FAQ'S

Frequently asked questions (FAQ)

All our energies, all our efforts, all our expertise, and experience, in fact, all that we do is to ensure that you lead a life of contentment and happiness in a home that creates an environment of comfort and peace. May the fruits of our labour nourish your body and soul and swell your heart with pride.

Is there any restriction on the number of properties I can buy in India?

There is no restriction on the number of residential or commercial properties an NRI can own in India. However the law restricts NRIs from purchasing any kind of agricultural land/ plantation property/ farm house in India.

What are the documents required for buying a property in Tamilnadu ?

You will require the following:

  1. Pan Card (Permanent Account Number)
  2. OCI/PIO card (in case of OCI/PIO)
  3. Passport (in case of NRI)
  4. Passport size photographs
  5. Address proof
If I plan to rent or sell my property in India, what is the tax treatment for the income generated from these activities?

Tax is applicable on income that is accrued from:
– Rent, if the house is let out
– Annual value of the house, if it is not the only residential property owned by this person in India
– Any short term or long term capital gains stemming from the sale of the house However, no tax is levied for simply acquiring a property in India.

Do I need to take consent from the RBI prior to purchasing a property in India?

No, an NRI does not require consent to buy any immovable property other than agricultural/plantation property.

How do I make payment for purchase of residential/commercial property in India?

There are two options:

  1. a) Funds remitted to India through normal banking channels
    b) Funds held in NRE/FCNR (B)/NRO account maintained in India
Can the proceeds from renting or selling the property be remitted to another country?

You can repatriate the rental income after paying the necessary tax applicable to the income generated. There are certain rules governing the repatriation of income generated from the sale of a property in India-

– The amount to be repatriated does not exceed (a) the amount paid for acquisition of the immovable property in foreign exchange received through normal banking channels or out of funds held in foreign currency non-resident account or (b) the foreign currency equivalent, as on the date of payment, of the amount paid where such payment was made from the funds held in non-resident external account for acquisition of the property. In case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties. Authorized dealers can allow remittance up to USD 1 million for any purpose, per calendar year from balances in NRO accounts subject to payment of applicable taxes.

– If the property was acquired out of Rupee sources, NRI/PIO may remit an amount up to USD one million, per financial year, out of the balances held in the NRO account (inclusive of sale proceeds of assets acquired by way of inheritance or settlement), for all the Bonafide purposes to the satisfaction of the Authorized Dealer bank and subject to tax compliance. The NRI/PIO may use this facility to remit capital gains, where the acquisition of the subject property was made by funds sourced by remittance through normal banking channels/by debit to NRE/FCNR(B) account.

Can I gift my residential/commercial property?

Yes you can gift the property to:

(i) person resident in India or
(ii) an NRI or
(iii) PIO.

What are the guidelines for NRI/PIOs to obtain loans for purchasing a residential/commercial property in India?

(i) The loan amount should not be more than 80% of the cost of the housing unit.
(ii) Own contribution, which is the cost of housing unit financed less the loan amount, can be met from direct remittances from abroad only through normal banking channels, your Non-Resident (External) [NR (E)] Account and /or Non-Resident (Ordinary) [NR (O)] account and /or Non-Resident Special Rupee account [NRSR] in India
(iii) Reimbursement of the loan, comprising of the principal and interest including all the charges should be remitted from abroad only through normal banking channels, your Non-Resident (External) [NR (E)] Account and /or Non-Resident (Ordinary) [NR (O)] account and /or Non-Resident Special Rupee account [NRSR] in India

Can authorized dealers grant loans to NRIs?

Yes, but these dealers can grant loans to NRIs for acquisition of house/flat for residential/self-occupation purpose. However, repayment of the loan should be made within a period not exceeding 15 years out of inward remittance through banking channels or out of funds held in the investors’ NRE/FCNR/NRO accounts.

What are the rules governing obtainment of housing loans by an NRI/PIO/OCI?

