NRI FAQ's

A maximum loan of 80% of the agreement value can be availed. However as per your income eligibility as approved by the bank, your loan amount may differ. All loans are at the sole discretion of the bank.

10 years to 25 years, is the term usually offered by bank and financial institutions.

Documents required for self-employed persons applying a loan to buy property in India are:

• Photocopy of the applicant’s statement of accounts for the last 6 months or updated pass book
• Applicant’s ration card photocopy
• A profile of the applicant’s business mentioning at least the nature of the business, client list, suppliers, employee strength, geographical spread, etc.
• A copy of the partnership deed, 3 years P & L a/c, B/S, computation of income certified by a CA and individual computation of income and tax returns for last 3 years is required, in the case of a business partnership
• 3 years P & L a/c, B/S, computation of income certified by a CA and an income tax return file statement for 3 years is required, in the case of a proprietor or professional
• A remuneration certificate, the board resolution for fixing remuneration, the company's annual report and individual IT returns for last 3 years is required, if the company applying for a loan is a Pvt. Ltd.

Documents required for employed persons applying for a loan to buy property in India are:

• The original slip or latest salary certificate
• Applicant’s ration card photocopy
• Form no.16 A (TDS Form) photocopy from the applicant’s employer
• For any other allowances that are not reflected in the applicant’s salary slip, the original certificate from the applicant’s employer is needed
• Photocopy of the applicant’s updated bank pass book or a statement of the applicant’s accounts for last 6 months
• Photocopy of the applicant’s company I.D or voter I.D. card or the applicant’s passport/ ration card
• Passport size photograph of the applicant & co-applicant

After the selection of property and submission of the required legal documents, the loan will be sanctioned. As each document needs to be verified for the safety of the applicant, the process might take some time. The 230 A Clearance of the seller and / or 37I clearance from the appropriate income tax authorities (if applicable) is also needed. The registration of the conveyance deed and investment of the applicant's own contribution and the loan amount will be disbursed by the bank, once the above has been submitted and verified. The disbursement will be in favor of the builder.

Documents required for disbursement:

• Loan agreement
• Disbursement requests
• Post-dated cheques
• Personal guarantors documents.

Purchaser of an immovable property (other than rural agricultural land) worth Rs 50 lakh or more is required to pay withholding tax at the rate of 1% from the consideration payable to a resident transferor, is proposed by the Finance Bill 2013, effective 1st June 2013. Buyer of the property would have to deduct the TDS and deposit the same in Government treasury. Buyer or Purchaser of the property is not required to procure Tax Deduction Account Number (TAN), according to rules in respect of tax deducted at source. The Buyer is required to quote his or her PAN and sellers PAN.

The submission of transaction documents (copies) to the required governmental officer for preservation is part of the process of registration. Once the stamp duty has been paid on a document, The document has to be registered under the Indian Registration Act (1908) with the Sub-Registrar of Assurances of the locality of the property, once stamp duty has been paid. The investor does not have full ownership of the property, unless this procedure is completed, A capping is applied on registration fees and is payable @ 1% of market value/consideration (whichever is higher).

The repayment of the interest portion of the EMI is allowed as a deduction under section 24 under the head "income from house property" up to Rs. 1,50,000/- for self-occupied property. It may also be the full amount in case of let-out property if the purchase or construction is completed within a period of three years from the end of the year in which the loan is taken.

Under section 80C up to a maximum amount of Rs. 1 lakh, the repayment of principal amount of the loan can be claimed as a deduction. Under Section 80C towards payment made for stamp duty, registration fee and other expenses for the purpose of transferring the property in the name of the assessed also, one can claim deduction. All these deductions however should not exceed the overall limit of Rs. 1 lakh. However, deduction under Section 80C is not available in respect of payment made towards the cost of any addition, alteration, renovation or repair carried out after the issue of the completion certificate.

Income from House Property: According to the Indian Income Tax Act, if a person (resident or NRI) owns more than one house property in India, only one of them will be deemed as self-occupied. There will be no income tax on a self-occupied property. The other one, whether rented or not, will be deemed to be given on rent and deemed rental income (based on certain valuations prescribed by the income tax rules) will be added to income. Further, TDS will be deducted on actual rental incomes earned by NRI.

Wealth Tax: Wealth tax is levied on the value of specified assets in excess of the Rs. 30,00,000. Specified assets include house property. However, the Wealth Tax Act provides an exemption in respect of one house property in India. There is a specific exemption available for returning Indians in respect of investment made in house property out of money brought from outside India or from balances held in NRE accounts as on date of return to India.

Capital Gains: If a residential property in India is held by the seller for more than 36 months, it is considered a long-term investment or else short-term. Long Term Capital Gain shall be computed by considering indexed cost of acquisition. NRI's are entitled to claim exemption from capital gains tax if they re-invest in specified assets as per Income Tax Act.