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Tips for NRIs to invest in Indian real estate market

Tips for NRIs to invest in Indian real estate market

In India, property prices have appreciated significantly over the past five years. However, for the overseas Indian, it has been a marginal increase owing to the depreciation of the rupee against the US dollar, writes Overseas Indian Facilitation Centre CEO Sujata Sudarshan.

PHOTO: Reuters PHOTO: Reuters
Overseas Indian Facilitation Centre CEO Sujata Sudarshan
In India, property prices have appreciated significantly over the past five years. However, for the overseas Indian, it has only been a marginal increase owing to the depreciation of the Indian rupee against the US dollar. This has made investments in India's real estate sector more affordable and extremely lucrative for overseas investors.

In fact at the Overseas Indian Facilitation Centre (OFIC), every other investment query is regarding buying residential property in India. With the Union Cabinet approving the Real Estate (Regulation and Development) Bill, the sector should soon become more transparent and better protect consumer interest.

If you are an overseas Indian, adhering to some basic rules will help you navigate the real estate market in India.


First, determine the nature of the property. As per the guidelines from the Reserve Bank of India (RBI), an overseas Indian cannot buy agricultural land, plantations and farm land in the country.

Examine all the legal documents before buying the land. There have been cases of residential projects being built on agricultural land without securing approval from the government. In such cases, the investment will be deemed illegal, irrespective of who buys the land.

Therefore, ensure that you have seen the title deed, in original, and that it is solely in the name of the seller. If the seller is unable to produce the original and shares a photocopy, there is a possibility that a loan has been taken against the property. Initiate a thorough check to avoid the pitfall of the sale being challenged at a later stage.

Besides this, also ascertain that the property has secured all clearances required by law, such as environment and municipal clearances and the authority to transfer the undivided share of land to each apartment owner and the entire plot to the society upon completion of the project. Even for projects under construction, insist on these documents to ensure that your investment is safe.

It would be advisable to use the services of a lawyer in India to ratify the claims made and ensure that the builder has secured all the necessary approvals. This will ensure you've covered all legal aspects.

In case the property (irrespective of its nature) was acquired or inherited by you (the overseas Indian or NRI) when you were a resident of India, you can sell or build on the property without the approval of the Reserve Bank of India. However, if you wish to sell it, you must be a resident citizen of India.


Having identified a property after due diligence and negotiation, you will arrive at a price at which the sale is agreed. Subsequently, a sale agreement must be drawn on a Rs 50 stamp paper, which will mention the final amount, advance payment, time limit to pay the due amount and details of instalments.

Once the sale deed is completed, you need to get it registered at the sub-registrar or Sub-District Magistrate. The overseas buyer's foreign address has to be mentioned in the sale agreement. He can appoint a representative in India (with a power of attorney) to act on his behalf. The power of attorney should be notarised with the Indian consulate in the buyer's country of residence.

The property can be registered in the name of the NRI and the holder of the power of attorney can sign on his behalf by producing a copy of the document to the appropriate authorities.

The payment of purchase price, if any, should be made from either funds received in India through normal banking channels or funds held in a nonresident bank account. You could pay through rupeedenominated non-resident ordinary (NRO) or nonresident external (NRE) accounts and foreign currency non-resident (FCNR) accounts.


Apart from the registration cost and stamp duty, a service tax is also levied on the transaction. It depends upon the property you are buying. If you are buying a property that is being constructed by a builder, you will have to pay a service tax of 12.36% on 25% of the total price for apartments up to 2,000 square feet and 30% for bigger apartments.

For a built-up property or a single residential unit, stamp duty is to be paid on purchase of the property. The stamp duty payable varies from state to state and is different for properties in rural areas. There are three slabs for payment of stamp duty in Delhi-4% of the property value if the new owner is a woman, 5% if it is the joint property of a man and a woman and 6% if a man is to own the property. A registration fee of 1% is applicable for all property transactions.

CEO, Overseas Indian Facilitation Centre