original title deeds tracing the title of the property for at least a period of last 13 years
  • Encumbrance Certificate for the last 13 years
  • Agreement of sale/ construction, if any
  • Receipts for payments made for purchase of the dwelling unit
  • Approved plan/ license
  • ULC clearance/ conversion order, etc.
  • Receipts for having invested the margin money through normal banking channels from the Non-Resident (External) account in India and/ or the Non-Resident (Ordinary) account in India
  • Latest tax paid receipt
  • Allotment letter from the co-operative society/ association of apartment owners
  • Agreement for sale/ sale deed/ detailed cost estimate from the Architect/ Engineer for property to be purchased/ constructed/ extended/ improved
  • Copy of approved drawings of proposed construction/ purchase/ extension

ADDITIONAL DOCUMENTS TO BE SUBMITTED BY PERSON OF INDIAN ORIGIN

Photocopy of PIO Card
If the PIO card is not available, photocopies of any of the following documents:

  • The current passport with birthplace as ‘INDIA’
  • The Indian passport, if held by the individual earlier
  • Parent’s/Grandparent’s Indian passport/ Birth Certificate/ Marriage Certificate substantiating the individuals claim as a person of Indian origin

PERMISSIONS AND APPROVALS

Before construction on a project can begin, the builder must seek several permissions and approvals from relevant bodies. Without these clearances, the construction attract litigation.

 

 

NRI Guide

Who is an NRI?

An NRI is any citizen of India who is not residing in India and has resided in India for less than 182 days in the preceding financial year. NRIs have professional or other commitments which require them to live outside India for an indefinite period of time.

Who is a PIO?

A PIO is any citizen not of Pakistan or Bangladesh who has:

  • At any time held an Indian passport
  • Parents or grandparents who are citizens of India according to the Indian Constitution
  • A spouse who is an Indian citizen or PIO (for the purpose of bank deposits)
A PIO can also buy real estate in India, and invest in Indian properties.

Who is an OCI?

An OCI is a person who is a citizen of another country, but also:

  • Held an Indian citizenship at some point
  • Was eligible for an Indian citizenship at the time of the commencement of the Indian Constitution
  • Belongs to a territory that became part of India after Independence
With NRI investment in India growing at a large rate, an OCI can also buy real estate in India.

Who can purchase property in India?

According to guidelines laid down by the RBI, the following can purchase property in India:

  • A Non-Resident Indian (NRI)
  • A PIO
  • An OCI
All three categories are generally referred to as NRIs for the purpose of opening bank accounts, for bank deposits, for purchasing property, etc. NRI investment in India shows great potential, and any of the aforementioned can buy real estate in India.

What property can NRIs buy?

The RBI allows NRIs to purchase immovable property in India including:

  • Residential property
  • Commercial assets
However, NRIs are forbidden from purchasing:
  • Agricultural land
  • Plantations
  • Farmhouses
If you are looking for NRI investment in India and want to purchase one of these, you will need to specially apply to the RBI for permission and your case will be considered separately.

What documents are required by NRIs purchasing property?

NRIs looking to purchase property in India fall under two categories: salaried individuals and self-employed individuals.

What documents do salaried individuals need?

Salaried NRIs looking to invest and buy real estate in India should have the following documents:

  • Indian passport
  • PIO card/OCI card (if applicable)
  • PAN card
  • Power of attorney documents
  • Latest salary pay slips for the past 6 months
  • Income tax returns for the last 2 years
  • Copy of employment contract
  • Appointment letter (if applicable)
  • Work permit (if applicable)
  • Bank statement for the past 1 year from external bank account
  • Bank statement for the last 1 year from Non-Resident External (NRE)/Non-Resident Ordinary (NRO) account
  • Address proof
  • Credit report
  • Property related documents

What documents do self-employed individuals need?

NRIs who are self-employed individuals looking to buy real estate in India should have the following documents:

  • Passport
  • PIO/OCI card (if applicable)
  • Balance sheet of company for the last 3 years
  • Profit and loss accounts for the last 3 years
  • Bank account statement of individual account for the last 6 months
  • Bank account statement of company account for the last 6 months
  • Income tax returns from the last 3 years
  • Address proof
  • Power of attorney documents
  • Credit reports
  • Property-related documents

What property documents do NRIs need?

