NRI Buying Property in India from UAE: Complete Guide

An NRI may choose to buy a property in India while living in the UAE for family use, retirement, or capital appreciation. It offers both a financial decision and a long-term personal investment plan. You can choose to purchase residential, commercial, or other eligible immovable properties in India, subject to applicable laws. However, you are not allowed to buy any agricultural, farmhouse, or plantation properties under the general route.

If you cannot visit India, you can complete the property purchase process remotely from the UAE, subject to applicable state requirements. For this, you can appoint a trusted person living in India through a PoA to act on your behalf for specified activities throughout the process. You may even incur tax obligations in India even though the UAE doesn't levy personal income tax. But what is a PoA, and on what income do you need to pay tax in India? Keep reading further to know more about the tax obligations, documents required, process, and more about an NRI buying a property in India from the UAE.

Types of Properties NRIs Can Buy in India

NRIs can buy residential, commercial, or other eligible immovable properties in India, with no general FEMA limit on the number of such properties. However, restrictions apply to the types of property they can buy. So, an NRI can buy:

• Residential Properties: Flats, villas, and independent houses used for self-use or rental income.
• Commercial Properties: Shops, offices, and warehouses to use for business purposes.
• Non-agricultural land or residential plot: to construct a house.

Moreover, these are the properties NRIs are allowed to buy; there are certain properties they can't buy. This includes agricultural land, farmhouses, or plantation properties. They may acquire such properties through inheritance, subject to applicable FEMA provisions and other laws.

When you purchase property in India remotely from the UAE, you need to provide certain documents. Next, we will discuss the documents you need to buy property in India as an NRI from the UAE.

Documents Required to Buy Property in India as an NRI

Here are some of the key documents required to purchase a property in India to prove identity, financial proof, and legal compliance:

*PoA (Power of Attorney): It is a document required when you cannot visit India to make the purchase. It basically allows you to authorize a trusted person to act on your behalf when signing agreements and registering the property, subject to applicable requirements.

Real Estate Regulatory Authority (RERA) Registration: Make sure you verify the RERA registration of an applicable project, as the act offers more transparency and safeguards buyers. RERA registration does not replace independent verification of the property's title and other legal documents.

Once you have all the documents, you can proceed with purchasing the property. Next, we will explain how you can buy property in India remotely from the UAE.

Property Purchase Process for NRI

As an NRI, you can buy an eligible property without visiting India by following the steps below:

Select the Right Property

When choosing a property, don't focus on just one locality; consider different cities, areas, and projects. At the same time, keep your budget and requirements in mind. Consider factors like accessibility, infrastructure growth, future development, etc. For example, popular destinations among buyers include Mumbai, Pune, Delhi NCR, and Bangalore.

Verify the Documents

It's very important to stay compliant with all the legal guidelines when making the purchase. Ensure the property has a clear land title, is RERA-registered where applicable, and has the required building plans and approvals.

Book the Property

Once you have everything sorted, cross-check all the details and proceed with the purchase. Many developers now let you book the property online and even take virtual site tours. So, be careful and accurate with the details, and check everything thoroughly.

Complete the Payment

Once you're sure, you can make payments through permitted banking channels, such as inward remittance or funds from NRE (Non-Resident External), FCNR(B) (Foreign Currency Non-Resident Bank), or NRO (Non-Resident Ordinary) accounts. You must transfer funds through official channels to stay compliant with Indian laws.

Property Registration

Registering the property is a crucial step for every NRI buying property. If you cannot visit India, you can appoint a trusted person to complete the property purchase process on your behalf by providing a properly executed and authenticated power of attorney, subject to applicable state requirements.

According to the RBI, payment for an eligible property purchase can be made through permitted banking channels, including inward remittance or funds held in NRE, FCNR(B), or NRO accounts. UAE NRIs can also sell property in India remotely, subject to applicable requirements. Additionally, you can also avail NRI home loans from Indian banks to purchase the property. That being said, let's learn more about home loans for property purchase in India.

Home Loans for NRIs

You can finance your property purchase by applying for a loan with an Indian bank or housing finance institution that offers loans to NRIs. They will finance a portion of the property's value, and you will have to pay the remaining amount as a down payment. However, here are some points to keep in mind:

• Eligibility for a loan may vary based on income and employment status
• Repayment for the loan can be made through permitted banking channels and NRI bank accounts, subject to applicable requirements
• Banks may request additional documents as compared to Indian residents

You may need certain documents when applying for a home loan as an NRI, which include:

• Credit report
• Proof of employment
• Loan application form
• Property appraisal report
• Recent months bank statements
• Salary slips or income tax returns

Once you have these documents ready, the property purchase process becomes easier and helps prevent delays or issues. Lastly, let's look at the tax implications for NRIs buying an Indian property.

Tax Implications on NRI Property Purchase

Beyond understanding the documents, legal requirements, and more, it's also crucial to understand the taxation guidelines for NRI property purchases. Here are some points regarding taxation that NRIs must stay aware of:

• Rental income earned in India will be subject to taxation
• TDS may apply to rent paid to an NRI landlord, depending on the tenant, the amount of rent, and the applicable provisions
• Capital gains tax applies based on the holding period when you sell the property
• Stamp duty applies to the property transaction, but the rate varies from state to state
• Property registration charges vary by state and transaction

Since the UAE does not impose personal income tax, the main tax liability arising from Indian property income is generally in India. Additionally, NRIs may claim the applicable 30% standard deduction when computing income from house property, subject to the applicable provisions. DTAA provisions apply separately, and any treaty relief depends on the taxpayer's residential status and the specific provisions of the applicable tax treaty.

The Bottom Line

Buying property in India from the UAE as an NRI may offer an opportunity for long-term personal use, rental income, or capital appreciation. An NRI may buy residential, commercial, or other eligible immovable property, but cannot purchase any farmhouse, plantation property, or agricultural land under the general route. They can use a power of attorney to sell or purchase an Indian property from the UAE by appointing a trusted person to act on their behalf, subject to applicable requirements.

You can pay for the property purchase through permitted banking channels, including inward remittance or funds held in NRE, FCNR(B), or NRO accounts. At the same time, NRIs can repatriate eligible property-sale proceeds from India to Dubai, subject to applicable FEMA/RBI conditions, taxes, and other requirements.

Moreover, to ensure compliance and manage tax obligations in both countries, connect with an expert at Savetaxs. At Savetaxs, we have an entire team of professionals who can help you understand Indian income tax laws, advise on TDS on property purchase, ensure compliance with the regulations, and much more. Contact us right away as we are actively working 24/7 across all time zones.