(i) The quantum of loans, margin money and the period of repayment shall be at par with those applicable to housing finance provided to a person residing in India.

(ii) The loan amount shall not be credited to Non-resident External (NRE)/Foreign Currency Non-resident (FCNR)/Non-resident non-repatriable (NRNR) account of the borrower.

(iii) The loan shall be fully secured by equitable mortgage by deposit of title dead of the property proposed to be acquired, and if necessary, also be lien on the borrower’s other assets in India.

(iv) The installment of loan, interest and other charges, if any, shall be paid by the borrower by remittances from outside India through normal banking channels or out of funds in his Non-resident External (NRE)/Foreign Currency Non-resident (FCNR)/Non-resident Non-repatriable (NRNR)/Non-resident Ordinary (NRO)/non-resident Special Rupee (NRSR) account in India, or out of rental income derived from renting out the property acquired by utilization of the loan or by any relative of the borrower in India by crediting the borrower’s loan account through the bank account of such relative (The word ‘relative’ means ‘relative’ as defined in section 6 of the Companies Act, 1956.)

(v) The rate of interest on the loan shall conform to the directives issued by the Reserve Bank of India or, as the case may be, the National Housing Bank.

What are the key points that I should keep in mind before I invest in real-estate in India?

We suggest you to assess any property that you plan to buy on the following factors:

– Location- ease of transportation, connectivity, presence of schools, hospitals, restaurants etc.
– Quoted area of flat- Carpet, Built-up and Super-Built Up area
– Quality of Construction
– Car parking Space
– Water supply, electricity and other utilities
– Different costs involved- price, stamp duty, registration charges, transfer fees, cost of utilities, monthly outgoings and society charges
– Potential for resale or renting out of the property
– Distinct infrastructural of location based advantages of the property

Will I receive any assistance with the legal and paperwork from Sree Daksha when I buy a property with them?

Yes, Sree Daksha will ensure that you get all your clearances in a hassle-free manner and that we accompany you at each step of your buying decision.

What should be the method of payment for purchasing residential immovable property in India by foreign nationals of Indian origin under the general permission?

The purchase consideration should be met either out of inward remittances in foreign exchange through normal banking channels or out of funds from NRE/FCNR accounts maintained with banks in India.

Do non-resident Indian nationals require permission of Reserve Bank to acquire residential / commercial property in India?

No permission is required by non-resident Indian nationals to acquire immovable Property in India.

Are foreign nationals of Indian origin allowed to purchase immovable property in India?

Yes, foreign nationals of Indian origin, whether resident in India or abroad, have been granted general permission to purchase immovable property in India.

In what way the Non-resident Indian can finance the flat?

The purchase of the flats can be financed from the fresh remittance through the normal banking channels or from payment from original non-resident account or from Non-resident (External) Accounts. Non-resident Indians who are citizens of India (India Passport holders) are eligible for housing finance for the acquisition of an immovable property or construction of a new house, or a flat for their occupation or for that of their family in India. But the Bankers  also considers granting of loans to non-resident Indians even if they are abroad, provided a family member of his or her in India is made a co-borrower and a power of attorney is given to his representative in India.

Non-resident Indians are staying abroad can the property be purchased through the agent or through the Power of Attorney?

The non-resident Indians who are staying abroad may enter into an agreement through their relatives and/or by executing the Power of Attorney in their favour as it is not possible for them to be present for completing the formalities of purchase (negotiating with the builder or Developer, drafting and signing of agreements, taking possession, etc.) These formalities can be completed through some known person who can be given the Power of Attorney for this purpose. Power of Attorney should be executed on the stamp paper before the proper authorities in foreign countries. Power of Attorney cannot be drafted on the stamp paper bought in India.

Can such residential property be given on rent if not required for immediate residential use?

yes

Can the rental income from such property be remitted outside India?

No. Such income cannot be remitted abroad and will have to be credited to the ordinary non-resident rupee account of the owner of the property.

