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The implementation of RERA and GST has proved to be a boon for the real estate industry in India. As a result of these revolutionary moves, the real estate sales in India has witnessed an upward trend and is all set to keep growing in the future as well. Once you have zeroed in on investing in homes in India, there are a few guidelines you should know for a hassle-free buying experience.
Consequent to the introduction of Foreign Exchange Management Act (FEMA), 1999 the Reserve Bank of India has made the following regulation called as the Foreign Exchange Management (Acquisition & Transfer of Immovable Property in India) Regulation with effect from June 1, 2000.
The current position is therefore as under:
Important Definitions
In the event of sale of immovable property other than agricultural land/ farm house/ plantation property in India by the above two categories of persons repatriation of sale proceeds is possible subject to the following conditions:-
In case the property is acquired out of Rupee resources and/or the loan is repaid by close relatives in India (as defined in Section 6 of the Companies Act, 1956), the amount can be credited to the NRO account of the NRI/PIO. The amount of capital gains, if any, arising out of sale of the property can also be credited to the NRO account. NRI/PIO are also allowed to repatriate an amount up to USD 1 million per financial year out of the balance in the NRO account / sale proceeds of assets by way of purchase / the assets in India acquired by him by way of inheritance / legacy. This is subject to production of documentary evidence in support of acquisition, inheritance or legacy of assets by the remitter, and a tax clearance / no objection certificate from the Income Tax Authority for the remittance. Remittances exceeding US $ 1,000,000 (US Dollar One million only) in any financial year requires prior permission of the Reserve Bank.
Citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Macau or Hong Kong can take immovable property in India by way of lease for a period not exceeding 5 years without permission from RBI. For all other types of acquisition or transfer of immovable property in India they need to take prior permission of RBI.
Summary of acquisition and transfer of immovable property in India:
| Indian Nationals Residing In India | Indian Nationals Residing Outside India | Persons of Indian Origin Residing Outside India |
| No restrictions | Can acquire any immovable property other than agricultural land / plantation / farm house. | Can acquire any immovable property other than agricultural land / plantation / farm house out of foreign currency funds or by way of gift from person residing in India or from a person residing outside India who is either a citizen of India or a Person of Indian origin or by way of inheritance from person residing outside India provided that person had acquired the property in accordance with the provisions of the Foreign Exchange Law in force at the time of acquisition or from a person residing in India |
| Can acquire any immovable property other than agricultural land / plantation / farm house. | Can sell any immovable property other than agricultural land / Plantation / farm house to a person residing in India. | |
| Can acquire any immovable property other than agricultural land / plantation / farm house. | Can gift residential or commercial property to a person Residing in India or to person resident outside India who is a citizen of India or PIO | |
| Can sell / gift any agricultural land / plantation / farm house to an Indian citizen residing in India. |
| Foreign Citizens Residing in India | Foreign Citizens Residents Outside India | Indian Branch/ Office of Foreign Concern |
| No restrictions, except in case of Nationals of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal , Bhutan, Macau or Hong Kong who will require prior permission from RBI in all cases except where the immovable property is acquired by way of lease for less than 5 years. | Can acquire only after prior permission from RBI. | Can acquire immovable property which is required for carrying on its activities, a declaration in From IPI will have to be filed with RBI within 90 days of such acquisition (the above procedure is not applicable to a liaison office) |
Various varieties of housing loans are offered by different financial institutions. Prominent among these are:
Any Indian citizen, including Non Resident Indians, with a steady source of income can borrow funds for financing the cost of a flat from housing finance companies and banks.
Yes, depending upon the eligibility criteria and policy of the bank.
Loans are generally disbursed between 70%-80% of the cost of the flat. The balance money is to be funded by the flat purchaser from his own contribution. The percentage of loan would vary from bank to bank.
All projects at Runwal are preapproved for the grant of home loans by leading housing finance companies and banks. The Runwal sales team liaises with the all leading Banks & Housing Finance Institutions for project approvals, processing the loan, documentation and disbursement of loans.
Equated Monthly Installment ("EMI") is the amount comprising a portion of the interest and the principal loan amount, which is payable by a borrower to the lender every month.
Interest rates vary from time to time and from institution to institution. The interest is calculated either on a daily or monthly reducing or yearly reducing balances.
A fixed-rate housing loan is a loan where the rate of interest is constant through the entire term of the loan period.
A floating interest rate loan is a loan where the interest rate payable is linked to the bank's internal prime lending rate (PLR) such as the base rate which rises and falls as per banks policy.
Repayment period options range generally from 5 to 20 years. Some of the banks may give loans up to 25 years also.
The flat purchased is the primary security and is mortgaged to the lending institution till the entire loan is repaid. Additional security such as life insurance policies, shares, bonds, fixed deposit receipts, national savings certificates can also be offered, as per the requirements of the institution.
Yes. Many lending companies require 1 guarantor or a co-applicant.
Varies from bank to bank but usually it is 15 - 20 days for a salaried person and 20 - 30 days for a self employed person depending on the applicant's documents.
Usually loans are disbursed within 10 - 15 days after completion of verification by the institution, documentation (original agreement for sale / lodging receipt) and completion of all relevant procedures. Submission of proof that the borrower's own contribution has been paid by him to the vendor / builder / developer is also an important aspect.
Yes, but this policy varies from bank to bank.
What are the documents required at the time of applying for a housing loan?
Purchasing a home on a loan is a lot more than pure happiness, you enjoy multiple tax benefits with it too! These benefits and exemptions not only help you save tax, but they also help in managing smooth cash flows.
Here are the deductions that income tax authorities offer to individuals who have taken a housing loan from specified financial institutions:
Under Section 24 of the Income Tax Act
The interest paid on capital borrowed for the acquisition, construction, repair, renewal or reconstruction of property is entitled to a deduction. Rs 2, 00,000 is the maximum amount eligible for deduction.
Under Section 80C of the Income Tax Act
You can get a maximum Rs.1, 50,000 deduction from the Income, on repayment of principal during a financial year. Stamp duty, registration fee or other such expenses paid for the purpose of transfer of such house property to the assesse is also considered under this amount. All these deductions should not exceed the overall limit of Rs. 1 lakh. However, deduction under Section 80C is not available in respect of payments made towards the cost of any addition, alteration, renovation or repair carried out after the issue of the completion certificate.
The plans, specifications, images and other details herein are only indicative and subject to approval of the concerned authorities. The Group / Owner reserves the right to change any or all of these in the interest of the development, without prior notice or obligation. Artist’s impressions are used to illustrate amenities, specifications, images and other details and these may be applicable to select apartments only. Tolerance of +/- 3% is possible in the unit areas on account of design and construction variances. All brands stated are subject to final decision of the project architect. This printed material does not constitute an offer and/or contract of any type between the Group / Owner and the recipient. No booking or allotment shall be deemed to have been made on the basis of this printed material. Any Purchaser / Lessee of this development shall be governed by the terms and conditions of the agreement for sale / lease entered into between the parties, and no details mentioned in this printed material shall in any way govern such transactions unless as may be otherwise expressly provided in the agreement for sale/lease by the Group / Owner. The Group / Owner does not warrant or assume any liability or responsibility for the accuracy or completeness of any information contained herein.