Anybody who wants to make an NRI investment in India should possess the following documents:

  • Title Deed
  • Authorized building plan
  • NOC from Electricity Supply, Pollution Control Board, Water Department
  • Sale agreement between builder and previous owner (if applicable)
  • Possession letter from the builder
  • Sale agreement
  • Khata certificate and extracts
  • Allotment letter
  • Possession letter
  • Encumbrance certificate (in case of there being a previous buyer)
  • Occupancy certificate

Power of Attorney

NRIs who want to buy real estate in India need to appoint a power of attorney who can act on their behalf.

What are the different types of PoA’s?

There are three types of PoA’s for NRI investment in India:

  • A Special PoA has only limited powers, usually restricted to a particular kind of transaction.
  • A General PoA can act on behalf of an individual for a wide range of transactions without any limitations.
  • A Durable PoA has lifetime powers and can even make decisions for an individual when they’re incapacitated.

What functions can a PoA perform?

With regard to real estate for NRI investment in India, a PoA can:

  • Mortgage, exchange, sell, lease, collect rent on behalf of an individual
  • Manage and settle any disputes which arise
  • Perform acts required by banks and insurance companies and enter into contracts, deal with bonds, sign documents, etc.

Who should file income tax?

NRIs need to file income tax returns for investments if:

  • Taxable income in India during that year was above Rs. 1.6 lakhs
  • Short-term or long-term capital gains from sale of investments or assets were made (even below Rs. 1.6 lakhs)

What are the steps for granting PoA?

The following steps need to be completed to grant someone PoA status:

  • Draft the PoA agreement on non-judicial stamp paper
  • Visit Sub-Registrar’s office with legal representative and two witnesses
  • Carry ID proof, two passport size photographs, copy of PoA agreement along with original
  • Signatures, photographs and fingerprints of both parties will be collected
  • Visit Sub-Registrar’s office again to collect registered PoA agreement once it’s completed

What are the guidelines for NRIs applying for a home loan?

If you are an NRI looking to buy real estate in India, loans can be made available. Here are the guidelines to follow for home loans that cater to NRI investment in India:

  • Period of repayment and amount given as loan shall be decided by the bank providing the loan
  • Rate of interest is decided by the RBI or National Housing Bank
  • The loan amount will not be credit to the NRE/Foreign Currency Non-Resident (FCNR)/Non-Resident Non-Repatriable (NRNR) account
  • Loan installments will be paid through normal banking channels

What documents do NRIs need for a home loan?

  • Copy of passport
  • Copy of work visa
  • Address proof (utility bill, bank statement, lease agreement)
  • Salary statement for the last 6 months
  • NRE/NRO bank account statement for the last 6 months
  • Power of attorney documents
  • 2 passport size photographs
  • Copy of PAN card
  • List of documents for salaried/self-employed individuals as well

Who are exempted from filing income tax?

For those looking to make an NRI investment in India, you will be exempted from filing income tax returns if:

  • Long-term capital gains were from equity shares or equity mutual funds
  • If tax has been deducted at source from income through investments and or/capital gains income

How can NRIs file income tax returns?

There are three ways NRIs can file income tax returns:

  • They can give power of attorney to someone to file their returns on their behalf
  • They can send their documents to an agent in India
  • They can file income tax returns online

How is Capital Gain Tax calculated for NRIs?

For NRI investment in India, some of the assets taxable under CGT include:

  • House property
  • Loans
  • Buildings
  • Jewellery

What is exempted under CGT?

Some of the assets which don’t fall under CGT include:

  • Capital gains invested in NHAI bonds or in Rural Electrification Corporation
  • If long-term capital gains from the sale of a house is invested in buying another house. In such cases, the amount exempted is either the amount of capital gains or the amount invested in buying the new house, whichever is lower

What guidelines has the RBI laid down for repatriation of funds?

If the property was bought through foreign exchange sources (through normal banking channels/ NRE debit/FCNR account), then amount repatriated cannot exceed:

  • Amount paid in foreign exchange through normal banking channels
  • Amount paid through NRE debit/FCNR account
If the property was bought with Indian rupees, NRIs who want to buy real estate in India can remit not more than 1 million USD per financial year from balance held in NRO account.

How is income from Selling or Renting Property taxed for NRIs?

For NRI investment in India, acquiring the property in itself is not taxable. However, the following are subject to income tax:

  • Income gained from property in the form of rent
  • Annual value of the house if it is not the only residential property owned by the individual
  • Capital gains from sale of the property

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