Type of Home Loans

Various Home Loans are offered by Banks and Housing Finance Companies (HFC’s)
•    Loans to purchase a home
•    Home Improvement loans
•    Home construction loans
•    Home conversion loans
•    Home Extension loans
•    Purchase of land loans
•    Bridge loans
•    Balance transfer loans
•    Refinance of a loan
•    Stamp Duty loans
•    Housing loans for NRI’s to build/buy a house in the country

Our Associate Banks

HDFC, ICICI, Can-Fin, SBI, BOI and many more.

Loan Amount Range

From Rs. 1 lakh to Rs. 1 crore

Loan Repayment Range

From 5 to 20 years.

Cheapest Home Loans

Keep the loan period constant and calculate the total amount paid for the home through the different loan options available.

Applying for a Loan

A loan may be applied for, before or after you select a property. Sanction of the loan amount lets the buyer know what amount can be availed of. This helps to decide the budget as well as the purchasing power. Actual disbursement is done only after satisfactory verification of all necessary documents and completion of specific formalities.
If all the papers are to the satisfaction of the banks and HFIs, the disbursement could be done within 3-5 days. Proof of self contribution i.e. 15% of the cost of the property has been paid to the seller of the property is mandatory.

Loan Application Approval Time

Immediate sanction to about 15 days.

Co-Application

Most institutions consider the incomes of the applicant and the co-applicant, usually the spouse; to decide the loan amount. The co-application may/may not be a co-owner of the property.

Documents Required At the Time of Application

•    Latest salaries slip (Proof of income)
•    Photographs
•    Proof of age
•    Identity papers
•    Proof of residence
•    Bank statements of the previous six months

For Self Employed Individuals

Certified copies of balance sheets, profit and loss statements and tax challans of the previous three years.

For Private Ltd Companies

The Articles of Association, Partnership Deed and details about the firm. Before the actual disbursement of loans, all documents of the property, including “Agreement to sell”. Are required to be handed over to the loan lending institution.

Buyer’s Guide FAQs

Buying a home is one of the biggest financial and lifestyle decisions you will make. A little homework helps buying your dream home turn into a reality. The Q&A’s below will help you make an informed decision. Happy Home Hunting.

Where do I begin?

Being clear about your requirements is very important. Match these to the specifications of the project at hand. There is a lot more to consider besides the specifications of the home itself.

How should I go about buying a home?

While buying a home, always do a background check on the builders you deal with
Know the builder: An established company with a history of sound construction and above-board policies would be the right place to start. Review their credentials.
Home Delivery: Consider the time taken for completion of the company’s projects. If there are delays, look for a trend to these delays.
Legal Concerns: Find out if there are litigations in any court in India against the company and if there are any criminal cases against any of the directors of the company.
After authenticating the reputation of the builder, it is time to look through the specifics of the project of your choice.

Are there additional costs for some features?

Most quality projects come with a built-in set of amenities like swimming pool, gym and common recreation areas. There may be other amenities that can be added at a cost. Look for features that are taken for granted, like pre-connected telephone, TV and Internet cables, security systems, interior design etc.

So, should I be aware of some terminology?

Familiarize yourself with the actual measurements of the project
Carpet Area: This is the area of the apartment/building which does not include the area of the walls. Built up Area: This includes the area of the walls
Super Built up Area: This includes the built up area along with the area under common spaces such as the lobby, lifts, stairs, etc. This term is therefore only applicable in the case of multi-dwelling units.
Understand the ratio between carpet and the built-up area. Balconies are usually included as part of the carpet area. Analyze the plans to understand how much of the carpet area is being taken up by spaces that are unroofed. Also, understand the common areas that are shared between apartments and regulations regarding their use.

Should I be worried about any legal issues?

While purchasing a property, you have to look at the approved layout plan, approved building plan, ownership documents, carryout search, etc. It is advisable to contact an advocate before you purchase a property so that he can advise you.
Certain areas have specific commercial or residential reservations. Make sure you have all the details before you commit to a purchase.

