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Kolkata, the cultural capital of India, is a city of rich cultural heritage and tradition, attracting people from all over the world. Non-Resident Indians (NRIs) are one such group of people who often invest in properties in Kolkata, either as an investment or as a second home. However, the process of purchasing property in India can be a complex and time-consuming process, especially for NRIs who are not physically present in India. In this article, we will discuss whether NRIs can purchase property in Kolkata without being physically present in India.
II. Legal Framework for Non-Resident Indian (NRI) Property Purchase in Kolkata
NRIs are allowed to purchase properties in India, subject to certain rules and regulations under the Foreign Exchange Management Act (FEMA) of 1999. According to FEMA, NRIs can purchase residential and commercial properties in India, except for agricultural land, plantation property, and farmhouse property. However, the purchase of property by NRIs is subject to certain conditions, such as the payment of stamp duty, registration fees, and compliance with tax regulations.
III. Procedure for NRI Property Purchase in Kolkata
The procedure for NRI property purchase in Kolkata is similar to that of Indian residents. The steps involved in the process are as follows:
1. Choose the property:
The first step is to choose the property that the NRI wishes to purchase. The NRI can choose the property through a broker, developer, or online real estate platform.
2. Appointment of Power of Attorney (POA):
The NRI can appoint a trusted relative or friend in India as the POA holder. The POA holder will act on behalf of the NRI and carry out all the legal formalities related to the property purchase, such as signing the sale agreement, registering the property, and paying stamp duty and registration fees.
3. Transfer of funds:
The NRI can transfer funds from their NRE (Non-Resident External) or NRO (Non-Resident Ordinary) account to the seller’s account through normal banking channels. The transfer of funds must comply with the regulations of the Reserve Bank of India (RBI).
4. Registration of property:
Once the sale agreement is signed, and the transfer of funds is complete, the POA holder can register the property in the NRI’s name at the Sub-Registrar’s office.
IV. Documents Required for NRI Property Purchase in Kolkata
The documents required for NRI property purchase in Kolkata are similar to those required for Indian residents. Some of the key documents required are:
1. Passport and Visa:
A valid passport and visa are required for NRIs to purchase property in India.
2. PAN card:
The NRI must have a PAN (Permanent Account Number) card to purchase property in India.
3. Power of Attorney (POA):
The NRI must provide a POA to authorize someone to carry out the legal formalities on their behalf.
4. Sale agreement:
The sale agreement is a legal document that specifies the terms and conditions of the property purchase, such as the sale price, payment terms, and delivery date.
5. Property registration documents:
The NRI must provide all the necessary property registration documents, such as the property deed, sale deed, and encumbrance certificate.
V. Tax Implications for NRI Property Purchase in Kolkata
NRIs are subject to the same tax regulations as Indian residents for property purchase in Kolkata. Additionally, it is important to note that NRIs are also subject to the Foreign Exchange Management Act (FEMA) regulations when it comes to property transactions in India. The FEMA regulations aim to regulate foreign exchange transactions and are enforced by the Reserve Bank of India (RBI).
Under FEMA regulations, NRIs are allowed to purchase residential and commercial properties in India, but there are certain restrictions and guidelines that need to be followed. For instance, NRIs can only purchase properties that are meant for personal use or for business purposes. They are not allowed to purchase agricultural land, plantation property, or farmhouses in India.
Furthermore, NRIs are allowed to fund their property purchases through inward remittances, which can be sent through banking channels such as wire transfers. They can also fund their property purchases through Non-Resident External (NRE) and Foreign Currency Non-Resident (FCNR) accounts. NRIs are also allowed to take out loans from Indian banks for property purchases, subject to certain conditions and restrictions.
Due to the complexity of the legal and financial aspects involved in property transactions in India, NRIs are advised to seek the assistance of a reliable property lawyer. A property lawyer can guide NRIs through the legal requirements and regulations and help them navigate the various procedures and paperwork involved in property transactions in Kolkata.
In conclusion, NRIs are allowed to purchase property in Kolkata without being physically present in India, but they need to follow the legal and regulatory guidelines set by the Indian government. They are required to obtain certain documents and approvals, such as a PAN card and an Aadhaar card, and are subject to the same tax and FEMA regulations as Indian residents. Due to the complexity of the legal and financial aspects involved, NRIs are advised to seek the assistance of a reliable property lawyer to ensure a smooth and hassle-free property transaction process in Kolkata.