A Complete Guide to NRI Property Selling in India

Welcome to the comprehensive guide for non-resident Indians selling property in India. This article is intended to help you understand the fundamental considerations a non-resident Indian must take into account while selling Indian property.

However, this cannot be considered a legal document, and professional assistance is required during the real transaction.

A non-resident Indian may sell his or her residential or commercial property to a resident of India, another non-resident Indian, or a person of Indian descent (PIO). Additionally, one may mortgage the property to a licenced real estate agent or a financial organisation that specialises in house loans. If the property is agricultural land or a farming development, however, it may only be sold to an Indian citizen who resides in the country.

If the property has been inherited from an Indian resident, no special authorization from the RBI is necessary. However, if the property has been inherited from a non-Indian, the NRI must request permission from the Central Bank. Income from the sale of a property is taxed as Capital Gains, while rental income from the property's rental is taxed as Income from House Property. The capital gain is the difference between the sales price and the indexed purchase price.

It is difficult to imagine that the procedure Non-Resident Indians (NRis) must take to sell their property in India does not differ much from the one resident Indians must follow. Nonetheless, there are a few conditions and apparent practical considerations to bear in mind when selling your home. This post will discuss crucial legal considerations that you, as an NRI, must bear in mind while selling property in India.

Documents required:

The paperwork that an NRI must provide is identical to that needed of an Indian resident. This includes the PAN card and passport, income tax returns for the entire period that the NRI has owned the property, proof of address (both in India and in the country where he or she currently resides), the property's sale deed, the housing society's NOC, allotment letter and encumbrance certificate, as well as the duly approved building plan and occupation certificate.

The lack of any of these papers may provide an obstacle. An advocate may be allowed to intervene with an affidavit in certain circumstances, but not all.

In recent years, the regulations regulating property sales have been significantly tightened, and many NRIs may have been unaware of the most recent legislative changes.

The absence of a valid Indian address evidence may be particularly difficult and may result in a higher tax rate than would otherwise be applicable. The greatest obstacle for both NRis and local Indians is often gathering the necessary documents, particularly if the land has been held for extended periods of time.

Tax on short- and long-term capital gains:

Even if they inherited the property, nonresident Indians are required to pay capital gains tax when they sell a residence in India. This may be short-term or long-term capital gains tax, depending on how long the non-resident alien has held the property. When the holding period is shorter than two years, short-term capital gains tax applies.

Actual selling method:

The RBI does not need an NRI to seek its clearance prior to selling a residence in India. Nevertheless, such transactions are subject to the Foreign Exchange Management Act (FEMA) of 1999. Especially in the case of high-value properties, the NRI should use the services of a qualified attorney or an RERA-registered real estate consulting firm for such transactions.

The actual selling procedure may be conducted either in person during a trip to India or via a power of attorney. In each situation, there may be distinct ramifications; thus, it is customary to use a lawyer or a reputable property expert.

The most important consideration for NRIS is that they may be out of touch with the ground realities of the Indian real estate market, both from a regulatory standpoint and in terms of the present dynamics at play in the property's actual location. Therefore, it is essential to be well-versed in the real supply and demand scenario.

This is vital for determining the price at which the house may be listed and the length of time it will take to sell.

Since the price is often established at the outset of talks, it is essential to have a thorough understanding of the property's market worth and the elements that influence it.

Every non-resident alien should seek the assistance of experts at every stage, including a professional real estate agent, professional certified public accountant, and of course a professional real estate attorney.