How do I finance my dream home and save on tax?

Finance plays a critical role in the purchase of your home. The important issues that are to be considered include modes of arranging finance and its implications on taxation.

Here are a couple of options

Use your own funds: If the house is being acquired out of the sales proceeds of an earlier house, the exemption from the long-term capital gain tax on the sale of the earlier house can be claimed under u/s. 54. To claim this benefit, the new property should be acquired one year prior to selling or two years after the date on which the transfer of the earlier house takes place. If the new house could not be acquired within a period of one year from the sale of the earlier house, the sales proceeds should be deposited in a bank or institution, which runs Capital Gain Accounts Scheme approved for this purpose. Other issues also need to be considered. For example, if the person acquiring a house already holds another house, then every year, one of the two house properties would be deemed to be let out (u/s. 24) of income tax act and the let-out value shall be treated as income. Hence, appropriate tax planning should be considered. Further, in the case of individual or HUF (Hindu Undivided Family), exemption is provided from long term capital gain tax u/s. 54F on sale of any long term capital asset, if sale proceeds are invested in acquiring a house within prescribed period.

Taking a bank loan: Interest paid on housing loan can be claimed as deduction under u/s. 24(b) to the maximum extent of Rs. 1,50,000 per year. Such limit is per person and not for one property. Hence, a loan can be taken in two joint names for one house to claim deduction of Rs. 1.5 lakhs each for both the persons repaying the loan. Repayment of the principal amount of housing loan is also eligible for the rebate u/s. 88 subject to a maximum sum of Rs. 20,000/- per year.

In taking a housing loan, the following issues need to be considered

Bank or financial institution offering loan: It is generally safe to take a loan from one of the leading financial institutions.

Rate of Interest: The rate of interest on housing loans is currently (2006-2007) between 9.5% to 11.5% depending on the tenure of the loan, fixed/floating rate, credit profile of the borrower etc.

Fixed/Floating: You can either opt for a fixed or floating rate of interest. The fixed rate is generally 50-75 basis points higher than the floating rate. The floating rate is linked to the PLR(Prime Lending Rate) of the lending institution.

Processing fees: Processing fees is charged by financial institutions for verifying the title report, financial performance, valuation of flat and so on. This fee can be up to 1% of the loan amount. During special periods like property exhibitions, banks and financial institutions offer special interest rates and waivers/concessions in processing fees, so buyers can benefit from such offers.

Tenure of the loan : The tenure of the loan should be decided by the buyer after taking into consideration various things like repayment capacity per month, earning potential over the next few years, other financial commitments like weddings, children’s education etc. The expected outflow on property maintenance should also be considered.

Generally, housing loans are available ranging from 5 years to 25 years. Some banks also offer step-up housing loans which charge a lower EMI for the initial years which gets increased for the later period. Such loans are generally considered favorably by those house buyers who are in the early stage of their careers and who expect earnings to improve significantly over a period of time.

Other aspects : Consider the percentage of the cost of house that is available as loan etc. Some banks offer up to 95% cost of the house by way of loan. Another important factor is financing for the interior work, furniture etc. Some institutions have started providing a composite loan that extends over the cost of interiors and design.

What are the documents I will have to submit to the bank?

Different banks require different sets of documents for processing a housing loan.

Following are some documents generally required by most banks:

Proof of Income: Salary certificates and form No. 16 for last three years – TDS certificate for last 3 years – Bank statements showing credit entries for salary/ professional fees received for past 12 months – Professional qualification certificates etc.

Title of the property: Copy of the property sale deed – Title report by a solicitor – Valuation report – NOC from the builder/condominium/society – Amenities agreement, if any

Other Documents : Proof of age – copy of passport, driving license etc. – Proof of residence – Copy of ration card, passport, society letter etc. – Photographs with signature. Documentation required for guarantor, if any.

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